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The mainstream believes that blockchain is a technology of the future. But that’s not the case.

This database technology is already very old and, today, makes sense only in rare, exceptional cases. It’s slow, memory-intensive, and offers few configuration options. Virtually every newer database management system is superior to a blockchain. So why is it still held in such high regard and praised so highly?

The reason is the rise of cryptocurrencies. In the wake of Bitcoin’s development, numerous offshoots have emerged. Since Bitcoin’s code is open-source, it can be legally copied and freely restructured for other purposes. Theoretically, anyone can launch a new Bitcoin-like cryptocurrency onto the network. This has happened frequently, and it has become very easy to bring one’s own coin to market.

The fact that most crypto projects use a blockchain is primarily because Bitcoin itself uses a blockchain. However, Bitcoin’s developer did not do this without reason; rather, it was to ensure a future capability should the project become established: to create a digital truth with an unalterable timestamp chain once the protocol became decentralized. It was, in other words, a forward-thinking move. Given Bitcoin’s characteristics, the blockchain was not a groundbreaking development but a necessity.

But blockchain alone is not sufficient for storing data in a tamper-proof manner. No one can verify whether the information stored on it is actually true. Strictly speaking, virtually no digital information can be verified for authenticity—not a television image, a video, or any information from the Internet. In fact, no database management system is capable of storing verifiably true information. Only when combined with cryptographic keys and self-regulating computing power from a very large, decentralized network does the blockchain become a powerful tool.

The computing power (hashrate) required today in the Bitcoin network is so vast—and decentralized—that even a country the size of the United States could not muster the energy needed to manipulate it. The blockchain’s inefficiency actually serves as a security feature here. This is because the Bitcoin protocol automatically adjusts the speed of block generation through a difficulty adjustment mechanism—the more participants engage in mining, the higher the difficulty becomes. The difficulty parameter ensures a consistent interval at which blocks can be found. Over the long term, the Bitcoin protocol is designed to add a new block to the blockchain every 10 minutes. If there is a lot of computing power in the network, the difficulty is increased. If less power is available, the difficulty is reduced. This also makes mining more cost-effective again and creates new incentives, as miners automatically receive a reward for each block they find.

This balance can only be achieved with a blockchain, a fact the developer recognized with great foresight. With a node that anyone can operate themselves, it is therefore possible to unequivocally determine whether the chain is genuine based on the historically known parameters of hashrate and difficulty. It is even possible to calculate the network’s enormous global energy consumption from this, thereby establishing a tamper-proof, digital truth.

However, this truth applies exclusively to the coin’s own data. Additional information—even if it is stored on this blockchain—cannot be verified. That is why all other, non-decentralized crypto projects based on blockchain technology are pointless.