Misconceptions About Blockchain: Myths
Bitcoins Are The Heart Of Blockchain
Misunderstanding:
The popularity of Bitcoin brought blockchain into the spotlight. Since then, many have equated blockchain and bitcoin or thought that blockchain is the same as cryptocurrencies. Blockchain is the technology that facilitates the creation of bitcoins and other cryptocurrencies. It is much more useful than an application.Blockchain can be used in the financial sector alone for money transfers, security, smart contracts, customer data storage, etc.
Blockchain is a Cloud-based Database
Misunderstanding:
Blockchain is an open-source cloud that stores and distributes data between specific parties.Blockchain and cloud-based solutions are two different things. The first requires internet access to deliver services. However, the second uses different encryption techniques and hashes to store blocks of the distributed ledger. Cloud platforms allow data to be edited by those with the "edit" permission. Blockchain information, on the other hand, is unalterable. No one can alter or delete any transactions. All transactions are transparently available to all members.
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The Blockchain is Effective for Everything
Misunderstanding:
The blockchain is the silver bullet that can solve all problems on Earth.This is one of the most common misconceptions regarding blockchain. It is not the perfect solution, nor is it a complete replacement for traditional centralized methods. Blockchain applications are hindered by limitations such as expensive and difficult development, immutability issues and scaling problems.
We wouldn't recommend using this technology if you need to quickly scale your project to store large amounts of non-transactional data or if the team needs to change transitional rules or update or delete some data.
The Data on a Blockchain is Public
Misunderstanding:
The blockchain is accessible to all. Bitcoin is a popular example of a blockchain that has been misunderstood by many.In reality, cryptocurrency is just one way that blockchain can be used. Blockchain can also be hybrid or private.The type of blockchain you use depends on the purpose.
A public chain suits a truly democratic and authority-free organization that wants to encourage as many participants as possible. A private blockchain, on the other hand, is preferred by companies in logistics, finance, healthcare, and so forth, as it increases efficiency and immutability. Only members who are invited can join the network.
A hybrid is a mix of public and private Blockchains. Everyone cannot join the network until they pass a rigorous identity verification process. Only a few of those members can grant specific permissions.Blockchain is always a great investment for both individuals and companies.Bitcoin, the most popular blockchain application, has reached its highest price. It is now worth more than 65,000 USD. Since then, people have been convinced that blockchain and its cryptocurrency, such as Bitcoin, are highly profitable.
Sadly, prices for many cryptocurrencies are down significantly this year. Experts in the industry predict a possible recession, a collapse of war in Ukraine, a stubbornly rising inflation rate, and high-interest rates.Many investors who invest in blockchains lose money instead of making a profit.
Also Read: What is Blockchain & Benefits of Blockchain-as-a-Service?
Blockchain Is Unhackable
Misunderstanding:
Thanks to its secure encryption mechanism, blockchain cannot be hacked.Blockchain is based on a hashing algorithm. The signature of a new transaction on the blockchain is a random 32-bit number, and then it's tightened up with a 256-bit encrypted hash. These numbers are nearly impossible to guess, which eliminates hacking possibilities.
This concept is not safe enough from hackers. Due to the limitations of blockchain technology, criminals have found ways to get into the network. They attack the verification process, exploit coding mistakes and flaws or exploit weak security practices.
Blockchain Adoption By Business Is Not Ready
Misunderstanding:
Many businesses are concerned that a blockchain may have security, privacy and performance issues. The technology is, therefore, not ready for adoption by businesses.Many businesses have adopted blockchain technology, even though it still has room to grow. 29% of the businesses participating in the Global Blockchain Survey of Deloitte said they had already adopted a blockchain consortium. 45% of them confirmed that they would continue to use the technology next year.
Blockchain Is Only Used For Finance
People often misconceive Blockchain as solely being used by financial and cryptocurrency firms. My personal opinion is that Blockchain's applications go well beyond finance companies - distributed ledger technology can be applied across industries. Blockchain technology can transform the healthcare industry by eliminating outdated and slow workflows, disrupting real estate brokerage firms by eliminating intermediaries, and offering multiple other uses across various industries.
