Blockchain cannot exist without Cryptocurrencies
Technically, Blockchain can exist without Cryptocurrencies, but they have little credibility and definitely cannot be used for public use. When regulators say they want Blockchain and not Cryptocurrencies, clearly they have no understanding of both. Private Blockchains may be used on the back-end for businesses in a private environment. But they definitely cannot be used storing public data.
Blockchain consists of a network of nodes, where information is created in blocks. Once a new block is created and verified by all the nodes, it is entered in the BlockchainThis block once entered cannot be edited or altered without the other nodes knowing about it.
A private blockchain lets companies deploy their own blockchain. It would require multiple nodes and no reward to run these nodes. So it requires the company to convince its partners and customers to deploy nodes. Even then, they know where these nodes are, making it easy to manipulate the data.
A private blockchain can be formed through an agreement between multiple companies. But there is no way to prevent network abuse since the creation of blocks are free.
A public Blockchain like Ethereum on the other hand, gives incentive for people to run their nodes and these nodes are run anonymously. Miners run the nodes and they are awarded with Ethereum in return for maintaining the network. There is absolutely no way to mess around with the data on Ethereum’s Blockchain since there are too many of them across countries and no way to locate them. Also, there’s a small fee to add new data to ensure the network is not abused.
Ethereum has faced heavy scaling issues. It definitely cannot be used by enterprises in it’s current state. We need a better solution, which is public at the same time.
A private blockchain might work inside enterprises if they’re happy with a what they’re getting. A bank may want to have it’s internal accounting on a private Blockchain. It would just make things harder to be manipulated with. Just not impossible. It would be better than current services in place.
But for things like identity verification, land registration and voting which requires absolute trust, it has to be on public blockchain. When a government wants to use the blockchain, there should be absolute transparency and assurance that it cannot be messed around with. This is only possible with a Public Blockchain.
If the government wants to use Blockchain to prevent voter fraud, it has to be on a Public Blockchain system to make it tamper-proof.
Another example is Canada's attempt to enhance transparency. The National Research Council will record all grants and funds given out on the Blockchain to make sure people know how the taxpayer's money is being spent. Here, the government chose to use Ethereum and not a custom private blockchain which makes this data trust-worthy.
This is why regulators should carefully consider Cryptocurrencies before banning them. Blockchain is an amazing technology which is set to change the way data flows and we interact with things with future. But Blockchain innovation cannot happen without cryptocurrencies. Both the American and South Korean regulators recognise this and I hope Indian regulators also realise this soon as they’ve set aside Crores of Rupees this year for the development of Blockchain.
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This post was originally published on Crypto-News.in