7 Blockchain Myths, Debunked by Johan Zammit - SmartStudios.io Johan explains why Blockchain is not a database Blockchain is not free Blochain is not the same as Crypto and is cannot be used interchangeably with Btcoin. Blockchain is not only hype but cannot be used for everything. There are many blockchains - not just one. There are many non-crypto examples of blockchain. Blockchain will not kill all middlemen. Banks are very involved in blockchain. Smart contract are neither smart not contracts yet. Consortium blockchains can be useful. Most of the hacks we hear are not a hack of the blockchain. Malta - the blockchain island

1. 9th July 2018
7 Blockchain Myths,
Debunked
Johan Zammit

2. Myth 1
Blockchain = Database

3. Blockchain Is Not A Magical Cloud Database
- A blockchain is a type of datastore.
- It is NOT a (distributed) database.
- It is NOT cloud storage.
- All have their own different uses and strongpoints.
- We do NOT store everything on it.
- We usually store only the key (the hash) to the data.
- Useful for multiple (non-trusting) stakeholders.

4. Myth 2
Blockchain is Free/Cheap

5. Nothing Is Free!
- “Free Money Transfer” we were told
- Blockchain solutions are more expensive to run than databases.
- Every transaction incurs a transaction fee.
- For each new block, a miner gets paid for solving a
mathematical problem (find nonce -> hash with leading zeros).
- Miners have to buy computing resources. These consume
electricity “comparable to that of small nations around the
world”.
- Ethereum is moving to Proof-of-Stake

6. Myth 3
Blockchain = Crypto = Bitcoin
VS
Blockchain In Everything

7. Just Hype, Just Crypto, or Everything?
“Blockchain is just a buzzword. It is just hype.”
“There is only 1 blockchain”
“Blockchain = Bitcoin” used interchangeably
“Blockchain is only for cryptocurrencies and financial
use-cases”
“Blockchain will change the world, nothing will be
the same anymore”.

8. Just Hype, Just Crypto, or Everything?
- We will hear of failed projects, market crashes and “bubbles”.
- But blockchain is not a bubble. It is not just a buzzword.
- Blockchain (Distributed Ledger Technology) is the underlying
foundation technology of cryptos.
- Blockchain was invented in 2008 (Oct. 31). Satoshi Nakamoto
published his Bitcoin paper.
- So cryptocurrency was the first use of blockchain.
- coinmarketcap.com has 1620 cryptos, coinlib.io has 4494

9. Just Hype, Just Crypto, or Everything?
- But there are many other uses of blockchain.
- We are on a journey…
Fear It, Understand It, Respect It, Use It
- Blockchain, on the other hand, CANNOT be used for anything and
everything.
- No, blockchain does NOT have endless use cases.

10. How Many “Blockchains” Are There?

11. Top 12 Non Crypto Uses Of Blockchain
Use Of Blockchain Example
Registries chromaway.com/landregistry/
Provenance & Supply Chain provenance.org
Voting followmyvote.com
Energy Trading wepower.network
Music royalties to artists ujomusic.com
Real Estate & Apartment Rental slock.it
Ride Sharing arcade.city
AI singularitynet.io
Stopping Fake Drugs mediledger.com
iGaming & Esports bx.bet
Data Verification stampery.com
Insurance etherisc.com

12. Myth 4
Blockchain “kills” all middlemen
so banks are against it

13. Blockchain & Middlemen
- Banks, lawyers, notaries, real estate agents, insurance
brokers will all be affected by blockchain.
- Blockchain will change the way middlemen operate but
we will still need their services.
- Blockchain will not replace their soft skills. Yet it will
automate manual work they do.
- Most of the new services on blockchain are not fully
decentralised. Becoming middlemen themselves.

