Trust Issues: Tearing Down the Silos in Blockchain-Based Systems

Blockchain-based systems have been continuing to progress nowadays. As of now, there are already more than 100 blockchain platforms across the world, just only a year after this kind of system became a hit. In fact, Bitcoin, one of the most successful and renowned cryptocurrencies, has recently generated $882 million net revenue.

But similar to the silos present in every company, there is a lot of information about blockchain-based systems that hasn’t been widely known by the public. Here are key points that you need to know before and even during investing to cryptocurrencies.

Trust Issues - Tearing Down the Silos in Blockchain-Based Systems
Blockchain-based systems have been continuing to progress with more than 100 blockchain platforms, still counting, but trust issues is still a challenge! Blockchain offers you an alternative digital future that guarantees a digital ecology of technological advancements to help facilitate and support businesses that depend on Blockchain-based systems and platforms around the world.

Immutability isn’t for Free

Since the blockchain craze, a lot of people has been depending on its immutability feature, that is, the digital information in the chain can’t be changed. As the thinking goes, what a number of people only know is that the folders in blockchain based systems are crypto-signed.

As they’re crypto-signed, the participating network peers should somehow have the records of data. What will happen after is, if data increases, more disk space is needed. Similarly, if a network increases, bandwidth requirements, as well as response times, will also grow.

Now, here’s the thing. Immutability is very costly. In fact, studies revealed that some renowned blockchain platforms had been minimizing storage requirements. What blockchain investors do now in order to force immutability in their blockchain is either by personally paying for it or imposing network consensus.

51% Attack Vulnerability

Researches had shown that public blockchains are susceptible to approximately 51 percent attacks. Even before, this was mentioned by the Bitcoin’s founder, Satoshi Nakamoto. Basically, it’s known that these systems are public and have decentralized nodes. Meaning, changes are seen by everyone and should be agreed by all other nodes upon reflecting on the ledger.

However, an attack may happen in a public blockchain when either a certain hacker or group of hackers can induce 50 percent or more of a blockchain’s computing power or the network’s mining hash rate, making him/her/them hold a network majority.

After which, the hacker/s can hinder new transactions from getting confirmation, which will allow them to stop the payments of some users. What’s more, while having control in the network, the hacker/s can reverse completed transactions and double-spend coins.

Fortunately, every cloud has a silver lining. There is a possibility that hackers might not able to change old blocks or produce new coins.  This could mean that, although proven extremely damaging, a 51% attack may not completely destroy block-based currencies.

Being Public is Having Financial Transparency

Not having genuine anonymity is not good for business people with integrity. Again, everything that is happening in a blockchain is seen by everyone. All of your financial transactions and history in the past, present and even future will be revealed to anyone you made contact with.

Now, imagine you’re a company and this happens. You’re going to go public and reveal all your details from your scalp to soles including your contracting sales, parties, customers, account amounts and anything else. Isn’t that a good financial transparency gift for your rival company?

Lesser Convenience and Protection

You might have heard that maybe everything will be digitalized that conventional money and other tangible stuff will soon disappear because of the inception of blockchain technology. That might be true in the future, but not now. We’re not yet there.

One example is that, as stated, to make a transaction on the blockchain, all nodes must come first to an agreement. This transaction can be in an instant. However, it takes time when it’s classified as untrustworthy, which happens when the block or data is not yet verified.

What’s more, someone can launch fraudulent transactions to hack one’s network, which results in what has been mentioned before as double spending. That’s way inconvenient and unsecured than checking an account in a bank or even in an ATM machine.

Customers aren’t totally protected, as well. Blockchain is a push-based settlement system or a that uses a centralized method like a bank. Once more, anyone can take anything they want to check on the blockchain. That means, only when other parties agree is the only way of returning a transaction if it turns upside down after being verified on the blockchain.

Takeaway

Blockchain-based systems are somehow made for the main reason that a lot of people cannot be trusted, especially in terms of money. Some people will stab you behind your back, so blockchain is made to be in public. Other would tamper contracts, so blockchain is made to be immutable.

However, apparently, these systems have issues that can also break someone’s trust. Hence, don’t invest just because it’s in trend. It’s always important to be skeptical and sharp-witted at all times.

4 COMMENTS

LEAVE A REPLY

Please enter your comment!
Please enter your name here

This site uses Akismet to reduce spam. Learn how your comment data is processed.