debunking myths and uncovering success
The 10th anniversary of bitcoin this year rightly prompted a lot of soul-searching amongst blockchain proponents. While the demand for industry-specific engineers is skyrocketing, many senior industry figures are increasingly skeptical that the technology will have any application in the real world.
According to Forrester’s 2019 predictions for CIOs, blockchain will only be embraced by enterprises if the technology can demonstrate that it can solve a real-world issue. So far, it has become the quintessential solution looking for a problem.
In order to understand the true potential of blockchain, we need to look beyond the exaggerated claims and examine its real-world possibilities. That means we’ve got some serious myths to bust first:
It’s fair to say that the reason most people have heard of blockchain is because of cryptocurrency, and that’s unsurprising given crypto, and specifically the price fluctuations of bitcoin, have grabbed headlines globally. But fundamentally, they are different things.
The space is now seeing ‘blockchain’ and cryptocurrencies start to diverge. What we need to champion now are startups using the technology to solve real business problems in order for the wider public to recognize blockchain’s true value. It is these real world solutions to business, government and social problems that will truly drive blockchain growth. Gone, perhaps for the better, are the wild speculative days of cryptocurrencies and now we are building solid real world uses that will benefit not only the blockchain project but the companies and other entities that use them as well.
Myth 2: Blockchain is great for storing data
Essentially, a blockchain is a database built on a distributed, peer-to-peer topology, storing data on thousands of servers globally. And whilst it’s great for transactional data, it’s not actually designed as a way to store everything. In fact, it’s particularly bad at storing images and videos. Blockchain is actually at its best when used as an exchange, with multiple transactions involving at least two parties.
Myth 3: Blockchain can be used for anything and everything
This myth is possibly the most persistent and damaging, and is the very reason we see startups using blockchain for things it’s just not needed, through to company valuations skyrocketing thanks to the buzzword. Just like with any technology, there are certain things it simply isn’t good at. It is process-intensive, hard to scale and, if being used for transactional data, can take longer to process those transactions. For this reason, if what you’re looking to achieve can be done using a database, then you should probably just use that.
Myth 4: Blockchain is secure
Blockchain can be considered secure, to a point. Blockchain technology relies on physical decentralization to gain resilience to DDoS attacks, and censorship. To coordinate the network, blockchains will rely on a consensus algorithm to make sure the network is synchronized. These algorithms can fall victim to “Collusion Attacks”, where more than 50% of the participants on a network band together to force bad or malicious transactions into the chain. This isn’t an issue specifically with Blockchain, but more with distributed systems in general, and while the number of colluding participants needed to be successful is prohibitively high on larger networks, it is a real possibility on smaller ones.
In short, when blockchain is successful in its role, users shouldn’t be aware of it at all. As with any successful technology, it works because it’s solving a problem, not just because the tech is ‘cool’.
In fact, one issue blockchain has the potential to truly solve is creating transparency in a supply chain, whether that’s ensuring medicines reach their final destination, luxury goods are genuine, or to establish provenance of materials to confirm they were ethically sourced. For instance, the Shanghai municipal government launched a partnership with the VeChain Foundation, which traces global supply routes via blockchain technology, aiming to establish pharmaceutical traceability.
By giving an item a unique identifier that allows it to be tracked, using blockchain for the rest of its life, organizations can verify that only real versions of their products are being sold. Buyers, meanwhile, know exactly where the product has come from. If counterfeit items make their way into the supply chain, it can have obvious disastrous consequences for brands, particularly if authenticity is their stock in trade. Far worse than that, counterfeit medicines can cost lives, if for instance anti-malaria drugs are getting intercepted with placebos.
When should you use blockchain?
Blockchain essentially blurs the lines between application and database. If you are the only writer, for example, it makes more sense to just use a database, as blockchain trades out efficiency for certain performance-based properties. If there are multiple writers, and especially if you do not know them all, it may be safer to use blockchain to overcome potential issues of trust. This can easily be achieved without a middle man as public verification negates the need for centralized control.
Understanding when not to use this technology is almost as important as knowing when to use it. By applying it logically and only in relevant instances, many of the pitfalls and myths surrounding it cease to be an issue. Like many exciting and disruptive technologies before it, blockchain is beginning to mature and evolve. How exactly it will change the way we live and work, however, remains to be seen.
What we can say though, is that we see the potential and are ready for this to revolutionize how business is done, how governments achieve transparency and how money gets back into the hands of the people, where it should be.