Blockchain is still a relatively new concept for the mainstream population, and with its recent popularity comes a number of common misconceptions. Well, we’re here to debunk a few of these blockchain and cryptocurrency myths!
“Blockchain is Bitcoin”
Even though the concept of blockchain technology has been around for quite a while, it truly came into the picture when cryptocurrencies, and in particular Bitcoin, started to gain popularity.
As Bitcoin is powered by blockchain technology, it’s easy to see why these terms have gotten confused before. But remember, blockchain facilitates peer-to-peer transactions over its network; whereas Bitcoin is a type of cryptocurrency (powered by the blockchain) that can be exchanged between two parties, without a central authority.
“Blockchain is Only Used for Crypto”
It may surprise some people to know that, other than enabling crypto transactions, there are many other uses for blockchain technology. Blockchain has made waves in many different industries, such as supply chain, digital marketing, logistics & tracking, healthcare, and more! The advantages here are still relatively new, making knowledge of blockchain’s wider usages pretty much uncommon.
“Coins & Tokens Are the Same”
These two terms are often used interchangeably, although they hold different characteristics. Coins are a type of crypto that operate on their own blockchain networks, such as Bitcoin or Ethereum. Whereas tokens run on existing blockchain networks, such as PumaPay’s currency token, PMA. And as well as exchanging currency, tokens can be used for different purposes, such as utility or security tokens.
“Blockchain is Public vs. Blockchain is Private”
Well, this one isn’t an either-or, it’s both! The data available over a blockchain can be public or private depending on the type of blockchain and why it was created. For example, common public blockchains are used for cryptocurrencies, they’re completely transparent and enable anyone to view transactions that are taking place.
On the other hand, private blockchains allow different levels of permission, restricting access to data to an invitation-only basis.
“Blockchain isn’t Trustworthy”
The decentralized nature of Blockchain makes the tech trustless by nature. But many find our nature as humans not as easy to trust. It’s the lack of regulation around the use of blockchains, and distributed ledger technology in general, that’s made some people a little wary of implementing it.
However, many more regulations have come into effect since blockchain technology became popular. Blockchain and cryptocurrency companies today are now required to comply with Anti-Money Laundering (AML) and Customer Due Diligence (CDD) regulations to enhance their security and prevent fraudulent behavior.
“Blockchain Is Just for Storing Data”
It’s true, blockchain can be used for its data storage capacity, but this isn’t its only advantage! As well as storing data, we can also view blockchain as an exchange, allowing transactions to take place that transfer funds from one party to another. Blockchains also enable the use of smart contracts and, when combined with other technologies such as the Internet of Things (IoT) and Artificial Intelligence (AI), the possibilities are endless!
Find this article interesting? Be sure to share it with friends!