Topics In Demand
Notification
New

No notification found.

Demystifying Myths about Blockchain
Demystifying Myths about Blockchain

May 16, 2020

9

0

Blockchain technology was invented in 2008 and the first application with blockchain — Bitcoin cryptocurrency went live in 2009. Bitcoin earned noteriety due to its heavy usage in the dark web and rebellious philosophy of no controlling authority.

Though there was a sea change in the technology features and underlying philosophy over the decade, Blockchain technology remained in shadow of bitcoin for several years and was needlessly shunned by many due to the notoriety of bitcoin.

This article dispels some of the common myths about blockchain some of which are prevalent even now.

  1. Myth: Blockchain is same as Bitcoin
    Reality:

    Blockchain IS NOT SAME AS Bitcoin.
    Blockchain is a technology that can be used for several purposes (functional applications).
    Cryptocurrency is one of the applications built using blockchain technology and Bitcoin is one of the cryptocurrencies.
    Bitcoin happened to be the first functional application built with blockchain technology and this fuelled the misconception.

2. Myth: Blockchain technology is not environmentally sustainable
Reality:

Only blockchain networks using Proof of Work (POW) consensus mechanism consume high energy; Rest of the blockchains don’t.
POW is only one of the several blockchain consensus mechanisms. There are 2 types of blockchains — Public and Private. Private blockchains don’t use POW and majority of blockchains in the world are private blockchains. Even among public blockchains, several don’t use POW.
So very few blockchains in the world use POW and are energy intensive and the rest (big majority) of blockchains are environmentally sustainable.

3. Myth: Blockchain is illegal or discouraged by regulators in India
Reality:
Blockchain technology IS VERY MUCH LEGAL and encouraged by regulators/governments in India. Following examples reiterate the same:

  • Central and State governments in India doing many blockchain projects over last few years.
  • Indian PM had tweeted about promoting blockchain;
  • Indian FM’s budget speech mentioned blockchain;
  • Several state governments conducted blockchain seminars.
  • In 2018 a key Indian central government body, Telecom Regulatary Authority of India (TRAI) mandated telecom companies to use Distributed Ledger Technologies like blockchain to store mobile users commercial messages receiving preferences and all commercial messages sent.
  • India’s central bank setup a Task Force and sandbox environment to study blockchain usecases

Cryptocurrency (one of the several usages of blockchain technology) had/has restrictions in some countries; but there hasn’t been any restriction in India against using blockchain technology for other functional use cases.

4. Myth: Putting data on (private) blockchain secures the data from unauthorised reads/leaks
Reality:

Blockchain DOES NOT provide any additional protection from unauthorised reads. Protection from unauthorised reads depends on the application design(eg: usage of encryption, tokenisation, other security aspects….) both for on-chain and off-chain data.

On other hand, blockchain may deteriorate risk of hack/unauthorised read because for decentralization, the data is stored repeatedly on mulitple blockchain nodes increasing the attach surface for a hacker trying unauthorised reads.

Blockchain does give additional protection to data from tampering (updates/deletes/back dated inserts) but not from unauthorised reads.

6. Myth: Blockchain philosophy is anti-regulator/anti-government (rebellious)
Reality:

That was true only for bitcoin cryptocurrency and the blockchain platform available in 2009. Now IT IS NOT TRUE.
Bitcoin blockchain that started in 2009 did have following features/behavior in sync with the anti-regulator philosophy: Anonymity, absence of KYC/AML, irreversibility of transactions, governance strictly as frozen in the software code.
But over the decade there has been a sea change in features & behavior of blockchain plaforms and several alternate schools of thought emerged on blockchain’s usage. Some of the these philosophies are very regulator/government friendly. Traceability of blockchain users, KYC, AML are featuring in blockchain applications.
There are also non-profit bodies like Government Blockchain Association (www.gbaglobal.org) with purpose of enabling government, public sector professionals understand, implement and benefit from blockchain.
In India and in many countries Government has been a key customer for blockchain projects over last couple of years.


The author is the senior vice president of engineering at Zebi Data (www.zebi.io); This article was also posted by author on Linkedin

DISCLAIMER: This article is only sharing knowledge in good faith for educational purpose. This should not be construed as legal/ investment/ business advice. Author makes no warranty, nor assumes any legal liability or responsibility for the completeness or adequacy of information in this article.


That the contents of third-party articles/blogs published here on the website, and the interpretation of all information in the article/blogs such as data, maps, numbers, opinions etc. displayed in the article/blogs and views or the opinions expressed within the content are solely of the author's; and do not reflect the opinions and beliefs of NASSCOM or its affiliates in any manner. NASSCOM does not take any liability w.r.t. content in any manner and will not be liable in any manner whatsoever for any kind of liability arising out of any act, error or omission. The contents of third-party article/blogs published, are provided solely as convenience; and the presence of these articles/blogs should not, under any circumstances, be considered as an endorsement of the contents by NASSCOM in any manner; and if you chose to access these articles/blogs , you do so at your own risk.


© Copyright nasscom. All Rights Reserved.