It’s no secret that blockchain technology is already disrupting the conventional ways of doing business. However, many myths surrounding blockchain and cryptocurrencies have not only brought confusion but also derailed its adoption by the masses.
In this post, we will debunk some of the common myths. Let’s delve and explore:
1. Blockchain is Bitcoin
Since Bitcoin’s popularity overshadows blockchain’s, many people tend to confuse between the two. Some people even believe they are the same, which is not the case. Blockchain can exist without cryptocurrencies.
Blockchain is the technology that allows peer-to-peer transactions to be recorded on a distributed ledger across the network. It is a public transaction ledger of cryptocurrencies.
Bitcoin (BTC) is a cryptocurrency, which can be exchanged directly between two people without involving any third party (a bank). Bitcoins are created on a blockchain and stored in a virtual wallet.
2. Blockchain is just for cryptocurrencies
While it’s true that blockchain and cryptocurrencies may go together like bread and butter, this is not the only use case for blockchain. This technology can be used to revolutionize other sectors besides the financial sector.
For instance, in the health sector medical records can be securely stored and shared across medical personnel regardless of where they are in the world.
Blockchain can also be used to eliminate election fraud by offering transparency in the election process without compromising voters’ privacy.
The food sector can utilize blockchain to track down the whole process of food delivery from its source. Suffice to say many industries can utilize blockchain’s revolutionary capabilities to enhance productivity.
3. Digital Tokens are Digital Coins
Tokens and coins are often mistaken as the same, and the two terms are also often used interchangeably by most people. However, the two concepts are entirely different from each other.
Digital coins have only one utility. They act as a store of value much like fiat currency. They are used for monetary exchange or as a payment method for services on the blockchain. A good example here includes Bitcoin (BTC) and Ethereum’s Ether (ETH). Digital coins have their own blockchain.
On the other hand, tokens store complex levels of value such as property, income and utility. Simply put, they represent ownership a particular asset such as company stock. Tokens are hosted on secondary blockchains like Ethereum. They are usually issued through an Initial Coin Offering (ICO).
4. There is one type of Blockchain
There is more than just one type of blockchain. They are mainly three types;
Public blockchain: here anyone can read and write the blockchain. Anyone can audit and review anything at any time on the blockchain.
Private blockchain: here there is an in charge who regulates everything in the blockchain. Therefore it is not free for anyone and everyone.
Consortium or federate blockchain: here you have more than one in charge. A group of people or companies (consortium or federate) come together to make decisions that best suit and benefit the network.
5. Cryptocurrencies are for criminals
Blockchain’s decentralization and anonymity features are quite attractive to criminals. In the past, criminals have taken advantage of them to execute illegal activities, but the crypto sphere is slowly entering the regulatory world.
Many legitimate organizations now accept cryptocurrencies as a form of payment. Some governments and large financial institutions are also on the verge of implementing blockchain technology.
Countries like the US, for example, recognize Bitcoin as a commodity. Germany and Japan are already using Bitcoin as a financial instrument. Dubai is also in action towards being the first government running on blockchain by the year 2020. As you can see, cryptocurrencies are legit, and they are getting even more mainstream traction than ever before.
The early mysterious and misconceptions that surrounded blockchain and cryptocurrencies led to the churning of several myths that have been mistaken for the truth. Dispelling such myths will go a long way in helping digital assets become mainstream. We hope this myth-busting blog post helps you have a better understanding.
Over to you. What are the other myths surrounding blockchain and cryptocurrencies? Share your views in the comment section below.
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