A curse or a blessing? Busting myths about blockchain
There was once a popular science entertainment show on American TV called The Mythbusters. In one of their episodes dedicated to the Star Wars series, the crew tested whether, in real life, Luke Skywalker or Han Solo would be able to dodge the stormtroopers' blaster bolts every time they made a run for their lives.
To check the scene’s probability, a special experiment was designed. It involved speed calculations based on the futuristic saga’s visual references, the distance between a hero and a foe, or the characters’ height. Then, a fake blaster battle was staged to gather enough evidence. The result? None of the beloved Star Wars heroes would, in fact, ever be able to escape the enemy’s laser fire.
In their show, The Mythbusters often employed homemade tests exploring pop culture references, replicating stunts from famous Hollywood blockbusters, and verifying internet rumors. But their experiments were largely based on modern technology solutions and solid data science derived from math, physics, and chemistry. The two main hosts were highly experienced special effects designers who employed humor to render myths busted (results impossible to ascertain), plausible (possible under certain circumstances), or confirmed (so verifiable).
Since The Mythbusters show stopped airing a few years ago, we took it upon ourselves to validate four common myths about blockchain.
Myth #1 – Blockchain is still in its infancy stages
Just because something is new or yet unexplored, it doesn’t mean it has no potential to change the world. So here, we need to look at what the term blockchain refers to in the first place.
In a nutshell, it is a decentralized database of anything that can be recorded and updated in real-time. Sounds a little vague? Then let’s break this definition down even further to better understand its foundations.
It’s true that whenever we talk about blockchain, we tend to automatically associate it with cryptocurrencies. But the theory of blockchain had been developed approximately 20-25 years before Satoshi Nakamoto popularized Bitcoin in 2008.
Since then, things have progressed rather dramatically. As of April 2022, the entire crypto market was valued at $2.2 trillion. There are “at least 1,000 blockchains with at least four types of blockchain networks” and “12,000 active cryptocurrencies“. Those numbers are still growing.
Additionally, over 20 countries so far have explored blockchain applications, with Japan recognizing Bitcoin as an accepted form of payment.
Myth #2 – Blockchain is strictly related to cryptocurrencies
As discussed above, the technology’s first application happened to be in a cryptocurrency. And fintech still is the industry where most solutions are applied. Moreover, according to research, the global blockchain market will reach $67.4 billion by 2026.
Traditional banks are slowly starting to get behind it. Such is the case of a joint project between Luxembourg’s 21finance, a digital software solutions provider, and Bankhaus von der Heydt, one of the oldest owner-managed private banks in Germany. This mutually beneficial cooperation adds a banking service to 21finance’s digital marketplace while simultaneously expanding the bank’s offering to a digital platform allowing its customers to trade tokenized securities, for instance.
On the other hand, Future Processing is collaborating with Smart Valor, one of the first companies to embrace tokenization and DeFi (decentralized Finance). The project aims to implement a blockchain-based system to revolutionize the financial industry.
IoT (Internet of Things) is one of the industries in which blockchain’s got potential to contribute to the enhanced data exchange security between connected devices. Our future IDs, certificates, and permits could also benefit from its encryption capabilities since these documents deal with potentially sensitive information. Similarly, in healthcare, its application could facilitate a faster transfer of patient information, maintaining confidentiality at the same time.
Global food-supply chain companies, such as Nestle, have already implemented it to track the quality of their products, reducing contamination and eliminating bad produce wherever possible. Any manufacturer or supply-chain-dependent business could easily monitor inefficiencies and quality non-compliance using blockchain technology.
Future Processing also recently cooperated with Fortaco Group, an international organization delivering cabins and steel parts for heavy machinery, on their Smart Steel project. Its purpose was to redefine access to authenticated information about the lifetime of a component. Our task was to evaluate the feasibility of this project, propose a solution architecture, and prepare technical documentation. After running a business analysis to understand the problem, we confirmed that blockchain technology was a suitable solution, and we were able to develop its potential.
