Even if you have no idea how it works, odds are you have heard some of the buzz around blockchain. Because the distributed hyperledger technology is a relatively new technology, there is still a large gap in knowledge between those who believe it to be the next Internet and those who just don’t know where to start.
That was why I decided to collaborate on an online Blockchain for Business course with Columbia College Chicago Online. The 8-week course demystifies blockchain technology by starting with the basics and working through powerful use cases in booming industries like healthcare, law, government, and finance. Studies walk away with a whitepaper and a plan to implement blockchain in their business immediately.
Blockchain might seem like a technology waiting for us in the distant future, but the transformation is already happening as studies show that global spending on blockchain hit $2.1 billion in 2018 and is expected to reach $20 billion by 2024.
That means that the time to challenge the myths and start exploring the technology is now. To help you get started, here are a few of the most common misconceptions surrounding blockchain that might be holding your business back.
1. Blockchain = Bitcoin
While it’s true that blockchain was initially developed in 2008 for cryptocurrencies, it can be used to store and protect data of any kind. Think of blockchain as a vehicle for transporting information from point A to point B. You can fill the vehicle with cryptocurrencies, digital currencies, customer data, voter information—the list goes on.
Beyond the functionality of the technology, it is also worth knowing that different types of blockchain have been developed as a result of several cryptocurrencies, not just Bitcoin. In fact, Ethereum’s hyperledger structure is far more robust than Bitcoin’s and is becoming the model of choice for most businesses.
2. Blockchain is used only for financial transactions
After the successful application of blockchain to cryptocurrencies, banks and other financial institutions were naturally among the first to explore blockchain—JPMorgan, Bank of America, and the Federal Reserve to name a few. However, companies like IBM are really the ones leading the charge by investing in blockchain and educating their employees at break-neck speed.
Remember that blockchain protects data and information, which is not limited to banks, but rather includes any company that is concerned about the safety and speed of information transfers. Even industries you might not expect like music and entertainment are finding creative and highly-useful ways to use blockchain for more efficient business models.
One of the most prevalent applications of blockchain is smart contract technology. Built on the Ethereum platform, smart contracts help businesses cut out middlemen by letting two parties exchange money, property, or any other sensitive information directly through the blockchain. While you might normally go to a notary or lawyer to legalize a document, smart contracts are completely digital and just as secure. Smart contracts come with their own sets of rules and authorizations, a cryptographic code, which are triggered when the two parties input their information. Smart contracts have the potential to cut out an incredible amount of time and money for any industry that relies on contracts to do business—particularly real estate, local and national government, and finance.
3. There is only one blockchain, and it floats up in a magical cloud
When you think of blockchain, you might imagine one large database floating in the cloud, connected and communicating across an invisible grid in the sky. Mystical as it might sound, this is far from the reality.
There are many different types of blockchain and distributed ledger technology. They can be created and exist separately from other blockchains, they can be open or closed source, and they can be used for general purpose or case-specific situations. The two things that all blockchains have in common is that they are distributed and have some sort of consensus mechanism.
Rather than existing in a cosmic cloud, blockchain is compiled as a flat file—a linear list of simple transactional records. These files are also known as “nodes,” in which miners can add or edit data independent of the blockchain.
Want to learn more about how this process works? Sign up to receive a free sample lesson for my Blockchain for Business course.
4. Blockchain technology is always public
Blockchain enthusiasts love to laud blockchain for being open and transparent, mined and mediated by a public consensus. While this can be true, private blockchains absolutely exist.
In fact there are three types of blockchain—public, private, and federated. For public blockchains, consensus algorithms are open source, and anyone can participate without permission.
Private blockchains are kept centralized to an organization and can place internal restrictions on participation. Federated blockchains, on the other hand, are run by a group and cannot be modified by anyone on the Internet. This means that companies can customize their blockchain according to their business goals and add another layer of protection to any sensitive information or data.
5. Blockchain is too complicated for small business
You might think that blockchain is reserved for mega-elite corporate giants, but it’s much more adaptable and adoptable than it seems. Because businesses have the option to create their own customized hyperledger technologies, there is a huge amount of opportunity for growth and discovery.
There are also small-scale applications of blockchain technology that your company can integrate without taking your entire business on the blockchain. Smart Contracts, digital identity verification, and international supply chain communication are a few ways that companies are applying blockchain to certain branches of their business.
6. Blockchain is a fad
Because blockchain is often associated with Bitcoin and other cryptocurrencies, there is an automatic assumption that it is a passing trend. But the progress of Bitcoin is in no way a reflection of the progress of blockchain. As the hype around Bitcoin faded over the past year, blockchain has been amplified by business leaders who cannot afford to ignore its benefits.
According to Oracle Executive Frank Xiong, at least 50 percent of all companies will be using blockchain within the next three years. By my own estimate, this is an understatement. Businesses are already beginning to discover the versatility and transformative power of blockchain—and because it generally takes six months to implement blockchain, the time to get started is now.
If you are ready to prepare your business for the inevitable future of blockchain, be sure to reserve your spot in my next course beginning on April 29!