No. 6
Blockchain is insecure!

Benjamin Franklin once said, “nothing in this world is certain except death and taxes.” He was right about that. After all, no technology in the world and no system will ever be 100 percent secure. But the fact is, blockchain technology and the principle behind it have not yet been hacked. Blockchain relies on decentralization, i.e. distributed structures, which means that hacker attacks can be securely warded off. Transactions are constantly checked by the entire network, so attacks on the blockchain are improbable. A hacker who wanted to change a network based on blockchain technology would have to hack the majority (at least 51 to 75 percent) of the nodes involved in the network. Only then would the attack have the potential to succeed.

However, the fact that blockchain technology is fundamentally secure does not mean that all services, applications or nodes linked to the blockchain are also automatically secure. It is not without reason that the community talks about 95 percent of problems being located in front of the computer. If a network participant does not secure his computer or else the device he uses to write on the blockchain, a hacker has the opportunity to access data. Digital identities can be stolen. This initially gives the hacker the same rights and access to the Blockchain as the original user. Which rights these are in detail (read, write) is determined by the authorization module.

There are different mechanisms that can quickly identify and stop such an attack. For example, the so-called plausibility check is used. If the behavior of the node does not correspond to the behavior in past transactions and activities, the participant is excluded from the network. Since the blockchain consists of blocks that build on each other and all transactions can be tracked at any time in the history, the hacking activities are quickly identified and can be cancelled.
Thus, two-thirds of all participants in the network would have to disregard their IT security, be hacked at the same time before, for example, the plausibility check detects deviations, further protective mechanisms would have to be bypassed, and only then could an attack become potentially dangerous for the blockchain network. Overall, blockchain technology is very secure and successful attacks are improbable.

No. 5

Blockchain is just a hype.

On this topic, we like to refer to the hype cycle, better known as the Gartner Hype Cycle. Typically, any successful technology that is newly introduced goes through five phases of attention. After an initial trigger, attention climbs the peak of inflated expectations before sinking into a deep valley of disillusionment and then reaching the plateau of productivity via the slope of enlightenment.

Blockchain technology has already passed through the peak of inflated expectations and the valley of disillusionment. No technology will be a universal panacea, including Blockchain. There have been some promising application examples, but there are always some challenges associated with the use of new technologies.

Currently, the technology is on the slope of enlightenment. There is an emerging understanding of the benefits, practical implementation, but also the limitations of Blockchain. The technology is becoming more tangible and more concrete use cases are appearing.

So blockchain is not hype. The Blockchain Europe project wants to take all interested parties along the way of enlightenment, so that the plateau of productivity can be reached together and in a timely manner, and the technology and its areas of application can be continuously developed.

No. 4
Blockchain supports crime.

Blockchain is a technology that does not require intermediaries. Digital currencies based on it enable anonymous monetary transactions. The assumption is that drug or human traffickers, smugglers of weapons or terrorists can profit from these transactions.

On closer inspection, however, it becomes clear that the anonymous transaction is not suitable for criminal use, as every flow of money can be tracked seamlessly in the blockchain. Only a single connection to the identity is necessary, for example when changing digital currency into euros, and all previous transactions on the blockchain can be assigned to the respective person. Many criminals have been caught in this way in recent years.

So, once again, it is digital currencies – especially BitCoin – that are causing misunderstandings here, and the statement that blockchain technology supports crime is wrong.

In the end, this statement applies to all other technologies as well. There is a reason why there are white hats and black hats in IT security. You can use cryptographic techniques and algorithms to secure systems and data, or to look for security gaps for targeted data theft. You can use AI to assist with complex operations, or to spy on people. Technologies offer new opportunities and potential. What they are used for is decided by the human being.

No: 3

There are no concrete and meaningful use cases for Blockchain!

As blockchain remains an intangible topic, the general public is often unaware of current developments. In fact, there are currently more than 30 blockchains on the market. There are numerous developers for decentralized applications on the blockchain and many service providers offering blockchain-as-a-service, among other things. In addition, the number of blockchain startups is growing rapidly. The impressive scene in Berlin is often cited. However, NRW is catching up, which is not least evident from the Blockchain Masterclass.

If we look at the big names and the global players, it quickly becomes clear that they are also working on being able to use blockchains without barriers: IBM, SAP, Oracle, Microsoft and Fujitsu are just a few examples.

Textile retailer KiK uses Blockchain with the goal of a seamless representation of environmental and social standards along the entire supply chain. Mercedes Benz is the first manufacturer to use blockchain technology to map CO₂ emissions in its global battery cell supply chain. The world’s largest brewer, Belgium’s Anheuser-Busch InBev, producer of Budweiser among others, is working with blockchain startup BanQu to track products in its supply chain.

In addition, there are many research networks, institutions and projects that are currently working on the use of blockchain technology in practice. Some implementation examples may still be pilots for now, but if we think back to the development of the Internet, it was no different.

No. 2

Blockchain wastes engergy! How can something like this be understood as a future technology in times of climate change?

Blockchain does not have a good reputation in terms of eco-balance. The reason is its frequent equation with cryptocurrencies such as Bitcoin. These are indeed energy-intensive – especially the so-called mining, i.e. verifying transactions and generating new coins, is associated with a very high computing effort. Bitcoin falls particularly heavily in this regard. The scalability is questioned, because every single transaction now consumes almost twice as much energy as an average household in a day. But: blockchain is not equal to bitcoin.

Many blockchain applications and systems, especially in an enterprise context, have a net energy consumption of zero or single-digit percentages. There are a variety of different algorithms to choose from. Some are more energy intensive, others less so. Each option has advantages and disadvantages. Depending on the application, cost-effectiveness and environmental impact, it can be weighed up which variant should be used.

Let’s go into a bit more detail: one algorithm is the so-called proof-of-work (POW). It is used with Bitcoin and first requires validation from every sender in the blockchain network. In a public network, this makes perfect sense, but this procedure is considered very energy-intensive. If we now use, for example, a proof-of-stake instead of proof-of-work for verification and consensus building, because the corporate network is not open but consists of known actors, the computing power required and thus the energy demand can be reduced many times over. However, with a proof-of-stake, we also get a satisfactory and adequate solution.

Blockchain should be used where it really makes sense. The technology can dock onto existing structures and networks and be used in numerous ways. Here, as with any technology, there are energy-saving and energy-intensive deployment options. Which combinations make sense is decided by taking into account economic, ecological and social aspects.

Today No. 1

Blockchain? That’s Bitcoin!

Blockchain is a technology and BitCoin is just an application. Meaning, Blockchain is much more than the Bitcoin. Blockchain is a basic technology on which many different systems can be built, digital currencies are just one example, even though they illustrate the potential of the technology very well.

For example, blockchain technology can provide transparency, traceability and data integrity in healthcare, identity management, insurance, food, timber, ticketing and of course logistics and supply chain management.

A blockchain is a distributed, public database. In the context of Bitcoin, this database is used to manage monetary transactions. However, personal data and authorizations or digital documents can just as easily be managed in the blockchain by means of digital identities. The focus of the technology is therefore less on financial transactions and more on verified, authorized and tamper-proof transactions of different data.