Skip to content ↓ | Skip to navigation ↓

As blockchain technology becomes an increasingly popular option for companies searching for secure business solutions, we’re seeing more use cases for the network and smart contracts.

A smart contract is a computer protocol that is used to digitally facilitate, verify and enforce the performance of credible transactions without the need for a third party. When operating on a blockchain network, smart contracts are utilized to verify or enforce a set of promises through various digital security methods.

However, there are a wide range of misconceptions about the security that blockchain and smart contracts offer. The average blockchain developer should be able to identify these widespread falsehoods and educate business leaders on the potential benefits of utilizing the blockchain for security purposes.

Blockchain Misconceptions

The Main Beneficiaries of Blockchain Technology Are Criminals

When blockchain technology first emerged into the mainstream, it was commonly portrayed as a hub of criminality, particularly on the dark web. Although the adoption of blockchain for secure business solutions has spread, there remains a negative connotation that it allows criminals to operate in full anonymity. On the contrary, most public blockchains are fully traceable and secure, as the technology enables businesses to track what is being sent between the company and clients.

Blockchain Is Unhackable and Unmodifiable

One misconception that is commonly spread about blockchain technology is that it’s completely unhackable and unmodifiable. Although the blockchain is one of the most secure options available to businesses, no system is 100 percent safe from being hacked or altered. In theory, any person or group within a blockchain network is capable of gathering enough mining resources to take control, though it is highly unlikely. The only assurance that blockchain technology can provide is that it will detect any unauthorized changes made to the records of applications on the network.

A Blockchain Network Can Be Shut Down by the Government

As governments across the world start to grapple with the impact blockchain technology will have on economics and business practices, some people believe that the government is capable of terminating or shutting down a blockchain network. But since a blockchain network is decentralized and not able to be controlled by a single entity, it’s virtually impossible to shut down unless every network participant stops working within it. The inability to shut down a network is one of the many factors that make blockchain technology a compelling option for secure business solutions.

Smart Contract Misconceptions

These common misconceptions that revolve around blockchain technology have also led to a fair amount of confusion regarding smart contract services. As stated earlier, smart contracts can be defined as a computer protocol that can be used to digitally facilitate, verify, or enforce an agreement between two parties without the need for a middle man. Although smart contract services are gaining popularity as an option for secure business solutions, the general unfamiliarity with the inner workings of smart contracts has created some confusion. Here are some of the most common misconceptions about smart contracts.

Smart Contracts Are Legally Binding Contracts

Based on the name alone, it’s easy to confuse smart contracts with legally binding contracts. A smart contract is software code within a program that follows the instructions set forth by an agreement between two parties. As explained on Coindesk, smart contracts essentially act as a list of “if/then” statements that operate automatically when a specific condition or promise is met. However, there is nothing legally binding about them, and they can only exist within the blockchain network. Rather than thinking of smart contracts as actual contracts, it’s more accurate to imagine them as a security tool.

Smart Contracts Operate with Complete Autonomy

Some people believe that smart contracts are able to act with complete autonomy, capable of actively analyzing their environment and executing a response to any changes. In reality, one of the characteristics that make smart contracts such a secure solution is that they can only be executed if a transaction or message is sent to the smart contract. The documentation for Ethereum offers a solid explanation of the limitations that smart contracts have in regard to the network.

“It is not only sandboxed but actually completely isolated, which means that code running inside the EVM [Ethereum Virtual Machine] has no access to network, filesystem or other processes. Smart contracts even have limited access to other smart contracts.”

All Smart Contracts Have the Same Features

Another misconception that exists among both blockchain technology and smart contracts is that there’s only one out there. Unlike Ethereum, most blockchain networks are either not capable of operating with smart contracts or only do so in an extremely limited capacity. On top of that, smart contracts possess completely different features depending on the blockchain network they’re running on. Therefore, when looking to develop secure business solutions through smart contracts, companies must figure out which blockchain network will help meet the specific requirements at hand.


It’s no surprise that the recent emergence of blockchain technology and smart contracts has created misconceptions among the business world and general public. As a new breakthrough security solution for all types of industries, the best way to bring light to these misconceptions is through education and adoption. By implementing the blockchain and smart contract services into your business model, you can help teach yourself and others how to properly understand and utilize blockchain technology and smart contracts.


About the Author: Michael Kordvani is a professional tech writer and content strategist with an app development background. He specializes in Android & iOS app design, as well as blockchain & dapp technology.
Ever since he was a child, Michael was captivated by technology. When the opportunity arose to spend his life writing about it, Michael didn’t hesitate. He now spends his time exploring and writing about captivating new technologies to introduce to the people. 
Editor’s Note: The opinions expressed in this guest author article are solely those of the contributor, and do not necessarily reflect those of Tripwire, Inc.