Ten misconceptions about the blockchain and cryptocurrency

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Ten misconceptions about the blockchain and cryptocurrency

Jack Cossman, the founder of the site www.cryptobeginners.info and passionate promoter of cryptocurrency, in his article for the Hacker Noon ponders where he is and where you should not use blockchain. In parallel, he debunks popular myths about this technology and about the cryptocurrency and ICO.

By 2017, the buzz surrounding the blockchain has become excessive. All around believed that the blockchain would undermine the foundations of the traditional economy, will change the face of the world and bring investing in ICO millions.

This hype and attention to the field of cryptocurrencies has led to the fact that people began to believe in incredible things about blockchain technology and what it can do. As a result, many people have a wrong opinion about the potential of this technology and its essence.

In fact, the blockchain is just a database with some features. It allows multiple parties to record information in database and share it in real time, without having to trust each other, because participants have incentives in the form of tokens in order to fulfil their obligations.

Thus, it can be concluded that the blockchain technology is very specific and therefore only really useful in certain circumstances.

For example, it gives great results from cryptocurrencies such as bitcoin because the blockchain, on which bitcoin is based, allows people to send money to anyone and anywhere at minimal cost for the translation and without the help of a Bank or another broker.

However blackany not suitable for storing all kinds of data and should not be used to solve non-existent (far-fetched) problems.

In this article I will give you ten misconceptions about the blockchain and its applications, including cryptocurrencies, and will try to debunk. The order is random. It is recommended to educate as haters, and enthusiastic admirers of the blockchain.

Misconception 1. Bitcoin the biggest Scam in history, the gravedigger of the modern economy, and it is not working

In 2017, a very powerful person from the world of Finance, such as Warren Buffett and Charlie Munger, and JPMorgan CEO Jamie Dimon, lashed out on bitcoin.

Bitcoin and blockchain on which it is based have their disadvantages, like any technology in its early stages of development. The mechanism of consensus Proof— of— Work requires a huge amount of electricity, and in addition, many people use the benefits of this system for speculation and illegal actions.

But to say that because of these shortcomings, the technology will fail — it is like saying in 1995 that the Internet can not work because of his clumsiness and disorganization. Bitcoin is growing and strengthening for over ten years, despite numerous allegations that his days are numbered.

You should pay attention to the opinion of Navale of Ravikant:

Bitcoin is a means of saving humanity from the oligarchs and tyrants, disguised as a get rich quick scheme.

To focus on the shortcomings of the blockchain technology and to call bitcoin a fraud can only be people who do not understand their real capabilities.

Misconception 2. The blockchain is a tool to increase the value of the shares of your company

Examples are Kodak, Long Island Iced Tea and On— line Plc vividly demonstrate what happens if you just add “blockchain” to the name of the company and expect the stock price will increase, although the blockchain in the company not used in any way. Spoiler: this is not work or works very long.

Misconception 3. The blockchain is a pyramid

Unless you bought PonziCoin — the token with the telling name. Also I do not advise to invest in Bitconnect and similar projects.

Misconception 4. Only crooks use crypto currencies

Fraud and break-ins in cryptosphere are very common, and this is a serious concern.

As I said, the anonymity provided by the blockchain, allows for the emergence of fraudsters and hackers. But this is only a side effect of technology, not its essence. For example, terrorist groups use social media to attract new recruits, but this does not mean that we all need to abandon the use of Facebook or Twitter.

Pablo Escobar was an amount of U.S. dollars that he burned them to warm my daughter. Whole drug industry runs on cash. Does this mean that cash is evil?

Misconception 5. The blockchain is a universal way to attract funding

The fact that a certain company has attracted millions in the course of the ICO, doesn’t mean you should take her example. The purpose of the ICO to issue tokens to potential users, stimulating them to use the blockchain of the company. Tokens will eventually have to work.

If your startup has nothing to do with Baccano, you do not need to issue tokens. Do not even think about using them to attract funding.

Misconception 6. Blockchain revolutionaire your business

If your business does not require the use of all the benefits of blockchain, the last will not help you.

Misconception 7. The blockchain will shake up all industries

You’ve probably heard the expression “It’s like Uber (industry X)”. Now try using the blockchain to create something that the degree of impact will be similar to the emergence of Uber. Moreover, there is an active work on creation of “Uber on the blockchain”. The only problem is that not all industries need the application of the blockchain.

So, you don’t like the way Uber does business, and you believe that the solution (besides using Lyft) is in the use of the blockchain?

Decentralized p2p network sharing looks very attractive. However, this ignores all the reasons why the blockchain might be quite unsuitable for application in this case.

By definition in the public blockchain, there is no Central regulatory authority. So who will make decisions in such a distributed company? How will disputes be arbitrated? After the data has been downloaded and verified, modify or delete them is impossible.

You got the bill for the trip, which is not ordered? The driver did something wrong and you want to report it? You will not work, because there’s no one to listen.

And how will the company evolve? How the company where there is no leadership as such, will be able to compete with the company (Uber), received one of the largest financings in history, working and proven in the current market?

And even if the “decentralized Uber” will be able to overcome all obstacles and create a successful business, whether it will be better than the real Uber, and if so, how?

Today, Uber and other centralized applications in the field of Economics sharing work effectively. It is unlikely that the alternative will be much better.

The potential benefits of the conversion of many existing industries on the blockchain not good enough to get consumers to change their behaviour.

Misconception 8. The blockchain is a way of sacrifice to the God Cthulhu

Perhaps it is better to remain silent.

Misconception 9. The blockchain is the platform for memes

Dogecoin the famous cryptocurrency meme, a fork of bitcoin. In 2013 it started as a joke, and in 2017, it reached a capitalization of $2 billion.

Misconception 10. The blockchain is useless

This is only true if your token useless.

What follows from all this?

Despite the fact that I listed many situations when you should not use the blockchain, there are instances when it is ideal. The introduction of the blockchain just asking if you have:

a common database that’s being modified only by the addition of new data;
numerous participants;
lack of trust;
the need to abandon intermediaries;
consensus and validation.

Money fit perfectly into this category. Apps like bitcoin perfectly meet all the specified criteria and therefore be a wonderful example of the use of blockchain technology. Unfortunately, until we have a few other widely used blockchain application proven.

This does not mean that such applications do not appear, it only means that we have not yet created. In this article it is: the blockchain is not a useless technology, but it is not a panacea for your business, the world economy and humanity as a whole.

We need to understand the true potential of this technology and make real plans to use it.

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