In the year 2008, someone using the name Satoshi Nakamoto introduced the world to blockchain technology. Since that time, an entire industry has been created around this game-changing tech. Moreover, while blockchain has become its own industry, it has also had a profound impact on others. Given its growing influence, more and more people are beginning to discover the benefits of utilizing this transformative distributed ledger.
However, despite the fact that they’ve been around for over a decade, there are still several myths and misconceptions surrounding blockchains – especially amongst folks who are just now discovering them for the first time.
With that in mind, it’s time to take a look at – and clear up – some commonly held misconceptions surrounding blockchain tech.
Blockchain & Bitcoin (BTC) Are The Same Things
Since the two were introduced together, and have a working relationship – it’s easy to understand why some folks mistakenly think blockchain technology and bitcoin are one and the same.
A blockchain is a type of disturbed ledger that is designed to support peer-to-peer transactions. It is a growing list of records, which are referred to as “blocks.” These blocks are linked by using cryptography.
In truth, you can build all kinds of applications on a blockchain; bitcoin is just one example.
Bitcoin (BTC) is a form of digital currency (also referred to as cryptocurrency) that is used for peer-to-peer transactions – without the need intermediaries. These transactions are verified through cryptography and recorded on a blockchain. In other words, blockchain is the underlying technology behind BTC.
As FT Technology reporter Sally Davies so eloquently put it, “Blockchain is to Bitcoin, what the internet is to email.”
There Is Only One Blockchain
Blockchains are not like the immortals in the Highlander films – there can be more than one. In fact, there are many different blockchains already in existence.
As we previously alluded to, there is a specific blockchain associated with bitcoin (BTC) – it is what’s known as open-sourced or public blockchain. Ethereum is another example of a public chain and is commonly linked to the popular cryptocurrency Ether (ETH).
There are also private blockchains – many of which have nothing to do with digital currency. For example, The Gem Health Network, an organization committed to improving healthcare, utilizes this type of blockchain.
Blockchain Tech And Cryptocurrency Are Primarily Used For Illegal Activities
Several years back, bitcoin was linked to the illegal dark web market place known as Silk Road. Despite the fact that Silk Road was shut down back in 2013 – some people still commonly associate both bitcoin and the technology behind it, with the now-defunct website – or criminal activity in general.
However, the overwhelming majority of people who use blockchain tech and own cryptocurrency are law abiding citizens. In fact, there are several blockchain-based projects that are, not only legal but focused on making our world better.
One such group is the Bitgive Foundation; a nonprofit organization that raises bitcoin and uses the funds to help underprivileged folks around the world. The Ethereum-based platform Alice is designed to help make funding philanthropic organizations more transparent and highlight charitable projects that work. These are just 2 of the many blockchain-related organizations that are doing good things.
As Propy CEO Natalia Karayaneva put it,
“of course, criminals can use the blockchain for illegal activity, but they can also use highways or the postal system to facilitate their crime. Blockchains are used for legitimate, legal and necessary tasks, just like anything else.”
All Blockchain Transactions Are Anonymous
While there are some digital currencies with enchanted privacy features, in many cases, blockchain transactions are traceable – particularly when using public chains. The person initiating a transaction won’t have their name made public, but the address used to send or receive the funds will be accessible.
In the words of OptinMonster President Thomas Griffin,
“Many people are under the false assumption that all Bitcoin and crypto transactions are anonymous. Bitcoin (the blockchain) is a public ledger that tracks how much was sent from one address to the next. Many government organizations have established relationships with major exchanges to complete the mapping of the address to the owner.”
This is why it’s especially important for those who are buying and selling cryptocurrency to make sure they are complying with all applicable laws.
Blockchain Is Only For The Finance Sector
When people think blockchain, they often think cryptocurrency – which is why many people associate the technology with the Finance Sector.
In truth, blockchain tech is being used in many sectors – not just finance. We’ve already highlighted a few ways that it’s being utilized in other fields, but that’s really only the tip of the iceberg.
As tech author Margarita Khartanovich wrote,
“the potential of blockchain technology extends far beyond its financial and cryptocurrency beginnings. As a blockchain is a list of records, it can be used to record any type of data and can thus be applied in a variety of industries, including real estate, healthcare, and even government .”