Is it the complexity or is it the simplicity, that is making blockchain a mystery for many?
Fundamentally, blockchain is a distributed (decentralized) ledger that has three basic properties: immutable, cryptographically-encrypted, and transparent. While we won’t be getting into the nitty-gritty of the technical aspects in this article, what is important here is the fact that these features are the hallmark of an efficient and self-aware system, much like the human nervous system. This analogy is derived from the presumption that a particular blockchain has in it all the memories (blocks) of previous actions (transactions), and add to it a little bit of cognitive intelligence. And voila! We have an intelligent system capable of taking decisions without the bias or rigidity of human interventions based on hundreds and thousands of interconnected and progressive links (blocks).
Isn’t that fascinating?
Well, for all the hype and hoopla around it, this breakthrough technology hasn’t quite caught up with the industry and the public in general, mainly due to technological impairments, and mostly an apprehensive attitude that a common man has towards anything new or radical he might witness.
Myth 1: Blockchain Networks are not Secure
Blockchains are playing a huge role in decentralizing cloud storage because they allow strangers to collaborate with each other. Instead of storing files on a single centralized server, you’ll be able to save your files on thousands of devices across the globe. While the centralized cloud storage stores your file on several backups, the decentralized storage will keep your data on an even bigger number of devices, therefore, increasing reliability of the entire system.
Also, in centralized systems, the strength of the system depends on how secure one’s company’s servers are. Using decentralized networks, there isn’t just one device that contains the complete file, which makes it practically impossible for hackers to obtain the data. This implies robust applications in data-sensitive fields, such as banking and healthcare, coupled with the advanced encryption techniques that blockchain offers.
Myth 2: Blockchain Networks are Costly and Difficult to Scale up
Validating transactions through the peer-to-peer network takes time and computing power, which defies scalability as the number of transactions increases. At the same time, if we recall, then the first functional computer took an entire room to house and look at where we are now. Currently, permissioned platforms, coupled with frameworks such as Microsoft’s Coco, offer transaction speeds of around 1600 TPS, which is a huge improvement over the initial 7 TPS bitcoin transaction speed.
Also, rapid advances in quantum and semiconductor technologies promise a bright future for blockchain and open-source development platforms, such as Hyperledger and Multichain will certainly boost the software part of the system.
Myth 3: Lack of a Regulatory Framework
As of today, there are little to non-existent legal and regulatory frameworks for blockchain applications, especially the ones involving financial transactions such as Bitcoin. The apprehension is justifiable but leading governments and consortiums (e.g. Enterprise Ethereum Alliance and Microsoft Blockchain Council) are conducting a deeper and all-pervasive look at this aspect to come up with solutions catering to better transparency and higher economic implications. The major concern here is the farsightedness of policymakers, and consequently regulators, in the ways in which they can incorporate blockchains into the commercial mainstream without hampering data privacy and functionality. Also, blockchain is not just restricted to financial transactions, which perhaps create the most scrutiny, but have widespread industrial applications as listed below.
Myth 4: Blockchains are not Meant for my Business
For now, blockchain applications remain mostly in the financial sector, but increased corporate and entrepreneurship ventures have found novel and cutting-edge uses in sectors ranging from healthcare, supply chain, and cybersecurity to copyright infringement in the music industry. In 2017 alone, there have been nearly 1,500 blockchain-related mentions in SEC filings, transcripts, and company press releases, which is a 65% increase over 2016. At some point, industry stalwarts must realize that the blockchain technology will not only alter systems and processes, but will intrinsically alter the way business is done across industries. Add to that, the automation functionality provided by smart contracts which removes human intervention and manual processes from the system, helps reduce cost and time for operations.
Blockchain and cryptocurrency technologies will achieve their full potential in a decade, according to Apple co-founder, Steve Wozniak, who has a very bullish approach on this phenomenon and hailed it as “the next major IT revolution that is about to happen”. While Steve Wozniak might have seen a lot of technologies come and go, his attitude definitely says a lot about the future prospects of blockchain and associated applications. The pertinent question is “Are you up for it, Mr. Stark?”