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Cryptocurrency Myths and Misconceptions; Debunked! (Part 1)

Unsure of myths and misnomers surrounding cryptocurrencies? Read on to learn more in our series on cryptocurrency myths and misconceptions.

Cryptocurrency’s inception over a decade ago was arguably the biggest paradigm shift of this century, fundamentally changing existing notions of money, information transfer, and digital security. However, even though digital currencies and ledgers may be disrupting countless industries, many among us are still unfamiliar with the inner workings of the technology.

Speaking on the matter, Alluva CEO, James Giancotti says,

“Market leaders and governments — from JPMorgan Chase to the entire country of Japan — unanimously agree that cryptocurrencies and blockchain hold tremendous potential in 2019. Unlike other emerging technologies like Artificial Intelligence, however, cryptocurrency’s many benefits have not been abstracted and disseminated to the masses over the past several decades, making the system slightly more formidable to those unaware of it. For widespread adoption of tokens to become a reality, it is imperative that we first address these teething issues.”

In this first part of our series on myths and misnomers surrounding cryptocurrencies, we explore the complex relationship between the first cryptocurrency–Bitcoin, and blockchain technology.

Myth #1: Blockchain Equals Bitcoin

While many believe that Bitcoin and blockchain are the same, that is far from the truth. Similar to how email and chat rely on the Internet to function, Bitcoin is a singular entity built on top of blockchain technology.

The first blockchain was conceptualized last century, roughly 18 years before Bitcoin even existed.

In 1991, Stuart Haber and W. Stornetta published a research paper titled, “How to time-stamp a digital document.” In it, they explained how a cryptographically secured ‘chain’ could be used to store timestamps in a tamper-proof manner. A year later, they published another paper that proposed the use of Merkle trees to improve the original design’s reliability and efficiency.

It was not until Bitcoin’s unceremonious release in 2009 that the first practical implementation of the technology emerged. The cryptocurrency’s creator, Satoshi Nakamoto, adopted many of the proposals outlined in the 1992 paper, including cryptographic hash functions, Merkle trees, and digital signatures, and made a few key improvements. Most notably, Satoshi developed a “proof of work” consensus mechanism to ensure that the Bitcoin network would be decentralized and permanent. And so, the modern blockchain was born.

Notably, however, Satoshi Nakamoto did not refer to his invention as a ‘blockchain’ in the Bitcoin white paper. The term grew in popularity several years into the cryptocurrency’s release, by which time many other decentralized projects had already caught the attention of the public.

Today, Bitcoin’s underlying technology — blockchain — has found applications in a myriad of use cases ranging from supply chain to insurance, thanks to its unique strengths of decentralization, transparency, and immutability.

Myth #2: There is Only One Blockchain, and That’s Bitcoin’s

As discussed above, Bitcoin is only one of the many potential applications that blockchain technology has to offer. To understand why there are multiple digital ledgers in existence, we need to look no further than alternative cryptocurrencies such as Litecoin, Ethereum, and Monero, each of which boasts its own unique blockchain with varying characteristics, sizes, records, and even controversies. CoinMarketCap estimates the total number of cryptocurrencies in circulation to be just shy of 3,000, which tells us that there are thousands of public blockchains out there. Not to mention, those are only the blockchains that support digital currencies.

While blockchains were few and far between a few years ago, they have become increasingly prolific of late, especially in the enterprise and public sectors.

In recent years, companies like IBM and Microsoft have veered away from financial applications of blockchain technology. Instead, they have started to explore use cases such as healthcare and logistics. Last year, IBM partnered with shipping giant Maersk to bring millions of supply chain events to a private blockchain. Given that the industry is mired in paperwork and legacy systems, the two companies are betting on blockchain to drastically reduce instances of fraud and human error, while also lowering costs for all parties.

Token-based applications — another promising use case of the technology — have also contributed to cryptocurrency’s rising popularity in recent years. Earlier this year, Samsung, HTC, and Opera Browser added digital asset-related features to their mobile devices and browser respectively, boosting adoption for many blockchain-based and token-based apps. One such token-reward based webapp, Alluva aims to become the world’s largest analyst network. By rewarding users for accurately rating various cryptocurrencies, Alluva offers retail and institutional investors an unprecedented and predictive outlook on global market movement.

For more interesting content on cryptocurrencies, follow our Medium account here. To make your first prediction on Alluva, sign up for a new account here. To keep up with the latest Alluva related developments, feel free to follow our Twitter here or join our Telegram channel here.

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Alluva

Alluva

Alluva, the largest global analyst platform, rewards users for their cryptoasset predictions, and gives institutional investors tomorrow’s prices, today.