Blockchain is the hottest technology on the market today, and for a good reason. It has the potential to streamline everything from banking to supply chain management. But like any new technology, it also comes with some misconceptions about how it works—and what it can do. Here are five common misunderstandings about blockchain:
It’s not just for cryptocurrency
It’s not just for cryptocurrency. It’s not just for financial services. And it’s certainly not just for technology companies—it’s a database.
Blockchain is a decentralized, distributed ledger that allows people to share information securely without having to trust each other or any third party like a bank or government agency (see: “what is blockchain?”).
It’s not just for financial services
- It’s not just for financial services.
- Think of blockchain as a shared, decentralized database. It holds a history of transactions and can be used to track the ownership of anything that has value, not just money. In other words, you could use blockchain technology to transfer real estate deeds, titles and other important documents (medical records and diplomas).
- Blockchain isn’t just a buzzword either; it’s actually being used today by people in many different industries—from art dealers to diamond miners to insurance companies!
It’s not just for technology companies
You may have heard about blockchain but don’t know what it is or how it works. The best way to think about blockchain is as a secure database that can be shared across an entire network. Each record in these databases is called a block and each has its unique fingerprint, making it impossible to change once created.
It’s not just a database
Blockchain is, on a basic level, simply a database. However, it’s not just any database—it’s a distributed and decentralized database that is managed through consensus by a community of computers. In order to understand why this makes blockchain so revolutionary and potentially disruptive in the world of data management and storage, you’ll need to examine the first two points: distributed and decentralized.
A distributed database allows users (or nodes) to store copies of all transactions on different computers within the network or blockchain system. This makes it possible for everyone within the network to access this information from anywhere in the world. So if one node goes down due to technical issues or doesn’t have access anymore, then another node can take over its responsibilities until it comes back online later down the line or when repairs are being made at the last minute before everything goes haywire again!
Decentralized means that there isn’t any single point of failure within.
It’s not entirely secure yet
While blockchain is still in its infancy, it’s still much more secure than traditional databases. For example, if a hacker wants to hack into a database and steal data, they only have to target one place. With blockchain’s distributed nature, there are millions of points of entry for a hacker to attack at once—and all must be hacked in order for the hacker to succeed.
Blockchain is a new technology that offers some interesting possibilities for future development. But these five things show that it has already become an important part of your lives and will continue to grow in importance over time.
