Despite its growing popularity, blockchain still lacks mass confidence. This is because there still remain some unknown truths about blockchain.
Undoubtedly, blockchain is seamlessly penetrating into several industries, digitizing transaction ledgers, maintaining anonymity, and cutting down the ‘go-betweens.’ Despite such benefits, blockchain entails few issues that still make it a ‘less than perfect’ option for valuable asset transactions. Are you curious to know about these issues? In this article, we will disclose the truths about blockchain that make the adopters of this technology nervous about its implementation in their business.
It is important that organizations adopting blockchain should not only examine the benefits of the technology but also take a keen note of its imperfections.
Blockchain offers peer-to-peer digital transactions without the need for intermediaries. There is no central authority, controlling and managing the transactions. There is no need for the participants to reveal their identity while transacting on blockchain.
However, as blockchain makes for a decentralized ledger for storing, sending, or receiving assets, maintaining anonymity is quite tough. Why you ask? Let’s understand this with an example. Authors who do not wish to disclose their identity, write a book under a pseudonym, isn’t it? Similarly, asset transactions are made under a pseudonym on blockchain. But, in the case of blockchain, the alias is a ‘bitcoin address.’ These addresses are created to describe where cryptocurrencies are being sent. Every bitcoin exchange includes the user’s address and is stored on the blockchain. Hence, any participant on blockchain can view the history of exchanges for any address stored on that blockchain. Sending and receiving bitcoins requires the users to disclose their legal documents for validation, indicating that the addresses are not completely anonymous. Hence, it is a myth that blockchain offers anonymity.
It is true that blockchain offers a secure way for cryptocurrency users to exchange bitcoins. But, have you heard of a 51% attack or a double-spend attack? The 51% attack is an attack carried out by a group of miners, controlling a bulk of the network’s hash rate. If a higher number of miners belong to the same unit, then there are chances that they try to double spend their coins and impede other transactions. If the grifters are successful in doing so, the value of the cryptocurrency will reduce tremendously. Hence, each miner has to keep an eye on the other miners to flag any such suspicious activity, and this is not as easy as it may sound.
3. Immutable Smart Contracts
One of the incredible benefits of blockchain is its ‘immutable’ nature. The immutable nature of blockchain prevents tampering of data on the blockchain network, enabling blockchain-based organizations to enhance their security. For example, by using blockchain in the food industry, details on, let’s say, the food safety level can be entered on the blockchain. Anyone participant on the blockchain can then trace and monitor the safety level of a food item at any stage till it reaches the final consumer. No one can alter the details once entered. Due to such a feature, stakeholders could rightfully believe that the entry made is legitimate. Now, consider the popular application of blockchain, smart contracts. Smart contracts are immutable in nature. Once a smart contract is deployed in business, there is no chance that you can alter its code. But, there is a issue here. What if the smart contract that is deployed as an application contains flaws in its software code? What if the hackers exploit the defect of the software code? Again a problem, right? Like every modern technology, blockchain comes with its set of flaws. Developers always intend to make the technology useful and helpful for its users, but there are people (read hackers) who are constantly attempting to manipulate the technology to put it to an unintended use.