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Common Misconceptions about Working in the Blockchain Space, Part 2

This is a continuation – to read the first four misconceptions, click here.

It’s been two months since I started at Paxos, and I’m glad I did not let widely-held misconceptions about working in blockchain prevent me from joining the company. Search for the Truth and take a lesson from my book.

Misconception #5: Blockchain is a fringe vertical within fintech

Again, not true! Blockchain is more like the enablement layer for many different fintech companies. Blockchain is a technology within the fintech vertical. Increasingly, companies use the “B-word” only when having very technical conversations.  It’s more likely that other terms are used to describe the approach enabled by blockchain, such as “digital ledger technology,” “transparency,” or “openness.” 

Misconception #6: Government and regulation are way behind

While the Paxos approach involves working hand-in-hand with entities like the SEC and the New York Department of Financial Services every step of the way, governments around the world have become increasingly more aware and involved in crypto. We regularly see more proactive engagement from regulators around the crypto community, whether that is the CFTC, SEC, or the Federal Reserve. Encouragingly, much of this engagement comes from groups that don’t necessarily have purview over our products or services, but are hoping to gain a better understanding of innovation in the space.

Misconception #7: Everything is anonymous 

Before really diving in, I only saw the occasional headline focused on criminality being fueled by anonymous bitcoin transactions. Anonymity is a big misnomer. Crypto allows for pseudonymity. Transactions and identities are associated with cryptographic wallet addresses, but there is a historic paper trail (a.k.a. the blockchain) of all activity associated with these addresses that is publicly viewable. This actually makes it easier to uncover bad actors in the long-run.

Above, the tool indicates there is a direct association between our client (Mr. Anderson), three darknet markets, and three mixer/tumbler platforms. (via Chainalysis)

Misconception #8: All blockchains are the same

It turns out there are actually many flavors of blockchains! My default understanding was that blockchain was simply a publicly viewable database. This is not the case. In reality, blockchains can be open (public) or closed (private). There are  “proof of stake” blockchains, then “proof of work” blockchains. And each of these blockchains support different types of smart contracts, which in turn dictates how developers write code. Different combinations of these topline choices enable different use cases – new blockchains are constantly emerging while older ones are evolving.

In conclusion, I hope this has broadened your perspective on what it is really like to work at a company in the blockchain space. If this is still giving you pause, reach out and let me know! I’d love to discuss your perspective and eventually write part three of this series. 

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