Common Misconceptions About Bitcoin and Blockchain

[Debonaire217]

We might just heard about bitcoin at this time, we might be new to bitcoin and just get here through our friends mentioning bitcoin and blockchain. I just want to share some thoughts I have when I was a newbie in bitcoin and blockchain, merely, 2 years ago. I just later figure out that some of my understanding of bitcoin and blockchain turns out to be false as I learn new lesson every day.

Here are some misconceptions I have about bitcoin and blockchain with my own explanations how I can say that it is a misconception.

First, I thought that bitcoin is the best way to become anonymous in terms of transactions. Bitcoin is not anonymous. Why? Because we think that what we have are wallet addresses that isn't linked to any of our credentials. But the more we engaged to bitcoin activities, we didn't realize that we are associating our personal wallet addresses to our identity. One example is when we do KYC , or (Know your customers). These are procedures for a certain platform to verify our credentials and somehow differentiate us from AI.

Second, Bitcoin is a great way to Scam and Launder money. False, similar to my explanation at the first argument, people could track your activities and transactions. It is impossible to stay anonymous because we are bound to withdraw our profits through local exchanges, most of the time, these exchanges will not allow you to withdraw money from ATM without entering your credentials and being verified by their systems. What about Mixers? Even though we know mixers could provide us anonymity, it is not always the case that we can assure this to happen, not all of our transactions will undergo mixers because sometimes, we spend a very little amount of bitcoin that we think that it is unnecessary to use mixers but we might not know that even with this small amount of funds transacted could lead us to be caught. In short, Bitcoin isn't a tool to launder and steal from others.

Third, If Blockchain can store data, Then it is the best kind Database we could have.. We might have a point of thinking the way like this, but the definition of Database is a storage of data that we can manipulate in order to provide services. Blockchain on the other hand is arranged in a chronological order compared to database where we can execute commands such as Create, Retrieve, Update, and Delete. We cannot update a block in the blockchain just like what we do to a normal database as well as to delete a certain block as they are all connected and arranged in chronological order.

Lastly, I know many people really have this misconception from the beginning of their bitcoin and blockchain journey but Blockchain is not bitcoin. Blockchain is the technology working behind bitcoin to make each transactions secured and possible. There are various implementations of blockchain such as supply chain management, real estate, healthcare, and many more. We can just see that the most efficient use of blockchain is through implementing it with currency and transactions.



These are some misconceptions that I want to share for newbies, especially I realized this from watching videos and continuously learning from internet. If you think there are some misconceptions that we can share, feel free to contribute to this thread.

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[Wenbing]

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Third, If Blockchain can store data, Then it is the best kind Database we could have.. We might have a point of thinking the way like this, but the definition of Database is a storage of data that we can manipulate in order to provide services. Blockchain on the other hand is arranged in a chronological order compared to database where we can execute commands such as Create, Retrieve, Update, and Delete. We cannot update a block in the blockchain just like what we do to a normal database as well as to delete a certain block as they are all connected and arranged in chronological order.

Let me add one or two things to what a blockchain is.

Blockchain is a software technology that function as a ledger where crypto transactions are recorded. This transaction are transparent and public that everyone can know what's going on there at the same time. Once any information is recorded on the ledger, it can never be altered.

Misconception
Many people think altcoin is same with alternate currencies. I made the mistake too one time.

Altcoin is  digital currencies or cryptocurrencies other than bitcoin: example  are; Litecoin, Etheruem, Monero, stela etc.

While alternate currencies could mean any currency which could be fiat or digital that's different from the currency one uses.

I hope this help.

[BIT-BENDER]

First, I thought that bitcoin is the best way to become anonymous in terms of transactions. Bitcoin is not anonymous. Why? Because we think that what we have are wallet addresses that isn't linked to any of our credentials. But the more we engaged to bitcoin activities, we didn't realize that we are associating our personal wallet addresses to our identity. One example is when we do KYC , or (Know your customers). These are procedures for a certain platform to verify our credentials and somehow differentiate us from AI.

This is not bitcoin activities, these are personal activities people join, for example bounties, crytocurrency inclined site and more, we involve our self in many things so long is has particles of crytocurrency known or unknown to us we exposing our identity. We can't blame bitcoin for it.

Second, Bitcoin is a great way to Scam and Launder money. False, similar to my explanation at the first argument, people could track your activities and transactions. It is impossible to stay anonymous because we are bound to withdraw our profits through local exchanges, most of the time, these exchanges will not allow you to withdraw money from ATM without entering your credentials and being verified by their systems. What about Mixers? Even though we know mixers could provide us anonymity, it is not always the case that we can assure this to happen, not all of our transactions will undergo mixers because sometimes, we spend a very little amount of bitcoin that we think that it is unnecessary to use mixers but we might not know that even with this small amount of funds transacted could lead us to be caught. In short, Bitcoin isn't a tool to launder and steal from others.

rather than using local exchanges and you want your anonymity kept you can make use of larger exchanges, some local exchanges can even have limits in there transaction and can be a potential scam.
Bitcoin should not be a tool to lauder and steal others. But the grim reality is that it is. saying its not can make newbies to easy their sense of security.

[o_e_l_e_o]

Once any information is recorded on the ledger, it can never be altered.

Yes it can. That is the basis behind a double spend attack. It also happens when staled blocks are dropped from the network. That's why many services will require you to wait for 6 confirmations before crediting your deposit, as transaction with 0 or 1 confirmation can be altered.

Bitcoin should not be a tool to lauder and steal others. But the grim reality is that it is.

No it isn't. Bitcoin is a tool to transact peer-to-peer. If people choose to misuse that tool to steal from others, then so be it, but that doesn't make a bitcoin a "tool for stealing" any more than it makes the internet a "tool for stealing" because email scams exist.

[hatshepsut93]

Third, If Blockchain can store data, Then it is the best kind Database we could have.. We might have a point of thinking the way like this, but the definition of Database is a storage of data that we can manipulate in order to provide services. Blockchain on the other hand is arranged in a chronological order compared to database where we can execute commands such as Create, Retrieve, Update, and Delete. We cannot update a block in the blockchain just like what we do to a normal database as well as to delete a certain block as they are all connected and arranged in chronological order.

Blockchain is still a database, it's just a strictly append-only database with some additional restrictions. And existing centralized databased are sometimes implemented in such ways that they have some common features with blockchain, for example instead of just updating some value directly, they store the whole log of transactions and occasionally use it to recalculate the some values to correct errors, and when errors happen they don't edit them, but create special error-correcting transactions. This is an example of immutability, though it is still far from a true decentralized blockchain.

But the key point is, Satoshi created blockchain as a part of Bitcoin's protocol, and it's actually very hard to take it away from Bitcoin and apply it to something else, because it was designed for a peer-to-peer network, not centralized organizations with a few entities that actually trust each other.

[BrewMaster]

the biggest factor that makes blockchain a terrible thing to use anywhere else (anything other than a decentralized cryptocurrency) is the proof of work that exists on top of it. every time we want to "update" that database we have to perform a defined "hard amount of work". in a normal database you just update it right away without any additional requirement or time wasted.