What is hidden behind the hype about blockchain technology that we don’t know?
A new technology, no matter how good it sounds, still does not create practical applications in life. Sooner or later, that technology will be forgotten.
Plainness
This is the outstanding point of blockchain when compared to current forms of record storage. A data system built on blockchain will allow members to review details of every transaction recorded on blocks, which cannot be affected or deleted.
Going back to traditional recording methods, when data is not publicly available, people’s trust seems to have no basis. Worse, data can be modified by powerful individuals.
If the bank builds a database on blockchain technology platform. We can completely check the transactions of an account (look up using stk). We can see whether transactions have been completed or not, when the transaction started and ended, what amounts of money were transferred to and from,… just sit at home and look up on the page. Bank blockchain data.
To see, the development of blockchain has created a necessary transparency, completely superior when compared to current systems.
Eliminate intermediaries
As mentioned in the first article, most of the activities and transactions we are doing today are through an intermediary, which we trust will ensure reliability and security. and secure for transactions.
With the emergence of blockchain, these units will soon be eliminated. Instead, there is a Peer-to-peer transaction model, meaning all transactions will be carried out directly with each other without having to go through any third party.
We are lucky to live in a peaceful, stable country. But there are hundreds of millions of other people in the world, they are not as lucky as us when they have to live in a country that is politically and militarily unstable… Certainly intermediary systems such as banks, It will also be difficult for businesses to meet the legal requirements, and there may be certain violations.
In the above countries, blockchain will prove its capabilities. Helps people make transactions safely and transparently without relying on third parties.
Decentralization
If I had to choose the most outstanding feature when talking about blockchain, I would definitely choose decentralization. This is what makes blockchain different. Thanks to decentralization, the new blockchain can eliminate intermediaries, increasing transparency and reliability for on-chain transactions.
The decentralization of blockchain is built through a consensus network, all data entered into the chain will be censored, managed and stored by the whole network. No data belongs to any one organization, and no individual can arbitrarily change data on the blockchain. Thanks to that, data management, especially when there is cooperation between many parties, will become easier.
What if banks all had the same database on the blockchain? At that time, details of every transaction will be checked by member banks. Furthermore, information about customers can be shared with each other. In case there are discrepancies, for example on credit.
Furthermore, if a database on the blockchain is sufficiently decentralized, it will be difficult to be attacked or taken down. If data is changed on one computer, the remaining computers in the network still have a copy to compare.
Faith
As mentioned in the previous article, trust is the core value of blockchain. This trust is built through decentralization and transparency, so users can make transactions directly without the need for intermediaries.
Here, trust is placed in the blockchain, in distributed, secure and immutable data. It can be said that this is a well-founded belief. This is a great benefit that blockchain brings.
Security
With its special chain structure, data once entered into the blockchain cannot be changed. When blocks are linked together, if someone wants to change a piece of data in a block, he will have to change the entire blockchain.
Usually, attacks by fabricating historical data are very dangerous. To solve it, we will have to spend a lot of time and effort to trace back the data. But when blockchain is applied, data lookup will be easier than ever.
But saying that does not mean blockchain is absolutely safe. Although it has overcome security problems in conventional systems, blockchain still exposes certain weaknesses, not in data but in smart contracts built on it. Solana Blockchain was attacked, hackers took possession of many wallets containing users’ assets. The initial number announced by Solana’s twitter homepage was 7,767 affected wallets. But the actual number is probably much larger than that. The cause for the above hack is still being investigated, initial guesses are that the hacker found a bug in the transaction signatures on Solana.
Scalability, cost savings and transaction speed
Ecosystems like Ethereum are the clearest example when it comes to scalability. Blockchain is more than just a data storage platform, people have started creating things of value on blockchain. For example, electronic currencies — crypto. Furthermore, thanks to Smart Contract technology, many developers have created applications right on the blockchain to take advantage of the network’s advantages.
In recent years, many projects have launched new blockchain models. For example, multiple blockchain chains run in parallel but are interconnected. The blockchain chain combines Zero-Knowledge technology. To see, blockchain is still in the early stages and the potential for expansion is huge.
