So, what exactly is the Blockchain?
For many people, blockchain technology is the “new get rich quick” scheme in town, with all manner of excitement about Bitcoin and other instances of what has come to be called “cryptocurrency”, along with its promise of instant electronic transactions and the notion of people acquiring hugely valuable cryptocurrency from nothing, as if by magic.
Yet, unlike the typical scammer story, this one gets major press and legitimate levels of advertisement, all the while leaving the average person not really knowing what it is, but often curious as to financial opportunity. “Money for nothing” has always been an attractive idea, and it always will be. On this basis, many dishonest companies have come and gone, gathering large amounts of investment capital pursuant to their “initial coin offering” and then mysteriously disappearing, taking the investor capital with it.
Verisium makes use of blockchain technology to create a means of statistically airtight product authentication, as well as the provision of additional features and services for the end-customer of a given name brand product that increases the levels of present and future continued customer engagement.
However, we realize that the notion of “blockchain technology” suffers from the mythological fog that surrounds it. Therefore with a huge hat-tip to the writers at www.datafloq.com, we offer the description of a number of popular myths about blockchain technology and their debunking as they apply to what Verisium does with the technology.
We hope this will help our readers to understand that our application of this significant database technology is not some “magical” concept. We hope the reader finds this information helpful. As always, if there are more questions, please contact us!
And now, without further ado,
The Myths of the Blockchain
Myth # 1: The Blockchain is a magical database in the cloud.
The Blockchain is conceptually a flat file – a linear list of simple transaction records. “This list is ‘append only‘ so entries are never deleted, but instead, the file grows indefinitely and must be replicated in every node in the peer-to-peer network”
Blockchain doesn’t allow you to store any type of physical information like a Word document or a pdf file. It can only provide a “proof-of-existence.” The distributed ledger can only contain a code that certifies the existence of a certain document but not the document itself. The file, however, can be stored in “data lakes”, the access to which is controlled by the owner of the information.
Myth #2: Blockchain is going to change the world.
We can use Blockchain for complex and technical transactions – such as verifying the authenticity of a diamond or the identity of a person. [Hello, Verisium!]
There is also talk of a Blockchain application for the bill of lading in trade finance, which would be revolutionary in terms of cost reduction and transaction speed.
The myth-buster goes on to say that “while Blockchain can support these cases and mitigate the risk of a fraudster tampering with the ledger, it does not eradicate the threat of fraud online and it still raises questions over confidentiality. Additionally, the use of Blockchain technology will still be inefficient for many of these cases when compared to maintaining a traditional ledger.”
However, this is a comment taken in the strictest of all senses – that there is no such thing as a completely secure computer or especially, network. That being said, we must further add here what other myth-busters did say about the security of the blockchain:
“The power of blockchain, of course, is that the code is public, transactions are verifiable, and the network is cryptographically secure. Fraudulent transactions— double spends, in industry parlance—are rejected by the network, preventing fraud.”
The Verisium Product Authentication Blockchain is statistically impossible to compromise, meaning that the amount of effort required to create a breach in the chain is extremely large relative to the result one might gain. If someone really, really, really wanted to fake a product in the Verisium blockchain, with enough computing power it might be done. However, the cost of that computing power is arbitrarily large (this means more than anyone might be able to afford!) and so the possibility of compromising the database is virtually zero.
This means we can very confidently say that our product will always catch counterfeits.
Myth #3: There is only one blockchain.
There are many different technologies that go by the name Blockchain. They come in public and private versions, open and closed source, general purpose and tailored to specific solutions.
Myth #4: The blockchain can be used for anything and everything.
Though the code is powerful, it’s not magical. Remember the days when fax machines first came into use? People talked about faxing pizzas along with everything else under the sun. But of course, this was just exuberance over a particularly interesting, revolutionary, but short-lived, piece of technology.
Bitcoin and blockchain developers can be evangelical, and it’s easy to understand why. For many, the blockchain is an authority tied to mathematics, not the government or lawyers. In the minds of some developers, the blockchain and smart contracts will one day replace money, lawyers, and other arbitration bodies. Yet the code is limited to the number of cryptocurrency transactions in the chain itself, and cryptocurrency is still far from mainstream.
For us at Verisium, we are not concerned about the use of blockchain technology to create money at all. We use it as an immutable ledger to authenticate products. However, along with product authentication, we can also attach other very interesting and dynamic value-added services for the benefits of both customers and the brand-name manufacturers who serve them.
Myth #5: The blockchain ledger is locked and irrevocable.
Analogous large-scale transaction databases like bank records are, by their nature, private and tied to specific financial institutions. The power of blockchain, of course, is that the code is public, transactions are verifiable, and the network is cryptographically secure. Fraudulent transactions— double spends, in industry parlance—are rejected by the network, preventing fraud.
This is feature that we at Verisium make use of – the ability of the blockchain to reject “double spends” or in our world, “dual / multiple instances of the same product” (a.k.a. counterfeits.)
The bust for this myth focused its attention on Bitcoin, saying, “because mining the chain provides a financial incentive in the form of Bitcoin, it is largely believed that rewriting historic transactions is not in the financial interest of participants. For now, however, as computational resources improve with time, so too does the potential for deception. The impact of future processing power on the integrity of the contemporary Blockchain remains unclear.”
This speaks to the matter of faking money, and this is an honest assessment. Is it possible to fake? Theoretically, yes, of course, as no computer system has perfect security. However, the chances against succeeding at this are statistically large and the amount of computer power required to compromise a blockchain is also statistically large. Since the advent of blockchain technology, further developments in managing both the speed and security of the digital ledger have taken place, with the result remaining that the blockchain is an extremely secure means of product verification.
Myth # 6: Blockchain records can never be hacked or altered.
One of the main selling points about blockchains is their inherent permanence and transparency. When people hear that, they often think that means that blockchains are invulnerable to outside attacks. No system or database will ever be completely secure, but the larger and more distributed the network, the more secure it is believed to be. What blockchains can provide to applications that are developed on top of them is a way of catching unauthorized changes to records.
Myth # 7: Blockchain can only be used in the financial sector.
The busting of this myth in the original text focused on the financial sector. However, we can state it more clearly: We are not using the blockchain for financial sector associated applications. We are using it for product authentication and aftermarket special services. It is that simple.
Myth # 8: Blockchain is Bitcoin.
Since Bitcoin is more famous than the underlying technology, blockchain, many people get confused between the two. Blockchain is a technology that allows peer-to-peer transactions to be recorded on a distributed ledger across the network. These transactions are stored in blocks and each block is linked to the previous one, therefore creating a chain. Thus, each block contains a complete and time-stamped record of all the transactions that occurred in the network. On the blockchain, everything is transparent and permanent. No one can change or remove a transaction from the ledger.
Bitcoin is a cryptocurrency that makes electronic payment possible directly between two people without going through a third party like a bank. Bitcoins are created and stored in a virtual wallet. Since there are no intermediaries between the two parties, no one can control the cryptocurrency. Hence, the number of bitcoins that will ever be released is limited and defined by a mathematical algorithm.
Myth # 9: Blockchain is designed for Business interactions only.
Experts in blockchain are convinced that this technology will change the world and the global economy just like dot-coms did in the early 90’s. Hence, it is not only open to big corporations; it is accessible to everyone everywhere. If all it takes is an Internet connection to use the blockchain, one can easily imagine how many people worldwide will be able to interact with each other.