Bitcoin has become the face of blockchain ever since the 2017 price hike to an incredible $20,000 where mainstream media spread of Bitcoin’s existence. Leading to one of the biggest misconceptions about blockchain, Bitcoin is blockchain. We have decided to include four other popular misconceptions about blockchain:
1. Bitcoin is blockchain
Not too long ago, Bitcoin just celebrated its 10th birthday and what most people did not realise is that it was also blockchain’s 10th birthday. Blockchain is an upgraded design of what was described as a cryptographically secured chain of blocks. Blockchain in its simplest form is a way for a group of different individuals or computers to agree on a particular action or transaction without the need to know or trust each other — all through using a set of rules and mathematics.
Besides many traditionally evident problems, Blockchain also solves the long-standing problem of double spending. Double spending occurs when the same digital cash is spent more than once through duplication or falsification, often due to the centralised nature representing a single point of failure. What blockchain does is replace that single point of failure to creating a network of keys that will only work with the cooperation of the network. Hence, in order to attack the blockchain network, hackers would require coordinating a simultaneous multi-pronged attack on all points, in turn protecting itself more as the network grows larger.
Whereas Bitcoin is a cryptocurrency, a digital asset designed to work as a medium of exchange or store of value. Bitcoin uses strong cryptography also known as blockchain to secure financial transactions, control the creation of additional units, and verify the transfer of assets. Bitcoin is on the blockchain, but blockchain is not the equivalent of Bitcoin alone. Bitcoin is a subset of what are sitting on the blockchain — namely cryptocurrency.
2. Blockchain can only be used for cryptocurrency
Although blockchain and cryptocurrency usually come hand-in-hand, it does not actually mean that this is blockchain’s only use. In fact, any business or industry that utilises a ledger will be able to benefit from it. Not only can blockchain be used by tech and finance companies but also companies such as a logistics company or a food safety organisation. An example will be Hyperledger’s walmart case study where the time needed to trace mangos sold in Walmart’s US stores went from 7 days to 2.2 seconds! Better traceability will help save lives by allowing companies to act faster and protect the livelihoods of farmers by only discarding produce from the affected farms.
3. Blockchain transactions cannot be traced
Many are under the false assumption that all cryptocurrency transactions are anonymous. Contrary to popular belief, Bitcoin and many majority of cryptocurrencies’ blockchain activity are transparent and traceable. These cryptocurrencies have respective public blockchain explorers on the internet that facilitate tracing their network’s transactions.
When it comes to anonymity, it refers to the holders of the addresses as there is no tie between address and person. However, most platforms and exchanges require KYC which ties users to their respective addresses. Unlike common belief, black market money may find it harder to hide in cryptocurrency than fiat currencies.
4. Blockchain is just a ledger
Although Blockchain is essentially a decentralised ledger, its real advantage comes when it is used as a medium of exchange with transactions involving a give and take situation. Blockchain allows such transactions to be made without the need of a “trusted” 3rd party to “broker” the transaction. Many cryptocurrencies introduced a functionality called smart contract which allows new ways to include information and execute complex transactions without external intervention.
5. Blockchain can be hacked easily
There are three different layers when using blockchain, the internet layer, the World Wide Web layer and the blockchain layer. Although there may have been many cases of hacks in the past two years, but few of which are hacks on the blockchain layer. Majority of the hacks are due to the insufficient security on the World Wide Web and internet layer. The blockchain layer is seldom hacked mostly because the only one way to hack it is to do a 51% attack. A 51% attack is done by having control over 51% of the cryptocurrency’s network and approving transactions however you’d like. However, one flaw of this 51% is the lack of economic incentive to do so. By hacking the blockchain of a cryptocurrency, trust in it is immediately lost and it will cause a major selloff. The value of the cryptocurrency will plummet overnight to the point you probably will never recoup the amount you spent needed to do the hack in the first place. Therefore, priority for security lies on the World Wide Web layer and internet layer.
Here at Kozjin, we have the best security team in Andy and Dexter, our Chief Information Security Officer and Chief Technology Officer from Asia’s biggest bug bounty platform, AntiHACK.me. We have identified this trend and made it our priority to safeguard our community, rest assured as we have the A team on it.
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