Saturday, October 13, 2018

10 facts about the blockchain, you don't want to believe

10 facts about the blockchain, you don't want to believe

10 facts about the blockchain, you don't want to believe


Despite the fact that everyone is talking about the blockchain, many have the wrong idea about the possibilities and purpose of this technology.

Even in 2017, the excitement around the blockchain was just huge. People believed that this technology would affect all sectors of the economy, change the face of our planet and simultaneously bring millions to investors in ICO.

All this hype has led some to believe in completely crazy ideas about the blockchain and its capabilities. Many people have the wrong idea about the potential of this technology — they consider it something that it is not really.

Blockchain is just a database with some distinctive features. It allows multiple users to record and share information in real time, with the parties not having to trust each other as the correctness of the records is controlled by the participants receiving the reward in the form of tokens/coins. These features are very specific and really useful only in certain circumstances.

For example, they are perfect for cryptocurrencies like bitcoin — its blockchain allows you to send money to anyone in the world with minimal costs without the need for a Bank or other intermediary.

However, block chains are not really suitable for storing all types of data and certainly should not be used to solve far-fetched problems.

Today we will talk about 10 common myths about the blockchain and its applications (like bitcoin) both from haters and from ardent enthusiasts.

1. Bitcoin isn't the biggest Scam in history, it's not rat poison, and it's not dead


In 2017, against the cryptocurrency were some well-known financiers, including Warren Buffett, Charlie Munger and the head of JP Morgan Jamie Dimon.

Yes, blockchain and bitcoin based on it — like any new revolutionary technology-have their drawbacks. The proof-of-work consensus mechanism consumes huge amounts of electricity; cryptocurrency is actively used for speculation and illegal activities.

But to say that this technology is going to fail is like saying in 1995 that the Internet will not work because it is clumsy and unorganized.

Bitcoin lives and lives for 10 years, although he has repeatedly predicted the death. At first glance it may not seem credible, but says Navale Ravikant:

"Bitcoin is a tool for liberating humanity from oligarchs and tyrants, served as a scheme of rapid enrichment."

Concentrating on the shortcomings of this technology and calling bitcoin a Scam, we completely forget about its advantages and potential.

2. Blockchain will not increase the value of your company's shares


Kodak, Long Island Iced Tea and on-line Plc are excellent examples of using the hype around the blockchain to raise the value of shares. At the same time, none of the companies has anything to do with technology.

3. The blockchain is not a pyramid scheme


Although the financial pyramid on the basis of this technology meet. For example, PonziCoin is a typical Ponzi scheme (and don't mention Bitconnect).

4. Cryptocurrencies are not just for scammers


There have been many cases where investors and companies have suffered from break-ins and scams. This is a big problem for the industry, but not a sentence. It is anonymity-one of the main advantages of the blockchain — that allows hackers and scammers to go unpunished. But this is an unpleasant side effect of the technology, not its task.

Terrorist groups like ISIS (banned in Russia) are looking for recruits on social networks, but this does not mean that we should abandon Facebook and Twitter.

Pablo Escobar was so rich that he burned American dollars to warm his daughter. The entire drug industry is held solely on cash. Does that make them bad?

5. Blockchain is not intended for fundraising


The fact that some unknown company attracted millions of dollars during the ICO does not mean that its behavior should be copied.

The purpose of the ICO is not only to raise funds, but also to distribute tokens between potential users of the project. Ultimately, they must perform a function. If the startup has nothing to do with the blockchain, then the need for tokens disappears. They should not be used for banal fundraising.

6. Blockchain will not change your business


If the company does not have a real need for the advantages that the blockchain can offer, it is better not to communicate with it and store data in the old way.

7. Blockchain will not change absolutely all industries


Heard the phrase"it's like Uber for (a certain industry)"? It's funny, but it even penetrated the blockchain ecosystem. Some companies are literally trying to create Uber on the blockchain.

A small problem with this venture is that not every industry needs blockchain. Let's say you don't like Uber's attitude towards employees, and instead of switching to Lyft, you're inventing a blockchain solution?

"Decentralized, peer — to-peer taxi service" sounds really cool. But this idea completely ignores all the shortcomings of the blockchain.

By definition, there is no Central authority managing the public blockchain. Who will make decisions in such a company? How about dispute resolution? Once the data has been loaded into the block chain and validated, it cannot be changed. Paid for a trip you didn't take? The driver behaved disgustingly and it needs to be reported? Alas, you are not lucky, because there is no one to complain.

What about development? How will a distributed company without executives compete with one of the richest startups in history with a well-established market share?

Even if a decentralized Uber can overcome all the problems and create a working service, how much better will it be? Uber and other similar centralized apps are already working quite well. The alternative will probably fail to exceed them.

The potential benefits of moving many existing industries to blockchain are not high enough for users to decide to change their habits.

8. The blockchain is not intended for sacrifices of Cthulhu


We will just leave this link here and not go into details.

9. Blockchain is not a platform for memes


10 facts about the blockchain, you don't want to believe
Dogecoin is the most famous cryptocurrency-meme. It was created on the bitcoin code base in 2013 as a joke, but this did not prevent its capitalization from growing to $ 2 billion last year.

10. Blockchain is not useless


Unless, of course, a token based on it was created intentionally.

So what is blockchain?


We have listed all the cases for which the blockchain is not suitable. Now it is time to talk about the scope of its potential application. The blockchain will fit perfectly into the project that needs:

  • Distributed and immutable database;
  • Supports multi-user recording;
  • Does not require trust between the parties;
  • Able to eliminate unnecessary intermediaries;
  • Able to provide consensus and verification.
  • Money fits perfectly into this category. Cryptocurrencies such as bitcoin meet the above criteria and are perfectly compatible with the blockchain.

Unfortunately, at the present time there are not so many other areas that are suitable for mass application of the blockchain. This does not mean that they will never be — we just have not found them yet.

Summing up, we can say that blockchain is a useful technology, but it is not a Savior of business, economy or humanity. We all need to know the true potential of this technology and understand what it can actually achieve.