Some think that blockchain will fix the trust gaps in organizations when they transact with anonymous identities, while also increasing transparency, productivity, and efficiency in business. But, others believe that it is just an overhyped technology. So, what’s the ultimate truth about blockchain?
Talking about its inception, blockchain was first invented in the year 2008 by Satoshi Nakamoto. Since then, tech-savvies have deciphered the importance and potential of blockchain in different areas. If we skim through the news on blockchain, we see how the technology has proven its potential in various different sectors. But, to understand how this technology has actually grown out, we must first have a clear comprehension of the concept of blockchain. While some of us have a clear understanding of what this technology is all about, most of us know relatively nothing. And, people who aren’t sure about what exactly this technology delivers, end up making assumptions, thereby misunderstanding and overhyping the technology completely. Whenever a new technology emerges, people start assuming things by reading the headlines. But it doesn’t matter what people think about the technology, what matters is how confidently people can explain the benefits of a technology to others:
- Gartner, the global research and advisory firm, reports that blockchain is an overhyped technology and 77% CIOs have no plans for blockchain.
- Economist Nouriel Roubini says, “Blockchain, the technology beyond cryptocurrencies, is one of the most overhyped technologies ever.”
- According to the Deloitte Global Survey, 40% of enterprises feel that blockchain is an overhyped technology.
Let’s us be very clear on the fact that blockchain is an awesome technology having the protocol of exchanging information only after identity verification. It is true that the technology holds immense potential if analyzed and used appropriately. Let’s have some discussion on what makes blockchain so special?
Why so much buzz and excitement around blockchain?
Before we get into the uniqueness of the technology, let’s first understand the definition of blockchain well. Functionally, blockchain is a digital record keeper that stores data in real-time over a shared ledger only after verifying the credentials of the participants. The technology uses strong encryption algorithms for ensuring a sender’s identity. Such a feature makes blockchain special as a data storage solutions too. Here are the top attributes of blockchain:
- As the technology provides a decentralized ledger, no central authority owns the power over the network. Every single participant on a blockchain network will have equal ability to access and send data over it. As every participant shares equal ownership, there are no intermediaries involved.
- Due to decentralization, every member on a blockchain network can view the data/block/transactions. Any addition to the network will be reflected on the chain, and concerned members can view the changes. So, even if hackers try to tamper the data, people on the network will be notified as and when alterations occur.
- Furthermore, the technology uses robust cryptographic techniques and participants are handed over an authentication code (a combination of private and public keys). Before a sender adds data, she has to first enter a ‘difficult-to-breach’ code and validate her identity. Such a feature makes the technology stand out from the others that aim to secure data.
Why is blockchain not worth the hype?
It is true that no technology offers everything as promised. Every technology has its own imperfections. Similarly, blockchain has its fair share of flaws too.
We know that security, privacy, visibility, and immutability make blockchain incredible, but to be very honest, blockchain lacks the following:
- Blockchain uses cryptographic keys for validating a sender’s identity. Once senders enter the code, they can access the information stored on the blockchain network. But wait. What if senders store their keys on their computers and hackers try to inject malware into the senders’ computer? What if hackers get hold of a sender’s validation key?
- Have you heard of the 51% attack? If not, we will help you understand this risk that the blockchain technology faces. 51% attack is an attack by a firm that happens to get hold of the majority of the hash rate. So, if miners belonging to the same firm become successful in controlling the network, then such an attack would hinder other transactions. Also, due to such an attack, the price of digital currencies will reduce by significant levels.
- Another major issue with blockchain is privacy. People on blockchain think that they are anonymous for other users. But, the truth is very different. When crypto transactions occur, bitcoin addresses are created, which hold the information on where these digital currencies are being sent. Furthermore, during transactions, users are required to reveal their legal identity documents for verification. So, users must clear their misconception that they are anonymous because they actually aren’t.
- Another issue revolves around immutability. We know that smart contracts are meant for executing a predetermined protocol on the fulfillment of certain conditions. It is known that smart contracts are supposed to be immutable, and which is why the code entered should be flawless. But a defective code will execute the program, not as per the intended purpose.
Is blockchain an overhyped technology?
Did you know that the CEO of Swiss banking giant UBS Group has good views on blockchain? According to him, organizations should adopt blockchain because it reduces operational costs. He says,
“ It’s almost a must. The freeing up of resources to become more efficient will come through technology and blockchain is a great way to allow us to reduce costs.”
Furthermore, Lloyd Blankfein, CEO of Goldman Sachs says,
“Still thinking about Bitcoin. No conclusion – not endorsing/rejecting. Know that folks also were skeptical when paper money displaced gold.”
We feel that blockchain actually pioneers a wave of redefining business operations while increasing security too. Honestly, we don’t know whether blockchain is an overhyped technology or not. The technology contains a lot of potential, undoubtedly. But, it has flaws too. There is no jury to decide the result. And so, we can have individual views on blockchain.
Whether blockhain is an overhyped technology or not, solely depends on organizations and how they take the technology and its imperfections. Three possible things we can expect organizations to do are – First, they can analyze the shortcomings and find solutions accordingly. Second, they can continue to follow the same old strategy, ignoring blockchain completely. Third, organizations can probably wait for blockchain to evolve completely, look for other organizations’ strategy on adopting blockchain, work collaboratively to create their own approach, fill in the required gaps, and prepare the business for blockchain. The choice is theirs. We would only suggest that organizations should think well before coming to any decision.
