5 blockchain myths debunked

Serg Metelin busts the common misconceptions surrounding blockchain

A Google search for “blockchain” brings up nearly 300 million results. Try finding “understanding blockchain” and you’ll find a mere 152,000 references.

And there’s the innovator’s dilemma. While there’s no shortage of commentary on blockchain from supporters as well as detractors, the clash of opinions, information and misinformation has made it difficult for even a general tech enthusiast to figure out what blockchain is and isn’t.

These are five of the most prevalent myths debunked.

Myth #1 – Blockchain is a panacea for all problems

Blockchain can appear to be a one-size-fits-all solution for many industries including social media, financial services, supply chain and much more. While the jury is out on the most effective use cases for blockchain, it is generally recognised that the technology itself can solve real-world issues such as verifying digital identities and authorising digital assets. 

Validating digital identities can resolve well-documented issues around fake news and fake identities on social networks. The inherent characteristics of blockchain technology including security, accountability, and immutability to enable trusted and transparent social interactions offer a potential solution to bring trust back to social networks. Block.one’s announcement of the social platform Voice aims to do this by redefining social media through cultivating creation, sharing, discovery and promotion of content by real users.

For gamers, blockchain helps to move digital assets from the “grey” area where assets could suddenly cease to be operational. Blockchain makes it possible to verify digital assets on the chain through non-fungible tokens and have asset interoperability across games. Gamers can now trade virtual goods built on a blockchain based platform by using cryptocurrency technology to settle and process transactions. Popular examples include CryptoKitties or gaming platforms like Mythical Games (who we’ve invested in through the Galaxy EOS VC Fund) where developers can build “in game economies.” 

Myth #2 – Blockchains are slow and inefficient

As with any emerging technology, there can be limitations in the early stages. Yet not all blockchains are created equal. 

For regular blockchains, all computers need to be in consensus to validate a block, or in complete agreement without a central decision maker. An example of this model is Bitcoin which uses the original consensus algorithm, or “proof-of-work” to confirm transactions and build new blocks to the chain. This is where a group of computers race to solve a mathematical problem, using a consensus model known as mining to complete transactions on the network and get rewarded. This model can be very effective but very slow and energy inefficient. 

An example of a blockchain protocol using the consensus model differently is Block.one’s EOSIO protocol which is designed to be faster and more energy efficient than proof-of-work. Using a different model called Delegated Proof of Stake where computers don’t compete over computational power, network users instead vote for the computers (in this case called block producers) who they think are best qualified to run the network. 

Like any software protocols, there can be different capabilities across public and private blockchains available. It’s worth taking a look at which best serve your technology requirements given your resources. 

Myth #3 – Blockchain isn’t ready for mainstream adoption

Terms like “decentralised” platforms can imply the absence of a central authority. While blockchain protocols won’t substitute world governments any time soon, blockchains can open up new markets for use by everyone. 

Financial services is an example of an industry where blockchain’s impact can be felt by the public. The sector presents a strong use case for a decentralised platform with the need for custodian responsibility over user data. Creating more financial products on-chain can open new markets for financial institutions who can use a common database to keep track of execution, clearing and settlement of transactions without the need for central database or management system. 

Myth #4 – Blockchain isn’t ready for enterprise adoption

When looking for enterprise grade blockchain infrastructure, we recommend determining your objectives. Here is what we’ve learned from developers at organisations of diverse sizes and industry sectors as priorities when considering the right blockchain protocol: 

• Freedom to upgrade smart contracts rather than upload new ones
• Tools to create and schedule recurring transactions 
• A rich set of prebuilt libraries to build faster and help avoid common security issues
• Ability to create apps using familiar development tools and the same front-end technologies that power existing web applications. 

It’s important to emphasise the ability for the blockchain system to evolve with your business needs. Protect against vulnerabilities by ensuring smart contracts on the blockchain are upgradable and prioritise speed in smart contract execution. We took this feedback from our developer community to heart when we outgrew our existing general purpose WebAssembly engines by delivering a custom-built one in the form of EOS VM in the latest release of our flagship blockchain protocol EOSIO 2.

Another thing to keep in mind is latency – when working on an older version of blockchain, there can be 7-15 transactions shared across the network, which is impossible for applications that need high throughput to be operable. Compare this to the speed at which Visa processes transactions, which is reportedly 24,000 transactions per second. 

Myth #5 – The world of blockchain is hard to understand and opaque

Like any emerging technology, blockchain can seem confusing and complicated. Yet at its heart it is a fairly simple concept – a public digital ledger that records all transactions inside a given network in a publicly verifiable and cryptographically secure way. Or rather, how we see it: “a secure version of the internet.” Blockchain actually helps to make things more transparent through a record-keeping system of transactions recorded in blocks maintained by peer-to-peer networks.

Given the transparent nature of blockchain, the community is very open with tools and educational resources. Videos, tutorials and even games on developer sites are an easy entry-point to learn about blockchain. There are also opportunities to join and even host your own hackathons where no blockchain experience is required, just a positive spirit and a willingness to learn. 

• Picture Credit: freepik