The Blockchain, as many consider it, is very much revolutionary, meaning it can change the world of finance the way we know it. Truly, the Blockchain and Cryptocurrencies have a lot of current uses, as well as huge potentials waiting to be developed.
However, since the technology is still relatively new and fresh, not to mention it’s insufficiently explored, there are a number of misconceptions and misbeliefs about it. The technology has gained popularity largely based on things coming from hearsays and speculations. This spurred a lot of misinformation about it.
Here are some of the most common mistaken beliefs about the Blockchain and cryptocurrencies. Check them out and get your facts straight.
Mistake 1: There’s only one Blockchain
The Blockchain is usually compared to the internet and this may be quite so if you think about its disruptiveness and technological importance. On the other hand, unlike the internet, there are several kinds of blockchains. And each of such blockchains is designed for a specific purpose.
This belief isn’t as prevalent as it was before, though. That’s because of the rise and growing popularity of other blockchain networks outside Bitcoin.
There are blockchains that offer infrastructure and services that that of Bitcoin does not, like Zcash. Other blockchain networks have also been developed for certain use cases.
Mistake 2: It’s made for Criminals
This one came from blockchain’s association with the Silk Road, which is a dark web marketplace, in its early years. Another reason for people to think that blockchain networks are a hub of criminality is because of another misbelief that it offers complete anonymity.
But in real life, most public blockchain networks are surprisingly traceable, meaning it’s possible to know what’s being sent, as well as where and when it’s being sent.
According to some reports, companies that specialize with blockchain analytics can simply use tools that analyze transactions and blockchain explorers to spot illicit transactions and their sources. At best, the blockchain offers just pseudonymity instead of anonymity.
Mistake 3: Blockchain and Bitcoin are one and the same
This is arguably the most common misconception about the blockchain. To straighten things up, Bitcoin is a cryptocurrency, while the blockchain is a network.
The blockchain and Bitcoin were launched at the same year, but they act differently. Bitcoin was the first and most well-known implementation of the blockchain technology.
Mistake 4: Blockchains are public
Even though Bitcoin and many other popular Cryptocurrencies Bitcoin are public, not all blockchains that underlie cryptocurrencies are. There also exist private and semi-private blockchains that sport differing degrees of accessibility as well as transparency.
Within a public blockchain, everyone can view all transactions and anyone can take part at all levels of the consensus process. Meanwhile, this is quite limited on a private blockchain since only the parties that hold necessary keys can view private transactions.
In technical terms, public blockchains use proof of work consensus methodologies, while private blockchain use the so-called proof of stake.