All around the internet, social media, emails, and our traditional media, all we hear are talks about Blockchain, bitcoin, and other cryptocurrencies.
One begins to ponder, Are there no other topic of discussion in various forums?
Obviously, there are, but those behind the hype definitely know what they are benefitting from this practice of advocating Blockchain.
As a potential investor who may not be self-aware of how bitcoin and Blockchain works, the hype about Blockchain can lure you into investing in virtual currencies. However, despite all the hype about Blockchain technology, critics are hell-bent on picking loopholes on the drawbacks of the Blockchain technology.
If you look at the entire crypto ecosystem in detail, most Blockchain platforms make wild promises claiming to overthrow financial institutions, not considering the fact that financial institutions already have a platform to handle millions of transactions on a daily basis. This claim contradicts several lessons we have learned about the use of software by banks.
Another claim made by those behind the hype is that the Blockchain technology is similar in operation to a universal protocol such as HTML or TCP-IP. Such claim means that the Blockchain technology would serve as the foundation for most communications and transactions in the years to come. Although this claim makes sense, however, one does not understand how Blockchain intends to replace the universal protocol, since it also relies on TCP-IP protocol.
Furthermore, when you compare Blockchain with the base-level protocols, the Blockchain technology is sometimes “Stateful”, meaning that it can store any communication that is validly sent to it. Therefore, Blockchains that are properly designed needs to step up protection against spamming. This point explains why only five to seven transactions are being processed per seconds by the Bitcoin core, compare to its Visa counterpart which processes up to 25,000 transactions every second.
Another false claim of the Blockchain technology is that it will completely eliminate the need for financial institutions or middlemen. This claim is unrealistic due to this reason; today’s financial contract is either being breached or modified by the parties involved. Eliminating these possibilities is not viable commercially. At this point, it is pertinent to stop Bitcoin overhype, because it is slower, expensive and energy inefficient, among other drawbacks. A lot of people are already subscribed to centralized e-payment platforms such as WeChat Pay, PayPal, Alipay, Square, and Venmo.
Eventually, the use of Blockchain technology should be restricted to complex, specific, and well-defined applications that do not require speed but tamper-resistance and transparency.