What Is The Value Of Blockchain To Your Platform, And What Does It Add?
Transparency
Blockchain makes the history of transactions more transparent for network members since its distributed database structure ensures everyone shares an identical ledger. Validation within the network ensures all members agree on its authenticity; changing one record results in subsequent records being altered, too, so data stored on blockchain is like having multiple copies stored together on an invisible ledger.
- More secure
- You can also read more about
- Only members with access permissions can view the content
Traceability
Your company likely experiences difficulty tracking down items back to their source. Blockchain records the movement of goods between locations, creating an audit trail showing where each asset originated and all stops made along its journey. Blockchain records can help to verify product authenticity and prevent fraud.
Increased Speed
The traditional processes currently used are:
- paper-based
- time-consuming
- Verifying authenticity through third-party intermediaries
- Error-prone
Blockchain offers fast and secure transactions. No longer do you need to manage separate ledgers; all network participants have access to the same digital ledger, which enables quick settlement times.
Reduced costs
Blockchain allows businesses to lower costs. Blockchain eliminates intermediaries and third parties through consensus validation of information on the network, making trade easier as everyone has access to an immutable version.
Integrating Blockchain Into Your Existing Platform
Here are some questions to help you decide if integrating Blockchain into your current solution is a smart idea.
Do You Want To Store Your Data?
If your business solution doesn't require the storage of large volumes of data, a database may not be required; in this instance, blockchain has no advantage. However, blockchain could still prove invaluable for large-scale management applications; its technology enables one centralized ledger accessible across the network nodes.
Does The Data Have A Dynamic History With Auditable Records?
Paper documents have an expiration date even though they're difficult to falsify, requiring updates or sharing frequently. Maintaining transactions on paper can become time-consuming; therefore, a blockchain solution might be ideal if data integrity is critical to your business - this allows multiple parties to write entries without fear of corruption or manipulation.
Should You Allow A Central Authority To Control Your Data And Information?
Lack of transparency can create trust issues when working with third-party authorities. At the same time, blockchain data is managed and verified using a consensus algorithm. Furthermore, read-only and write-only permissions can be applied via blockchain for those concerned about privacy - eliminating dependence on central authorities reduces dependency while increasing efficiency.
- High fees
- delays
- single-point-of-failure.
Do You Need A Trustworthy Environment?
Trust is essential when doing business with others, especially in partnerships. Banks must keep our funds safe, while business partners must adhere to agreements. Unfortunately, trust can easily be breached, which poses serious problems for both sides involved.
How would you determine when and why to utilize blockchain? Though blockchain may seem distrustless, it allows parties to collaborate more securely since all transactions are recorded and up-to-date ledgers. Blockchain uses consensus algorithms that verify transactions without favoring one party over another, adding fairness to the system.
Do You Need To Change The Rules Or Not?
Blockchain is considered an immutable technology because its rules cannot be altered once written into it. Blockchain services may not always remain unalterable due to a 51 percent attack. A group of miners controlling more than half of the network can gain control and stop any transaction being processed through it and double-spend any funds. Proof of Work algorithms are particularly vulnerable. However, other measures may help provide additional safeguards that ensure security. If your answers to four out of five questions included "Yes," blockchain implementation may be right for your business.
What Type Of Blockchain App Do You Need?
Every business needs an effective digital solution for running their operations efficiently. A blockchain-based app can increase trust and transparency while eliminating additional intermediaries.
Before beginning with blockchain technology or estimating costs, you must establish what type of app you require. It would help if you determined whether you want a permission or permissionless blockchain application.
Costs associated with Blockchain applications will differ based on industry. You might require one for supply chain management, real estate transactions, healthcare delivery or education purposes - the complexity of each project will ultimately dictate its cost.
The Complexity of a Blockchain Project
The complexity of a project based on blockchain depends on the problems an application is trying to solve.
