In the previous article we studied about how a blockchain is like a peer-to-peer distributed ledger and its importance in certain industry with the advancement of technology.
We have been so mesmerized by this decade long cryptographic discovery that we tend to over look some of its limitation. In this article we talk about the common myths associated with blockchain and its reality check.
- Blockchain is bitcoin or vice-versa: In reality blockchain is a technology through which we track the virtual currency with the help of the digital ledger. However bitcoin is simply a digital currency and is just one of the application results of blockchain.
- Blockchain is better than the traditional database: In reality it’s as efficient as the traditional database- in fact in case of blockchain in order to write something in a database, the user is verified first with the help of a key (public and private) and then by the majority of the users in that network, however no one checks the authenticity of the data being written. If we were to talk industry specific- if public sector uses blockchain for storing the tax records- verification is being used for the user to enter the data- but no verification is made to check whether the data entered is correct or not.
Although this does not mean blockchain is not effective- rather its more effective in low trust environment, where the users can’t trade directly or there is a lack of intermediary.
- Blockchain is a cost effective technology: Blockchain using cryptography tracks the product in use, but it requires huge energy and high storage costs is involved. Thus making it harder for industries to adopt. In fact the very purpose of using high energy on the use of blockchain was made as an entry barrier, such that only the first movers can control most of the network.
- Blockchain cannot be tampered: it’s almost impractical to tamper the blockchain data, however if you control the majority of the users in the network, which verify the user, then in fact you can re-write all previous transactions.
- Blockchain is a truth machine: as explained above, we can only verify the user to the network- the truthfulness of the data represented in the database cannot be verified.
Currently there are many different implementation routes being created to use blockchain’s cryptographic algorithms in various industries and to solve the energy consumption hurdle. As a result of which the world is yet to reap the true benefits of blockchain.