Ever since the appearance of blockchain, it has become popular among people. Many large organizations are investing millions in it. It was previously considered as a hobby. Now it is considered to be significant innovation of our century. Mobile apps are developed to use blockchain technology for variety of purposes. However, many myths and misconceptions grew over the years.
The word Digital Tokens became popular and many people misuses as well as abuses this concept when they refer to blockchain. Smart Contract, Digital Token or Etherum are just a few terms related to blockchain. They exist conceptually as ledger entries (a blockchain). You own these digital tokens because you possess a key that lets you create a new ledger entry. Through this, you can re-assign the ownership to another person. These tokens are not stored on the computer. You essentially store the keys which allow you to reassign the quantity. There is a requirement of understanding these tokens in blockchain technology. Let’s discuss the 10 common misconceptions about them.
1. The first misconception about digital tokens is that only computing experts can use and understand them. However, the blockchain technology’s application has increased rapidly. Now more people understand blockchain technology. Experts try to simplify and popularize digital tokens in a more accessible way. These tokens will evolve just like the Internet. Initially it was for technology enthusiasts. The major reason was the unfriendly interfaces. However, people are now understanding how to use them. Many startups are creating user-friendly interfaces. An app development company can create such interfaces to make it easier for the users. This makes using the digital tokens as easy as logging into an email account.
2. Digital tokens are not a database, they are not a cloud either. They don’t allow the person to store any sort of physical information. Information like a PDF file or Word document. Digital tokens can only offer “proof of existence”. Many studies explain the fact that digital tokens can only contain a code. This code certifies a certain document’s existence. It doesn’t certify though the document itself.
3. Bitcoins are more famous than the blockchain technology. Most people get confused between these two. Digital tokens in Blockchain technology allows peer-to-peer transaction. These transactions are recorded on a particular distributed ledger across a specified network. Blockchain stores the transactions as blocks with previous block, hence creating a chain. Each block contains the complete as well as time-stamped transactions’ record. These blocks signify all of the transactions occurring in the network. Digital tokens are not just about Bitcoins.
4. Most of the people believe that digital tokens only facilitate B2B interactions. However, tokens in the blockchain technology will evolve and change the global economy. Currently, they are not just open only for big companies. blockchain application solution is present anywhere. Using digital tokens only requires an internet connection. With increasing penetration of the internet, more people will be able to use these tokens. People will be able to use blockchain technology to interact among themselves.
5. A major misconception of digital tokens is regarding the privacy. In general, people think that distributed ledgers are public. This means that their information as well as transaction details are public too. This is categorically false. The digital tokens just count transaction amount and a hash. A hash is basically a code which is obtained by running an actual transaction detail. It is done via a one-way cryptographic function. Transactions made through digital tokens are impossible to be accessed by anyone. The reason is that only one person has the hash.
6. Many people dismiss digital tokens in the blockchain technology as a mere buzzword. However, they are growing at a rapid pace. They bring trust, transparency as well as privacy in global interactions. For example, these tokens allow pharma companies to track their medicines. A blockchain Android app can help them with this tracking. They allow insuring the security during the course of clinical trials. They also help in improving the interoperability within the medical community. Hence they can potentially save many lives. It is up to the society to use it responsibly and reap the maximum benefits. Coherent legal framework along with powerful institutions need to defend the basic characteristics of digital tokens.
7. Digital tokens are not secure, another major misconception. That’s not completely true. Due to encryption embedded in them, these tokens are a safe option. They are a better choice to make financial transactions. They can be used in countries where there is a stricter financial control. The users can make transactions without the government tracking their expenditure.
8. Most people are under the misconception that digital tokens can’t assist in raising capital. Using digital tokens, the user can provide the funds for the app coders to create a particular technology. With the increase in the value of tokens, the early users will get benefitted. The users can also make money for being early adopters. These tokens will help them in raising the required capital to run a business or a mobile app idea.
9. One myth about digital tokens is that they can’t offer any measure to stop financial scams. This is not true. These digital tokens form part of the blockchains. Blockchains can’t run without them. This helps them validate transactions and also create blocks. For example, a digital token creates a small cost per transaction helping in preventing transaction spam.
10. People often think that applications of digital tokens are restricted to the financial sector. The reason is that digital tokens impacted this field first. Now, these digital tokens are used in a variety of sectors. They are used in real estate, healthcare as well as governmental sector. They are used at a personal scale in order to create a digital identity. And the mobile app world can go hand by hand with blockchain technology.
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