The United States' National Institute of Standards and Technology ("NIST") has issued a final version of its interagency report on blockchain-distributed ledger technology. The Blockchain Technology Overview provides a high-level overview and explanations, inter alia, on how blockchain works, the characteristics of this emerging technology that has enabled the development of several cryptocurrency systems, the blockchain components and consensus models, and its application processes, known as smart contracts. As explained by NIST, the report is designed as an introduction to provide the foundation for a planned series of publications on more specific aspects of blockchain.
The report highlights some of the limitations and misconceptions of blockchain technology in order to prevent organisations from incorrectly incorporation. These misconceptions include the following:
- Immutability: Although the blockchain is usually described as immutable, there are different ways in which the concept of immutability for blockchain ledgers can be violated. For instance, for some blockchain implementations, some blocks are subject to being replaced by a longer chain with different "tail" blocks;
- Cybersecurity: The use of blockchain does not remove inherent cybersecurity risks, and as a result, a robust cybersecurity program is still required in order to provide protection from cyber threats. A common misconception is that blockchain is so secure, that once a transaction is committed to the blockchain it cannot be changed. However, this fact is not necessarily true when it comes to transactions that have not yet been included in a published block within the blockchain; and
- Users involved in blockchain governance: According to the report, another misconception is that blockchain networks lack control and ownership. In fact, this claim is not strictly true since, for example, authorised blockchain networks are generally set-up and run by an owner or consortium, who governs the blockchain network.
According to the report, blockchain technology solutions can be relevant to activities or systems that require features such as numerous participants; a need for a decentralised naming service; or a need for cryptographically secure system ownership.
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