Moreover, with the P2P transaction model of blockchain, there is no intermediary involved, every transaction on the blockchain will save a lot of costs and completion time.
Returning to the Ethereum ecosystem again. With this network, we can transfer money anywhere in the world, a transaction usually costs 5–8$ (some networks cost less than 0.1$) and takes about 1–2 minutes to arrive. Thanks to blockchain, we can transfer money to any country in the world.
During the Russia-Ukraine war earlier this year, the Ukrainian Government opened crypto addresses (Bitcoin, Ethereum,…) to receive donations and support from all over the world. Do you still doubt the usefulness of blockchain?
Lack of privacy
In the above section, while it is true that transparency can bring trust to people, it also comes with concerns about privacy. Because blockchain is a distributed database, it allows anyone to access and “peep” your data.
If you unfortunately reveal your blockchain wallet address online, then everyone will know what your account balance is, what debt you have, what you bought yesterday,…
A decentralized blockchain network is a great idea, but data security concerns are equally important. We cannot yet know if our wallet address is in the hands of criminals, what they can do to cause harm or not.
Currently, there are private blockchains born to overcome this drawback. But often, these are chain networks for businesses or organizations. Networks with users around the world are still following the model of information transparency for users.
Security risks
Blockchain certainly does not have a method of absolute security. There are still vulnerabilities for hackers to attack. The Solana incident mentioned above is just a very small example. In the past, there have been larger-scale attacks than this.
In addition, there are ironic cases that happen when we use decentralized wallets. Centralized wallet means that both the wallet and the assets in the wallet will be managed by you. No organization can intervene. When you first open your wallet, you will be given a unique set of characters, like a unique key to open your wallet.
For this reason, there are a few possible scenarios:
Forgot the character line. So it’s the end, right, so it all goes down the river. If you lose or forget to save this character, your assets will forever be stuck in that wallet with no way to get it out. If it is a bank, we can solve the problem with identification documents to prove that we are the account owner. But with decentralized wallets, that’s the end.
Risk of wallet attack if character string is revealed. If unfortunately you reveal your wallet’s signature, it means anyone can access your wallet and use your account. And because this is a decentralized system, no one can intervene for you.
It can be seen that, once entering the decentralized game. We must take responsibility for all our decisions. One wrong move can cost you your entire fortune. No one will stand up to support you. The only advice is: Be careful and don’t reveal the string.
Decision making problem
Life is always full of unexpected risks, especially in the financial market. If unfortunately we encounter a serious problem, a decision to deal with it needs to be made immediately. But blockchain lacks that.
Is a decentralized network chain. The decision-making power of the chain lies in the hands of the consensus network. Meaning, the consensus network plays a role in determining the future of blockchain. If in a traditional company model, decisions can be made by the head, or through consensus of department leaders. With blockchain, that process is called consensus or voting.
Because a consensus network will have quite a few members, the time it takes for a decision to be voted on will not be as fast as with older models. Normally, the consensus process takes several days to decide. If the network encounters an urgent problem, it will probably be difficult to have a timely response.
In addition, sometimes there will be certain controversies within the network. If an opinion, although good, upsets the majority, they will most likely be willing to vote against it to maintain their personal benefits.
Maybe, the consensus network will grow the blockchain, but maybe, it will cause the network to stagnate.
Construction costs
The benefits of blockchain are something everyone can see. But the reason why large corporations, governments, etc. have not yet converted to this technology probably lies in the construction costs. If giant-scale transformations are to happen, blockchain must minimize construction costs and provide reasonable efficiency.
There have also been small-scale trials taking place. China, despite having repeatedly issued orders against crypto, is one of the most active with blockchain technology. The government of this country has built the first blockchain for the government. China even has its own stable electronic currency (Stablecoin) and is testing it on a small scale.
At the end of 2021, Britain also held a Digital Pound Foundation conference to discuss the issue of the digital Pound currency.
However, it still takes time for experts to find ways to apply blockchain effectively.