5 blockchain misconceptions Computerworld

Although considered by many observers – investors and analysts in the lead – as promising and full of the future, blockchain technology is nonetheless subject to suspicion on the part of companies. Often wrong but sometimes right as the Forrester firm has been able to show.

There is no doubt that blockchain technology is a source of value and companies are increasingly interested in the possible applications of blockchain. But there are still a lot of misconceptions around the technology. In a new report led by Martha Bennett, four Forrester analysts wanted to come back to “five persistent myths about technology”.

1. The myth of immutability

The term “immutable” which in the case of blockchain means “unalterable or cannot be changed” is technically impossible, the researchers said in their report citing two ways to modify the blockchain. “The first is to recalculate the chain, either in its entirety or upstream of the point where an adverse event occurred. The operation erases and recreates the history. Something like this happened in the early days of bitcoin,” they explained. “The other solution is to duplicate the chain. This time, the historical code and transactions are preserved. But, after this operation, the software works differently. Probably the best-known example is the Ethereum fork used to reestablish the platform that had collapsed after it was hacked by The DAO (Decentralized Autonomous Organization) in 2016.”

The researchers also point out that, from a technical perspective, permission-based blockchains are easier to modify and have far fewer nodes than public blockchains, especially in the early stages. But as a result, “they are also technically more vulnerable and are more likely to find themselves under the influence of criminals or fraudsters who manage to seize network identifiers”. In practice, the security and governance mechanisms that apply to the network make it possible to control the risk. “Ecosystem participants need to understand that it is not the technology as such that protects blockchain records from tampering, but how the network is designed, implemented, and operated. This applies to networks with consensus mechanisms that offer more scalability, but on their own provide little or no protection against malicious attacks,” the researchers further explained.

2. The myth of disintermediation and decentralization

According to the researchers, “cost reduction and efficiency gain are the main reasons why a company moves towards a blockchain solution”. Often this involves removing an existing middleman. “The company wonders why pass transactions through a third party when it can deal directly with its business partners. Some situations will allow you to do this. But it is a mistake to believe that there are no more trusted intermediaries in blockchain networks or that these networks are entirely decentralized. As the researchers point out, in practice, blockchain networks never work completely without intermediaries. They are distributed networks and as such retain a certain level of centralization. In addition, the chain may bring in new intermediaries and existing intermediaries may disappear unbeknownst to anyone.

3. The Myth of Zero Trust

“The two major blockchains – Bitcoin and Ethereum – have demonstrated that it is possible to exchange ‘value’ between people and entities who do not know or trust each other,” said said the researchers. But they also showed that it was a myth. Neither network is totally devoid of trust. “Participants need to trust the continued operation of these networks on many levels. For example, they must trust math and cryptography and they must trust that the code will always execute as expected,” the researchers added.

4. The myth that blockchains are “truth machines”

“Many solutions based on blockchain networks claim that they will be able to prevent fraud and ensure the provenance of goods in the physical and digital world,” the researchers said. To some extent, this claim is not wrong, since blockchain-based transactions are extremely difficult to manipulate, and any attempt is quickly spotted. “But no technology, whether blockchain technology or any other, can be considered a complete deterrent,” they said. “It is essential to keep in mind that a blockchain cannot protect against all fraud, and that a blockchain network alone cannot guarantee the provenance of physical goods. According to them, a distinction must be made between pure traceability and that which provides proof of provenance”.

5. The myth of transparency

“Making transactions more transparent is one of the main benefits of blockchain networks,” the researchers said. But, for most companies, transparency is as much a curse as a blessing. “Scale issues aside, the biggest technical challenge facing developers is that of privacy,” they said. CIOs should keep in mind that in a typical blockchain stack, all content on the chain is visible to all participants. According to the researchers, it is one thing to provide proof of provenance or guarantee integrity. But it’s another to maintain data privacy, business transparency and traceability. “It’s important for business leaders to first agree on privacy requirements before choosing the technology,” the researchers said.

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5 blockchain misconceptions Computerworld

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