Distributed ledger technology Blockchain has proven to be a breakout invention for many industries and is quickly taking the spotlight from cryptocurrencies. But while there is a lot of talk about it, there is still a lot of misconceptions about the technology. With the potential to revolutionize almost every industry, blockchain technology is being integrated into many businesses.
But, many myths around the technology remain and it is preventing businesses from understanding its potential impact and applications. Here are five myths about blockchain and why you need to understand why they are false.
1. Blockchain and Bitcoin are the Same Thing
Without fail, every time I mention blockchain technology, people say, oh ya that’s like the cryptocurrency Bitcoin. And I end up shaking my head and starting into my explanation as to why they are different. Blockchain is a type of distributed ledger technology, but it’s important to know that not all distributed ledgers are blockchains.
The definition of distributed ledger technology is still debatable, but the current position is that they require a legal identity with permissioned nodes to validate transactions. There are a number of enterprises labeling themselves blockchain, but in reality they are just distributed ledgers.
2. Lots of Illegal Activity Happens on Blockchains
Many people believe that blockchains are full of illegal activities, thus they shy away from the technology. Of course criminals can use the technology for illegal activity, but they can use almost anything else for this too. Postal systems, delivery services, store fronts and more. Just like these services, blockchains are used for legitimate, legal, and necessary tasks. And, they aren’t just used for trading cryptocurrency.
3. Blockchain will Solve Every Business Problem
Of course blockchain technology is all the hype right now and because of that everyone wants to use it as a one size fits all solution. But it doesn’t work that way. Blockchain tech is the best technology solution for certain business problems when there is an obvious and positive net return.
The technology should only be implemented if the business is ready for a substantial organization and operational change. Blockchain can’t simply be implemented and that’s it. The technology is completely different from anything else out there so vendor and provider technology needs to be changed to work seamlessly.
4. Blockchain Technology is Immutable and Unhackable
This is the biggest myth of them all as blockchains are susceptible to colluding attacks. This occurs when one or more party exceeds 51% of mining power to cheat the network into accepting unlawful transactions. Of course, such an attack would require a large number of colluding parties, and in the case of Bitcoin, this would be almost impossible to achieve. But on Ethereum this is definitely applicable. Private and permissioned blockchains, and new applications on public blockchains are vulnerable to this type of manipulation.
In June 2016, criminals successfully hacked a DAO on the Ethereum blockchain, forcing stakeholders and core developers to overturn parts of the blockchain and backtrack to a previous state. Criminals will always be looking for bugs in code or loopholes in smart contracts to manipulate the blockchain.