By: Ciopages Staff Writer
Updated on: Feb 25, 2023
The hype and reality of Blockchain technology is impossible to analyze given the fast pace of changes. However, while there is immense promise, there are also significant roadblocks. Blockchain technology is the underlying infrastructure behind Bitcoin, and while the jury is still out on whether or not Bitcoin has a future in the short or long term, there’s little doubt that Blockchain is going to be around and useful for a long time. Many tech experts are saying that not only will Blockchain stand the test of time, but it will eventually revolutionize information technology in an even greater way than has the Internet.
Blockchain is a distributed public ledger that keeps track of exchanges and transactions of things of value. So it isn’t difficult to imagine why it would be a fundamental component of something like Bitcoin, an online virtual monetary unit of exchange. Every Bitcoin transaction is recorded and is placed inside what is called a blockchain. These blockchains exist in several different, (sometimes hundreds or more) locations called nodes. Every node within a network contains a copy of every blockchain that stores transaction information within it.
That means if you make a Bitcoin exchange, the event will be recorded on every node in your network and if someone tries to steal some Bitcoin, or if one or two blockchains or nodes are compromised by a natural disaster, fire, or mischief- there are still numerous other nodes containing blockchains with the same information to ensure your exchange data cannot be lost or altered.
|Industries and Services That Can Benefit from Blockchain|
To put it simply, Blockchain cannot be successfully attacked by hackers. Even if a cyber attacker managed to hack into a given node in a network and changed some data, installed a virus, or stole some Bitcoin- all the other nodes in the network would remain unchanged. It would be immediately apparent where and how the attack took place. Nothing on these distributed networks would be lost, and the attacker would have wasted his time.
The tremendous advantages of this in the area of eliminating fraud, abuse, and accidental erasures are easy for anyone to see. Some people have even compared Blockchain to DNA, which is distributed evenly to all the cells of living things. This is one of the main reasons biological systems are so robust, and this is the kind of reasoning that has a lot of people in IT very excited about the future of Blockchain.
Today, every transaction not supported by a Blockchain network has to pass through some kind of intermediary. Whether or not that intermediary is a human or a piece of software- it can be compromised by anyone with the right knowledge and a desire to do so. One of the banking industry’s biggest secrets right now is that banks all over the world are being hacked on a virtually constant basis. CNBC reported in 2013 that the U.S. financial system loses as much as $100 billion in cyber crime each year. The way the banks survive it is mostly by not telling customers and simply replacing the money by writing it back into people’s accounts on a computer screen. Every time this happens, the value of our money drops ever so slightly. With Blockchain’s interconnected, distributed networks of nodes performing ongoing mutually supporting information backup- the hope is that we can put an end to this widespread insecurity.
Blockchain could also potentially put an end to the insecurity of voting by removing the possibility of voter fraud, vote theft, or any other forms of dishonesty or errors that now have so many people wondering if their votes are even being counted.
Not only could Blockchain eliminate huge amounts of fraud, abuse, and error- it could also streamline transaction processes tremendously. Consider the case of voting. At present, even with electronic voting machines, it is still expected that a human being should verify all of the votes counted. In instances where counties are still performing these functions by hand- the process of counting and registering voters, collecting ballots, tallying all the markings correctly and then recording all of this accurately is an enormous undertaking. It’s simply irrational that all this can be done without a considerable amount of human error in addition to all the opportunity for fraud, waste, and abuse.
Blockchain would automate all these operations in a way that would be very difficult, if not impossible to hack into or destroy. It would eliminate huge amounts of cost and inefficiency from our current systems by automating all of our transactions. These improvements in cost and efficiency would also give people the ability to make small transactions, whereas currently, micro-transactions are usually not worth the cost of the processes that must be invoked to process them. Blockchain would do it’s job silently in the background with the same nominal cost for every transaction.
This, and more is what the proponents of Blockchain say about the future of this technology. But is there a flip side to these networks of purportedly hack proof ledgers?
There are a number of ways that the proponents of Blockchain argue that even attacks strong and sophisticated enough to compromise an entire network could be thwarted by varying the cyber security measures used on each node. But there is not enough useful evidence that these networks would be as impervious as we are told. The fact is that the digital ledger software foundation of Bitcoin and similar cryptocurrencies needs to be developed quite a bit before it can gain mainstream implementation.
“Frankly, it’s not being used on a wide enough scale for blockchain to solve all the problems of the world,” said Anders Brownworth, a principal engineer of Circle.
Outside of high-value goods, like currency and precious metals, most consumers aren’t sufficiently invested in the technology to warrant building such a broad scale application. Because too few merchants and consumers are using blockchain, adoption raises more doubts than it satisfies- particularly in corporate scenarios where CIOs are expected to show returns on investments for implementations of emerging technology.
Blockchain must face challenges that go beyond the basic business concerns of practicality. The absence of oecumenical regulatory governance and standards, the problem of too few engineers trained to work with the software, as well as the many questions about its scalability hinder Blockchain’s adoption. For the time being, experts say blockchain is caught up in a whirlwind of hype that’s long on promises and short on practicality.
As yet, there hasn’t been an adequate amount of serious and rigorous thinking about the kind of thorough end-to-end processes that the envisioned future of Blockchain would need in order to become practical.
Comparing Blockchain to Hadoop, according to David Schatsky, a senior manager for Deloitte, is fair. “Both have made possible things that wouldn’t be otherwise, such as a number of so-called “know your customer” approaches to using the software. It has the potential to rid legacy business processes of terrific amounts of inefficiency. But the fundamental problem of using it in a broad range of various models is still outstanding, not to mention the question of scalability.
CIOs who want to adopt this technology will have a few challenges to overcome. First, how to sell it to a CFO when you’re only able to promise real returns on the investment one year after full implementation, at best? Second, you must convincingly show that a significant amount of practical implementations will result- which at the moment, is a matter of guesswork. Good luck submitting guesswork to your Chief Financial Officer.
Until Blockchain manages to deliver a robust amount of positive use data, it’s going to be very difficult for CIOs to convince their firms to adopt it.
For the time being, CIOs interested in Blockchain are advised to give ample consideration to whether or not their companies have a clear case for using a technology that cryptographically secures and replicates records of exchange. At the moment, many non-experts are too worried that massive replication of data could lead to the compromise of sensitive information.
It may take years of passive acclimatization to Blockchain in order for those who foresee its potential to overcome the fears of those who do not. It may be safe to say that the day will come when Blockchain is widely accepted, and considered universally foolproof. But that day isn’t here yet, and there’s a lot of groundwork that has to be done before that day arrives.
What is your opinion on the hype and reality of blockchain technology? Share your views.
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