Many developers are on the fence about pursuing a career in blockchain, which is unsurprising given the industry’s deeply ingrained misconceptions. Largely influenced by the media’s role in spotlighting scams that aren’t related to the blockchain technology itself but leverage common blockchain buzzwords – as well as the circulation of misinformation within blockchain communities in forums and on social media – these ‘myths’ have steered the blockchain conversation further away from its true functionalities.
They have also generated antagonism in the developer world, causing conflict between the gamers and those who want to mine blockchain and cryptocurrencies. As the hardware used by blockchain is similar to those who want to play video games – notably, graphics cards – when demand is high, the hardware becomes harder to get hold of. This has put the two groups on a path to question blockchain and how it works.
In the broader business sense, blockchain technology is often grouped into the category of ‘innovative technology we’ll eventually use’ – something that’s driven by short-lived hype. However, with use cases around blockchain’s real-world impact gaining traction and proving its functionality, these misconceptions need challenging – not only to provide greater clarity on what a career in blockchain entails today, but also to reflect the opportunities that are now available for developers in the blockchain space. Here are seven common myths demystified:
1. Blockchain technology can’t be green-conscious
Recent conversations in the industry have pointed to the energy consumption of blockchain and just how sustainable it really is. Many of these arguments are valid with Bitcoin per year using energy that’s equivalent to sixty billion six hundred and fifty million smartphones charging. When we think about the emerging and more exciting use cases of blockchain technology – from improving the efficiency of the private equity market or enabling simpler investments into green energy bonds – Bitcoin simply doesn’t factor that in.
But Bitcoin isn’t all of blockchain. Proof-of-stake blockchains secure the network while also eliminating the carbon emissions issue that’s inherent with proof-of-work blockchains like Bitcoin and Ethereum. And they’re growing.
Proof-of-work blockchains are what’s behind traditional blockchain ‘mining’, where ‘miners’ are tasked with solving a mathematical puzzle to add a new block (or packages of data) to the blockchain. Not only does this require a huge amount of computational power because they require the miners to all compete to solve the same very complex equation, but it also drives energy consumption for companies operating those computers sky high.
On the other hand, proof-of-stake blockchains simply require those working on the chain to have skin in the game – a stake – by putting economic value at risk to attest they will act in the interest of the chain and its users, rather than tasking participants with math equations. They also use general-purpose computers and can be run from the cloud, requiring no graphics card to mine it. So, with more companies moving towards a proof-of-stake approach, the industry’s greener future is looking a lot more promising – as is the divide between the gamers and miners in the developer community.
2. The blockchain industry is set on its ‘get-rich-quick’ mentality
A common criticism of crypto is that it’s a Ponzi scheme. For example, when buying Bitcoin, many rely on there being someone to buy it off them at a higher price. While there may be some validity to that, it’s important to distinguish the mature companies who are thinking long-term and building genuine utility and functionality from the ones who aren’t.
It’s tough to deny the dynamic growth mentality amongst blockchain players. Even though this can create a sense of fluctuation across the industry – with some eager blockchain companies accelerating ahead with a lack of direction and knowledge – it also creates visionaries that play an essential role in driving blockchain’s development and adoption. This isn’t to say that someone can’t ‘get-rich-quick’ in blockchain; it’s just that it’s not the central driving force and that there’s more to it than the short-term successes. By choosing to join one of the blockchain players that has a clear vision and long-term mission, you can secure a stable and viable career path.
3. Blockchain is simply an attempt to make decentralized digital currencies
Limiting blockchain’s function to purely creating decentralized digital currencies is an injustice. Blockchain is more than cryptocurrency. It’s about creating decentralized systems that solve real-world problems.
For example, the unequal access to economic growth that exists in today’s society can be solved by automating and simplifying regulated markets with blockchain. In finance and securities, blockchain opens up the option for fractional asset ownership, which can help assets become more liquid. It can also create new assets that simply weren’t possible before – either because they came at too high of a cost to issue, service or manage, or because they came with too high a risk. It’s all about augmenting processes that are bound to tradition and therefore – in some cases – hindering innovation.
4. You’re limited to developing Bitcoin or Ethereum ecosystems
Since blockchain has traditionally been built by developers and used by developers, those with less of a technology background may not even be aware of the different types of chains available. Bitcoin and Ethereum are certainly more well-known chains, but there are others out there that are more advanced in terms of combating the issues associated with Bitcoin and Ethereum solutions – issues like identity, governance, confidentiality and compliance. Looking beyond the obvious can uncover alternative opportunities within the blockchain landscape to develop forward-thinking applications.
5. Every blockchain is an island
Interoperability is the end goal for future-gazing blockchain companies. As interoperability is possible, many participants are now focusing on it and having conversations with institutional players and governments in ensuring integration is as seamless as possible, and that real-world utility and interoperability is brought into the blockchain space. It’s a work-in-progress and a collaborative effort.
In the security tokens space, this is incredibly important. While securities laws vary across different asset classes and jurisdictions, a successful open finance platform must be able to accommodate and ensure the compliance of any type of asset and jurisdiction. But thanks to smart extensions using a combination of Rust / WASM based smart contracts, financial primitives such as compliance, capital distribution, settlement and corporate governance, can be extended. These ensure that asset issuers and investors are not limited to utility provided at the base layer of the blockchain and can bring their own compliance rules and other functionality to the blockchain.
6. Blockchain companies are run by anonymous scammers
As the meme of the blockchain scammer becomes familiar in the industry and beyond, some players in the blockchain world have opted to make their teams semi-anonymous. They hide in the shadows, away from public sight. For some blockchains, there’s a loose and undefined collection of participants operating the chain – some of which are pseudonyms. This hasn’t worked in favor of building credibility and trust with blockchain users and developers. There are however legitimate blockchain companies that have employed talented people to develop blockchains in good practice. It’s a matter of differentiating the good from the bad.
7. Blockchain is just a database
A hangover from the Bitcoin world, many view blockchain as a glorified database, rather than the complex systems they are today. Because of blockchain’s decentralized nature, there are lots of problems within the blockchain world that developers need to solve, largely around governance and managing upgrades. For example, blockchains are susceptible to forks during upgrades, where the chain splits into two separate chains, which can expose major legal and tax challenges for tokens backed by real assets. But the blockchains that avoid the risks of hard forks will naturally pull ahead.
There are a bunch of blockchains that are carrying out the steps in mitigating these problems. Those that are built on Substrate Framework consider the chain over time and assume that the business logic must adapt to unforeseen challenges and bugs. With a runtime upgrade mechanism and a governance system sitting behind it that triggers whether the upgrade happens, the chain can be iterated a lot faster without every update being a huge deal like in Ethereum.
Ultimately, education around blockchain’s technology, functionalities and impact is essential in overcoming these myths. Being surrounded by talented developers can help, transferring knowledge within a culture that encourages development. But it’s also about continuous education during a developer’s career, both formal and informal. Choosing a company that invests in learning and development is important for keeping skillsets fresh, relevant, and updated – whether that’s learning a new coding language, new technology or trying out an entirely new area. The blockchain world moves at a remarkable pace, which means developers must too.
Adam Dossa, CTO, Polymath