Demystifying Cryptocurrency and Blockchain: 6 Common Misconceptions Explained
Introducing the subject of blockchain technology, as you can imagine, is a challenge. You never know what people have heard about blockchain technology and the conclusions that they have made on this complicated topic.
Many of these conversations start with the major headlines in the news. FTX, crypto winter, NFT scams, silly jpeg images that go for millions, etc. What have you heard? In the mainstream media, the more dramatic, the better. The perception of this technology tends to be negative — all the more reason to explain the benefits and resolve the misinformation.
For this article, I collaborated with Paul Lambert, Web3 startup advisor and host of the RunningWeb3 podcast. He has been involved in crypto since 2017 and co-founded a DeFi crypto company in 2021. Paul has since used that experience to educate people on web3 and cryptocurrency through LinkedIn posts. He also started RunningWeb3, a space where entrepreneurs come to listen, learn, and connect with others creating a web3, blockchain, or crypto business.
Here we discuss some of the common confusion and misconceptions we receive when we first introduce the subject of Web3 and blockchain technology to curious beginners.
Blockchain technology goes beyond the purchase, sale, and transfer of cryptocurrency.
Blockchain technology originated with Bitcoin and the underlying technology for cryptocurrencies.
However, this powerful technology has multiple purposes because of its decentralized nature and transaction transparency.
Some include:
Supply chain tracking
Secure voting
Manage digital identities
Eliminating intermediaries for banks, brokers, and other financial institutions
Membership and loyalty tracking
Applications such as social media platforms, marketplaces, and games
There is a misconception that decentralization is worse than centralization because of the lack of leadership, rules, and regulation.
Many argue criminals will get away with anything without a centralized authority, rules, and regulations. Because this technology is new and challenging to understand, consumers need more safety and security measures. We still need some level of leadership and decision-making.
However, the positives outweigh the negatives with decentralization.
Overall, blockchain technology is more secure because the information is stored and saved in multiple locations making it less vulnerable to attacks and hacks. All transactions operate on a public ledger which promotes accountability and trust. Without relying on centralized entities (government, big corporations, etc.) to manage our data, we have more control over what we want to share and with whom.
Additionally, many of the most common and effective attacks in web2 are ineffective in web3. Attacks such as “spear phishing” and social engineering are much less effective against a decentralized framework.
For web3, one of the most common ways to provide democratic decision-making is through a Decentralized Autonomous Organization, or DAO. DAOs let users vote on decisions, with the weight of their vote often determined by their participation within the organization or the number of tokens held. This gives all users a say in what happens within the project.
Mass adoption of blockchain is problematic because it is too confusing, technical, and complicated to understand or use.
Yes, blockchain is complicated and, thankfully, is addressed daily by those building in the Web3 space. Developers are consistently gathering information and feedback from their beta testers to build products and provide services that are easy to use. However, it does take time.
Web3 education is critical to the implementation and success of these projects.
Companies implementing blockchain technology into their business plans understand the need to break down complicated information into easy-to-understand instructions. While it is far from perfect, many educators (myself and Paul included) are eager and open to onboarding people into this space.
Every day the space becomes more user-friendly. As developers continue to improve the user experience and more people are educated on the advantages of web3, we move toward a world where the benefits are as easy to use as any app on your phone. As @Ryan Kuhel says, "In the future, people will access government services, commerce, and their finances using a blockchain-based digital identity.”
Some believe crypto has no real value. It is all hype that can go away in an instant.
While cryptocurrencies are volatile and unpredictable, they are becoming more widely accepted and used worldwide. Many currencies have a greater purpose - such as Ethereum (ETH), which runs decentralized applications (dApps).
With the limited supply of Bitcoin, for example, this scarcity drives up the demand and, as a result, the price, which creates more value. The enthusiasm for building on blockchain is increasing. While there certainly will be failures with some, with time, the improvements made will onboard more and more people.
Further, many large financial institutions hold investments in blockchain companies and crypto firms. Citibank, Morgan Stanley, JP Morgan Chase, Goldman Sachs, and BBVA have hundreds of millions of dollars each in such investments. While some projects are just for memes, a substantial number of crypto-related companies are changing the world.
With so many people on centralized social media platforms, it will be too difficult to change how we do things on the internet.
Moving people away from social media platforms like TikTok, Facebook, and Instagram will be challenging. These companies may adapt (Facebook and Meta are certainly trying), but will they create a decentralized platform?
Content creators will grow frustrated, giving their work away to big, centralized companies. They will see the benefit of decentralized platforms where you sell and work directly with your fans and customers rather than share with huge centralized companies and intermediaries with high fees and red tape.
Conclusion
Blockchain, Web3, cryptocurrency, and other new technologies are complicated subjects. It isn’t surprising that many people only hear the doom and gloom on the subject from mainstream media. But for those building, educating, and learning every day in this industry, we see the creative potential and positive outlook before us.
It will take time, and we are still early. It isn’t a matter of IF, but WHEN blockchain becomes more mainstream. The day will come when we won’t even know that our favorite businesses run on blockchain technology. We will buy concert tickets, get car inspections, earn points at the grocery store, and post on social media without thinking about the blockchain behind it all.
We hope this article gives you some clarity and a jumping off point to explore further. Web3 is full of amazing people that are happy to join you on your journey and answer questions as you continue to learn.
It was a lot of fun working with Paul on this article. If you want to learn more about crypto, blockchain, and starting a web3 business, you can follow him on LinkedIn or listen to the RunningWeb3 Podcast!
