6 common myths about the blockchain

1.Blockchain is the same as Bitcoin.

Too many people confuse these terms and treat them as if they were synonymous. By now you already know what Blockchain technology is and how it works. You have also learnt that Blockchain is the underlying type of technology (decentralized, distributed ledger) that enables cryptocurrencies, of which Bitcoin is the most popular and biggest one, to exist.

In simpler terms: blockchain is a type of technology, Bitcoin is a cryptocurrency. Remember that there are hundreds of cryptocurrencies in existence.

2.Blockchain is just a buzzword.

Where there’s a hype, the critics are not far. Blockchain critics say it is just another buzzword and will soon fade. This is wrong for two reasons.

For one, Blockchain is not a buzzword, but a very concrete description of the way in which this cryptography mechanism works. It is a new and innovative technology that is going to revolutionize many industries.

Hence, the second reason…if Blockchain is a buzzword, it is one that is sure to stay for the next decade at least. Over the next 3-5 years we are going to see dozens of industries implement Blockchain technology – a technology that many experts believe to be as fundamentally disruptive as the invention of the internet.

3.Blockchain is only good for the financial sector.

Because most people associate the term Blockchain witb Bitcoin, or cryptocurrencies in general, all they think of is how the Blockchain is an alternative to currencies governed by the central banks of the world. While this is indeed an important area of application, there are dozens other industries that are currently exploring the potential of blockchain technology to bring about a radical shift in operational processes and cooperation.

For example, the British government is exploring the use of Blockchain in its services for citizens; insurance companies are testing the potential of smart contracts to automate claims handling in various use cases, and many many more. As we are talking about a fundamental shift in technology, potential applications are endless.

4.There is only one blockchain.

As we are used to talking about “THE blockchain”, the implicit assumption is that there is only one blockchain. That’s incorrect. Remember the chapter on “types of blockchain”, and you will know that already from a theoretical point of view there are much more than just one. Moreover, every cryptocurrency network like Bitcoin and Ethereum have their own separate blockchain.

5.Cryptocurrency is used for untraceable black-market transactions.

There is this big myth that cryptocurrencies are used on the black market in order to conduct untraceable and illegal transactions of money earned through criminal activities.

This is absolute nonsense. First of all, the blockchain and bitcoin were developed for completely different applications and reasons. Moreover, more and more companies accept cryptocurrencies as a legal form of payment.

It has to be acknowledged though that given the anonymous and cryptographic technology of the blockchain, cryptocurrencies may also be used for dubious financial transactions.