14. Banks & Blockchain

15. Blockchain & Banks
- Quest for instant global payments.
- Banks…
- want to reduce processing costs, cost of compliance
- have competitive pressure from fintech companies like Revolut
- Bank Of America has approx. 50 patents, more than IBM.
- R3 Corda & Ripple (XRP) born from banks to build blockchain
solutions for banking.
- Maltese banks…
- most are not against the principles of crypto and blockchain
- ECB commitments, correspondent banks and were waiting for legislation

16. Myth 5
Smart Contracts Are
Smart & Legally Binding

17. What’s In A Name? “Smart Contract”
- Smart Contracts are a key element of blockchain
solutions
- They are a piece of code for process automation.
- Performs action when certain conditions are met.
- When conditions A and B are met, C will happen
- Transfer ownership
- Make payment
- Deployed at a particular address on the blockchain.
- Smart Contracts are NOT yet legal contracts.

18. What’s In A Name? “Smart Contract”
- Smart Contract are not legally binding.
- They do not enforce a contract like a court (by men with
guns)
- Can be used as a proof of whether a certain task has been
accomplished.
- The smart contract is as good as its developers.
- Powerful tool when used in tandem with IOT devices.
- Cardano, NEO, EOS, QTUM, Stratis, Waves (not just as
Ethereum)

19. Myth 6
Private/Consortium
Blockchains Are Useless

21. Blockchain Network Types

22. Uses Of Consortium Blockchains
- Public blockchains have strength in numbers but are slow, do not scale and use lots of resources.
- Non-Public blockchains (think Intranet vs Internet)
- not everyone can join and run public nodes on their PC, conduct a transaction, see the
transaction activity
- only open to their ‘members’ or pre-approved participants, whose identity is known
- better scalability, lower costs but more prone to hacks/attacks that threaten their integrity
- Non-Public blockchains lose some of the blockchain benefits but they are still very useful. Consortium
blockchains as more useful than private blockchains.
- Even Vitalik Buterin said that it is also possible to have a feasible non-public blockchain.

23. Uses Of Consortium Blockchains
- Use Cases : Supply chain, banks transacting with each other, accounting
- Examples : Monax, Multichain, R3 Corda (70 banks), EWF (for energy), and B3i (for
insurance) or IBM's Hyperledger Fabric (Linux Foundation), Ethereum Enterprise
Alliance
- Private blockchains offered as a BaaS. See Microsoft Azure, IBM, Amazon AWS,
Oracle offering.
- Hybrid - private/consortium blockchain interacting with a public blockchain.
- General rule : if the public – use public, if stakeholders are only a small group – use
private/consortium.

25. Myth 7
Blockchain
“Has Been Hacked” vs
“Is 100% Secure”

26. Blockchain Security
- Bitcoin & Ethereum’s blockchains were NOT hacked.
- The larger more distributed they are the more secure
they become against 51% attacks where attackers take
over control of the consensus.
- The standard cryptography blockchains uses was not
hacked.
- Most hacks come from human mistakes. PEBKAC.
- The fact that cryptos are volatile should not be mixed up
with whether or not they are secure.

27. Blockchain Security
- Hacks
- Smart contract bugs
- Exchange wallets
- Personal wallets including paper and hardware wallets
- 51% attacks on smaller blockchains
- Quantum Computing will force changes to the current
cryptography

30. Other Myths
- Blockchain Is Immutable
- Blockchain Is Only For Criminals
- Blockchains Are Anti-Government
- Blockchain Can Be Stopped Or Taken Down
- Blockchain Holds The Truth
- Token = Coin = Currency
- Blockchain Dapp is 100% on Blockchain
- Blockchain Is For Lawyers, People In Finance and Tech

31. Malta : The Blockchain Island
Malta has the most advanced blockchain regulatory framework in the
world.
The framework consist of 3 bills
• Malta Digital Innovation Authority Act
• Virtual Financial Assets Act
• Innovative Technology Arrangements and Services Act

32. Malta : The Blockchain Island
Another myth : blockchains and government are not compatible. They are
only an expression of liberitarians and anarchists.
Blockchain can improve the efficiency and transparency of a government.
Immutability & smart contacts are big features for governments
themselves internally and for enforcing compliance and taxes.
We will see a new era of software-defined and software-enforced
regulation.

33. Johan Zammit
j.zammit@smartstudios.io
Questions?