Below are examples of blockchain projects that vary in complexity:
- Smart Contracts Development App: Payment Apps and Low Complexity Blockchain Apps.
- Medium complexity Blockchain Apps: dApps on blockchain platforms. Semi-decentralized blockchain apps.
- High complexity Blockchain apps: Development from scratch of a blockchain platform, a complete decentralized network
App Developers
Cost estimates for developing a blockchain application depend on how much resource is required and include any salaries paid out to experts who work on building it. Given blockchain is still in its early stages, finding top-tier blockchain developers may prove challenging. When investing in them, hire only those deemed superior and add their salaries to your total cost estimate.
Project Management Methodology
Companies looking to implement blockchain projects may use agile methodology tools like Jira and Confluence for project management purposes, namely Jira and Confluence. These can help monitor timelines, deliverables and test apps - though this adds costs to any blockchain implementation project.
Third-Party Subscription Tools
Your blockchain app development process may involve subscribing to third-party tools, including bug trackers, notification services and software monitoring tools from third parties. Subscription tools represent another cost associated with building blockchain apps.
What Is The Blockchain Development Process?
Blockchain Can Help You Solve Problems
Before undertaking a blockchain solution for your business, you must define and understand its purpose and the issues it can solve. Make sure the solution will add value to your operations by migrating existing solutions or building entirely new applications on this revolutionary blockchain technology.
Imagine you are a healthcare provider looking to develop a blockchain-based app to store medical records securely. Before embarking on such an endeavor, it would be prudent to become acquainted with various applications available on the blockchain, such as their benefits for users. Once you decide blockchain-based solutions are right for your business, the next step will be selecting an ideal blockchain platform and development tools for your project.
Select The Right Blockchain Platform
As noted in the above article, developing a blockchain can take months or years to implement successfully. Therefore, to maximize success when building your blockchain app using one suitable for your business needs - choosing an Ethereum-based app that may offer public decentralized applications with smart contracts - is recommended as you brainstorm to identify and determine your ideal blockchain platform and understand its requirements before proceeding.
Brainstorming Ideas And Blockchain
When you've selected the platform to build a blockchain app, it's important to brainstorm and draft business requirements. Consider what technologies could be added as on-chain or off-chain entities into the ecosystem of blockchain applications; create a roadmap that will guide development by the deadline; conceptualize workflow and blockchain models that describe your blockchain app development project, etc. Decide whether your application will run on a permissioned blockchain network or a permissionless one, then select your front-end programming language, servers and external databases accordingly.
How To Do A Proof-Of-Concept
Proof of Concept (POC) is used to demonstrate the practical applications of blockchain. POC can take many forms, design or theoretical build-up being two possibilities. A theoretical buildup requires each project to have theoretical cases to help users understand its viability and applicability, with proposals created explaining any parameters associated with said project. Finally, after theoretical build-ups and user feedback have taken place, a prototype is created, which includes features like these.
- Sketches
- mockups
- Test product
- The following are examples of designs
- information architecture
After the client has approved the PoC, it is time to create the technical and visual design for the application.
Visual And Technical Designs
Make user interfaces for each software component. Design APIs to be integrated into user interfaces so your application runs on the backend. Technical designs represent an application's technology, while visual designs give it its aesthetic look. Once completed, your app is ready for development when all elements, such as admin consoles, user interfaces and design, have been completed.
The Development Of The Developing Countries
The development phase is where your blockchain application will take shape. At this stage, you may opt to develop APIs or integrate them for specific use cases; applications often consist of multiple versions. Pre-alpha refers to apps that have not yet been rigorously tested; after receiving client approval, these applications will enter an alpha stage where developers use white box techniques to test software containing all features that may or may not exist.
After the alpha release, the app is then ready for beta testing. At this stage, its features should be fully operational, but there may still be bugs; an external group is used to evaluate this version's functionality.
Once the beta version has been approved and tested, it will move into the Release Candidate Version, an enhanced beta version that's ready to become a final app and can be launched. Once it's been thoroughly tested, delivery is imminent. Before going live with an application, its functionality should be tested on a test network. When deploying apps, administrators can choose which versions should be deployed on specific resources.
