Blockchain technology is considered revolutionary when it comes to database management and record-keeping systems. However, the emergence of any new technology is usually fraught with confusion and error.
The underlying technology of the distributed registry has caused great interest from companies in many industries, as the blockchain allows you to create a single version of reliable data for participants in such networks.
The use of the blockchain, in essence, means that companies are well protected from data leakage, and the information in the system used is not subject to unauthorized changes. It also reduces the need for companies to invest in cybersecurity, data recovery and backup solutions.
All of the above is just a brief explanation of blockchain technology for companies. There is a lot of confusion regarding its potential and actual uses. Let’s look at the most common misconceptions regarding corporate blockchains, and try to figure out what’s what:
“Corporate blockchain can quickly change business practices”
It is said that the technology of the blockchain has a rich and exciting future – from the use in fire-fighting measures to improving the economy and society as a whole. But is any of this possible?
Answer: in general, yes. Blockchain can lead to serious changes in industries, especially in finance and supply chain management, and this is only a matter of time.
A recent study says supply chain management is the next blockchain technology application, but it won’t get widespread in the next 10 years. As for the field of finance, experts predict that it can take from 5 to 25 years.
“Corporate blockchains are not productive enough”
One of the common opinions is due to the fact that well-known blockchains of cryptocurrencies, such as Ethereum and Bitcoin, are not fast enough. They are really capable of performing only tens of transactions per second, and the transaction completion time is from a minute to several hours. Many company executives wonder if corporate (private) blockchains can become a viable solution, given their performance.
Corporate technological solutions are aimed at performing various tasks, and therefore the performance of corporate blockchains may vary depending on such factors as the complexity of computing data types, smart contracts and processing of user data. Other factors include the types of consensus algorithms used and the number of partners involved in achieving it; as well as the provider of the blockchain infrastructure and the level of service provided by it.
Some applications on corporate blockchains work well, which may well satisfy the needs of some types of business. In one IBM research document, an example of using a blockchain called Fabcoin is documented, which when using a certain network configuration reached a “very high” speed – more than 1000 transactions per second. Despite the fact that blockchains are not yet widely implemented, inaccessible and operate at a relatively low speed, their performance potential is definitely not far off.
“Blockchain can be used in any industry, for anything”
There is a widespread belief that blockchain has enormous potential and can fundamentally change various industries, including finance, automotive, aviation, shipping, telecommunications and the Internet of Things (IoT), offering a reliable way to record transactions in a digital registry, which also allows you to monitor data integrity.
But what can’t blockchain do?
The blockchain cannot verify and confirm that certain types of data are reliable. For example, the case when an advertiser paid for an advertisement that was intended for a rich audience, but instead it goes to some single mother or, worse, to a bot. Blockchain technology, in this case, is able to track digital identifiers belonging to consumers of advertising, but not the intentions of the advertiser or the features of those who consume it.
Checking who is behind this or that digital identifier simply goes beyond the capabilities of the blockchain technology in its current form.
“Corporate blockchains are private, secure, and scalable.”
Blockchains fall into two broad categories: controlled (private, private) and public blockchains.
The public blockchain does not have a controlling authority, and it is decentralized. This means that everyone can join it and become a member of the system. Examples of public blockchains are Bitcoin, Ethereum and Litecoin.
On the other hand, controlled blockchains (commonly used by companies) are essentially private and connected to a centralized governing body (the group of people). The controlling body of such a network decides who can participate in this network, what are its rights and the level of access to certain resources.
Confidentiality problems in corporate blockchains usually arise due to human errors resulting from the provision of certain permissions and access levels for participants. In fact, these private (private) blockchains are not private by default. The problem is that as the number of “controlled” network participants grows, control becomes more complex and scalability problems increase.
Although blockchain technology gives us good promises, it still has many unsolved problems. The right balance between optimism and realism will help each of us minimize unrealistic expectations from blockchains.