Even the industries providing “niceties” rather than “necessities” have joined” the explorers’ club”. The entertainment industry, and especially the music business, is currently experiencing the NFT boom, with transactions based on blockchain technology.
Last but not least, the non-profit sector is also greatly interested in exploring blockchain’s benefits. Charities like Save The Children or UNICEF already accept cryptocurrencies as donations. But the NGO sector wants to take it a step further and find ways to better distribute donations received. There has even been a project considering “smart contracts that offer opportunities for businesses to embed giving into their organizations and help charities raise money”.
Myth #3 – Blockchain is the environment’s enemy
Blockchain has been recently getting a lot of bad press due to its environmental impact.
The core of the concept is partially to blame for it. Since blockchain exists in the digital world only, it needs electricity to power the servers where it’s hosted. As the system is decentralized, to prove any transaction, blockchain relies heavily on complex computer calculations (called mining), that – in turn – need energy. A lot of it.
In a world where we’re arguing about switching back to trains instead of traveling by plane and complaining about the skyrocketing cost of electricity is the new favorite dinner conversation, the above are some mind-blowing statistics that cannot be ignored.
The growing demand for blockchain, although encouraging in terms of future projects, also contributes to those staggering energy-consumption numbers.
The crypto industry is well aware of it. Much as in aviation, striving to turn things around through offsetting and using sustainable, plant-based fuels, blockchain developers invest their time and money in improving the technology’s efficiency and reducing its carbon footprint. A voluntary Crypto Climate Accord is in place to ensure the transition to net-zero greenhouse gas emissions by 2040.
The first one, as the name suggests, incentivizes renewable energy usage. It has a very interesting idea behind it: users need to submit proof of generating Megawatt-hours from solar technology. For each hour, they then obtain 1 SLR and can trade it like any other cryptocurrency.
On the other side is the NFT marketplace. Here we have ONE, which creates a bridge between creators and NFTs on the Harmony platform, primarily based on the Ethereum ecosystem, one of the major blockchains. It stands out because it uses the more energy-efficient proof-of-stake (PoS) algorithm and has great scalability potential.
Myth #4 – Blockchain isn’t secure
Before delving into details, let’s acknowledge a simple truth: anything that is digital is hackable by nature. So the point here is not whether the door to the blockchain is shut so tightly nobody can open it. The questions are rather: how well-protected that door is and how quickly the system reacts to a potential breach and shuts the door again. Here’s how it works.
Public decentralized systems (like Bitcoin or Ethereum) have a unique advantage over centralized ones. They require teamwork. The more users check the result, the higher the chances are that someone will spot a mistake or an unusual occurrence.
Also, the rule of consensus is essential. If even one user renders the transaction invalid, it cannot be approved.
Moreover, the way the whole system is designed guarantees data security. Once created, blocks cannot be modified. If a new piece of information is introduced, a subsequent block is created without substituting the previous one. Not even the system administrator can delete a block. So there’s evidence of every single transaction, making it difficult to forge it.
Naturally, there are some aspects of blockchain operations vulnerable to hacking. But they are not directly related to the technology’s security. Since blockchain operates in the internet environment, data could potentially be breached when transferred between different networks. The human factor can also play a role here since phishing attempts have intensified in recent years. So it’s a matter of protecting oneself against those potential risks, as we do in any other area of our digital lives.
Blockchain’s growth in this decade is estimated at a rate of 85.9%. In fintech, it is no longer a niche phenomenon, but rather a mainstream technology. Despite some challenges and reservations about it, we are certain it is here to stay.
The only thing it needs at the moment is wider educational efforts to ensure that entrepreneurs and investors, also outside the pioneering financial sector, can fully embrace the technology’s capabilities.
So it’s a real shame that The Mythbusters show is no longer broadcast. They’d surely help spread the word about it through one of their science- and data-driven experiments.