Once a blockchain app has been provisioned, it must be added to the main blockchain. If your hybrid blockchain app, which includes both off-chain entities and on-chain ones, requires deployment into both app store/play store/cloud servers, you should upgrade accordingly based on changing business priorities or requirements.
Upgrades should not cause issues when it comes time to deploy new contracts later. App development does not end once deployed - software applications must be maintained after development to ensure they will continue functioning with future upgrades.
Why Is Blockchain Important?
The Internet is a platform that enables us to share information decentralized. However, when exchanging money or property rights such as intellectual property and ownership rights, we still depend upon outdated, centralized institutions like banks or government agencies. PayPal, one of the most widely-used online payment systems since the advent of the internet, requires integration with either credit cards or bank accounts to work properly.
Blockchain technology presents an appealing means of cutting out intermediaries. This can be accomplished by empowering financial services to perform three core functions simultaneously: recording transactions, verifying identities, and concluding contracts.
The financial services industry is the largest by market capitalization. A fractional change could create major disruption and efficiency gains for this industry. Contract creation is the third role and opens up an array of possibilities. Blockchain can store digital information of all sorts - even code.
This code could be configured so it runs whenever certain parties enter keys to sign a contract while at the same time reading external data such as stock prices, weather forecasts or news headlines and creating contracts automatically submitted when certain conditions are met.
Smart contracts present seemingly limitless possibilities. Smart thermostats may communicate your energy consumption to an intelligent grid. When a set threshold has been reached, a blockchain transfers that value directly from your account to the electric company, automating meter reading and billing processes.
Smart contracts could also regulate intellectual property by restricting how often individuals can access, copy or share something. They could also provide fraud-proof voting or information distribution without fear of censorship - all possible benefits of smart contracts. This technology holds many potential uses, and I believe more industries will soon take advantage of it.
Also Read: What Are The Other Examples Of How Blockchain Is Positively Impacting The World?
Five Major Blockchain Benefits
Security Enhanced
Blockchain can alter how your data is perceived. Blockchain provides an excellent solution to prevent fraud and other illegal activities by creating records that cannot be altered and are fully encrypted from end to end. Furthermore, Blockchain addresses privacy concerns by anonymizing data and employing permissions as access control measures, all while saving space since information is stored across a network rather than just one server, making it harder for hackers to access it.
Transparency
Each organization would need to maintain its database without blockchain technology. Using its distributed ledger function, data and transactions are recorded across multiple locations, ensuring full transparency for network participants with permission access at once; transactions are time stamped immutably with all records available to members, thereby virtually eliminating fraud.
Instant Traceability
Blockchain provides a trail of auditing that documents an asset's provenance throughout its journey. It is particularly helpful in industries plagued by fraud or counterfeiting or where there may be concerns over environmental or human rights implications of products. You can share provenance data directly with customers through Blockchain; additionally, data regarding traceability can reveal weaknesses in supply chains - for instance, when goods may sit idle at loading docks waiting to be transported away.
Efficiency And Speed Are Increased
Traditional paper-intensive processes are lengthy, subject to human error and require mediators for transaction settlements. With blockchain, transactions can be completed more quickly and efficiently - no longer needing paper for documentation and clearing settlement purposes - quicker clearing/settlement because there's no longer a need for multiple ledgers to be reconciled before settlement can take place.
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Smart contracts are an efficient and timesaving way to increase efficiency and speed up processes, increasing your efficiency and speeding them along. When certain criteria are met, smart contracts automatically initiate the next stage in any given transaction or process - eliminating human intervention and relying on third parties to verify whether a contract has been fulfilled. Once customers provide all documentation required to file insurance claims, these claims can often be settled and paid automatically.
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Conclusion
Now, you can invest in this technology and benefit from blockchain app development. Blockchain may be more accessible than you think - feel free to share this article with anyone who would like more information or wants to dispel myths surrounding this technology area.
