5 common blockchain myths debunked

As with any emerging technology, there are many myths surrounding blockchain technology. In this piece, we’re going to dispel five of them, and in the process highlight some ways blockchain can benefit businesses and organizations of all kinds.

Blockchain is only for “cryptocurrency”

First, the term “cryptocurrency” is a misnomer, but it’s not necessary for us to get into that today. In truth, most digital currencies that run on the blockchain are presented in plain text and can be seen by anyone. There is nothing “crypto” or “encrypted” about them.

The point here, however, is that blockchains are about far more than the currencies that move on them. What these currencies are for is far more interesting; they are for paying nodes to write ledger entries to the blockchain, and those entries can be all sorts of things.

Blockchain can indeed be used to send financial transactions from one wallet to another, plain and simple, but writing data to them is the primary use case. On Bitcoin SV, which is the most scalable blockchain, it is possible to upload images, videos and audio, and it is possible to mint all kinds of tokens.

What’s the point of any of this? Uploading data to the blockchain secures it on an immutable ledger so it can’t be missed by private servers, an all-too-common problem. It leaves a time-stamped record of the upload, and it is then possible to closely control access to this data, monitor exactly who accessed it and when, set permissions with Public Key Infrastructure (PKI) and other solutions.

The data management aspect of blockchain is a whole topic in itself. For now, blockchains are useful for much more than sending so-called “cryptocurrencies” around.

Blockchain is anonymous

One of the biggest misunderstandings in the blockchain world is the difference between anonymity and privacy. While anonymity makes it impossible to know who was involved in a transaction, privacy means that only those who need to know are involved. With blockchain, there is always proof that a given transaction has occurred.

While some early Bitcoin adopters made the fatal mistake of believing the blockchain and the digital currencies that run on it are anonymous, many of them ended up in jail as a result; nothing could be further from the truth.

Blockchain is private, but all transactions, no matter what they are for, are time-stamped and written to a public ledger that anyone can inspect. Although it is not immediately known who sent or received them, how much was done and for what, stakeholders have ways to find out.

As Justice Louis Brandeis once said, “Sunlight is said to be the best of disinfectants; electric light the most efficient policeman.” Despite the pervasive myth that blockchain is an anonymous tool for criminals and the insidious use cases it has created, blockchain technology is one of the greatest tools of transparency the world will ever see.

Blockchain does not scale

It is true that most blockchains do not scale, but it is not true that blockchains do not scale, per se. Satoshi Nakamoto, the inventor of Bitcoin, told early enthusiasts and collaborators that it scales infinitely and could challenge Visa (NASDAQ: V ) upon release.

Somehow, partly due to misunderstanding and partly due to the deliberate spreading of misinformation, the myth that blockchains cannot scale started. That may be true for protocol forks like BTC, but that’s down to design changes made by developers and says nothing about blockchain’s inherent capabilities.

Blockchain of different types scales to different degrees based on many different factors. At the bottom of the spectrum, we have blockchains like Ethereum, which can handle around 20 transactions per second (see why Ethereum 2.0 cannot scale). At the high end, we have Bitcoin SV, the original protocol designed by Satoshi Nakamoto, which can handle hundreds of thousands of transactions per second with no theoretical upper limit.

Critics will cite the fallacious blockchain trilemma, saying that scaling blockchain in this way comes at the expense of decentralization and/or security. This only highlights their own ignorance of the meaning of these terms, and once again says nothing about blockchain itself.

Blockchain scales, and especially the original Bitcoin blockchain scales without limit. There is no upper limit to how many transactions they can handle when block sizes are not limited.

The future will be a multi-chain world

Some experts in the blockchain industry envision a world where many different blockchains interact with each other, using intermediary protocols such as Chainlink to communicate.

However, “many different chains” is as much a myth as the “many different protocols” world many imagined back in the 90s when the internet started. AOL and others had their own networks, but eventually the Internet as we know it today won out, and the backbone protocols TCP/IP connect everything.

Sure, some private blockchains will likely be controlled by banks, the military, and government departments, just as intranets are today. However, there will only be one global blockchain, and it will be the most scalable by default.

A world with many blockchains reintroduces the problems Bitcoin was designed to solve, such as the hacks that occur when “bridges” between them are introduced and the problem of multiple sets of records saying different things. Many of the huge benefits of blockchain are lost in a multi-chain world, so there is little point in creating this version of reality.

The world of the future will be underpinned by one global chain, just as Satoshi Nakamoto said back in 2009. Maybe the father of blockchain knew what he was talking about after all!?

Blockchain technology is a solution

At the opposite end of the spectrum from some of the myths we’ve already debunked is another that is promoted mainly by those who “get it” but get carried away.

Like it or not, blockchain doesn’t solve every problem. It simplifies data management and transfers, counters financial crime and fraud, enables micro- and nano-payments, and enables true peer-to-peer transactions for the first time in history. Still, it doesn’t magically fix climate change, stop hacking, and create a techno-utopia where we all live happily ever after in a world of abundance (leave that to the AI ​​guys).

It’s important to realize that while blockchain technology is amazing, it was designed to solve some very specific problems, most of which I’ve outlined above. To solve these problems, however, it is important to keep your feet on the ground and realize that there is a lot of work to be done.

Join us at the London Blockchain Conference

If you are interested in learning more about the potential of infinitely scalable public blockchains or if you have any ideas/solutions aimed at exploiting them, we would love to see you at the London Blockchain Conference. It runs from May 31 to June 2, 2023, and anyone interested in real-world legitimate use cases for scalable blockchains is welcome.

Far from being a BSV-only conference, anyone working on any law-abiding utility blockchain is encouraged to attend the event. If you are a developer, entrepreneur, or any other type of person working on the massive scaling of blockchain technology, you are welcome to participate.

Register as a speaker, take a stand, or join and mingle with other thought leaders and enthusiasts in blockchain at the world’s largest blockchain conference. Register here to secure your free ticket today!

Watch: London Blockchain Conference 2023 Brings Government Business into the Blockchain

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