What is the blockchain? It’s on a hype, it’s in the news but still misunderstood. The blockchain is used for buying celebrities and creating board games. Some companies put this word in their names to make money. Long Island Ice Tea, for example, the company that sells non-alcoholic drinks, changed the name to Long Blockchain and go up in cost at almost 300% during one night. So, what is the most common myth about this trending technology? Let’s make it clear.
Blockchain is just a storage system
Yes, blockchain can be used as a storage system. With rising of fraud on the cloud storages, blockchain can reduce many different problems. For example, even encrypted information on the cloud could be reached with a key, and that key is kept by a service provider. In the blockchain case, only authorized parties can have access to the system. Even hackers attack on the separate node won’t be dangerous because all information is kept on other blocks.
Still, the main benefit of the system is not in the storing of data but in the exchanging of it. The information can be shared between a big number of people as well as between a few of them, and it won’t influence the reliability of its protection. Every transaction is encrypted and verified by every node in the chain. For example, the USA based DNAtix development team is trying to put a whole human genome into a blockchain. They sure that the system will bring to a new level DNA researches and share the data between scientists all over the world.
Blockchain can be used only for finance assignments
Of course, blockchain technology started to spread with its first implementation — cryptocurrency and created the waves on the whole finance sector. Numerous financial applications are based on the blockchain, including very popular nowadays mobile wallets. But new blockchain-use cases are continuing to appear every day, and a big part of them are non-financial. Forbes makes an accent on Smart Contracts that enable official agreements outside of a governmental or judicial systems, which was impossible before.
Blockchain can be used for media to reduce fake information and help writers to reach their readers in a peer-to-peer format. During UN Climate Change Conference, blockchain was discussed as a base for trading waste quotas. Or, for example, Goodr, Atlanta based service that helps local restaurants and stores send leftovers to the charities. Their blockchain system keeps information about trades, and companies can see which kind of food is wasted the most.
Bitcoin and blockchain the same things
The sphere of cryptocurrencies appeared very fast, which lead to a misunderstanding of some new terms. The blockchain is enabling peer-to-peer transactions to be recorded on a network of nodes. But Bitcoin is a blockchain-based digital currency, set up to function without any regulations and third parties. Basically, blockchain was created to enable bitcoin, but with a time it found its usage far beyond cryptocurrencies.
There is no difference between coins and tokens
Talking about cryptocurrencies, are coins and tokens pretty same things and can replace each other? Well, not exactly. Coins and tokens are perceived as cryptocurrencies, but some of them have nothing in common with currency at all. So, what is the main difference?
Coins are encrypted digital equivalent of money, and bitcoin is the biggest example of them. They based on blockchain systems and everyone is free to join the network. Coins can be mined, received and saved. Tokens do not necessarily represent the money, they more like digital assets. Tokens have a specific use in each project ecosystem and give to a holder the right to participate in the network. We can compare tokens with concert tickets: you can use them for a certain purpose at a certain time. Coins are just a method of payment, but tokens may represent a company’s share, give access to service or product, and much more.
Everyone can see all data in a Blockchain system
Traditionally, all information in Blockchain is publicly available. On bitcoin example, all transaction are traceable, because the system records all moves from one wallet to another. That improves transparency but plays against personal data. The point is that the technology has its advantage: not every blockchain-based project enables full visibility of data.
Today we have a huge number of different blockchain technologies, and every one of them can function differently depending on a user’s purpose. It is not surprising why we are comparing all blockchain projects to bitcoin, the first real-life application of the technology. But if we won’t fight this myth, we can lose blockchain benefits such as reducing fraudulent activities, poor communications of records, and more.
Blockchain is changing the core of transactions
Usually, blockchain is perceived as a technology that will change the way we record and manage transactions. But the current system does not allow to scale the process and takes more time to confirm transactions. Every move inside the blockchain system requires large processing power. While the technology is developing to avoid these limitations, it has some important advantages. It is the best tool for security verification and immutability of transaction records. Blockchain’s decentralization and anonymity are a great feature for people who live in an economically or politically unstable environment.
Check the Ralabs’ latest blockchain works.