How Effective is Blockchain against Fraud?
The incorporation of blockchain will enable organizations to eliminate fraud and introduce security into their transactions.
FREMONT, CA – The emergence of new technologies has opened the doors to an ocean of opportunities for business to improve their processes. The incorporation of new technologies has increased over the last few years and is predicted to witness a rise in the coming years. Many organizations are also eager to adopt blockchain to counter frauds.
The blockchain technology leverages distributed ledgers to layer and record transaction information in the form of hash blocks. It not only offers ease and efficiency, but also allows scalability, decentralization, transparency, and security to multiple parties. Several banks have incorporated blockchain smart contracts to eliminate double financing during monetary transfers. The adopters of this technology include fintech providers as well as digital payment companies.
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The frauds in the real estate sector, such as selling the same property to two different parties can also be reduced by leveraging blockchain technology to authenticate the owners. It has facilitated the development of identity management and information sharing networks to confirm access and manage online information, including transactions and preferences.
Smart contracts require the buyers and sellers to verify each step of the process before moving onto the next. The payment made by the buyer is held in a digital escrow until the package is shipped, which ensures that the buyer gets the package and the seller receives the money. It enables both the transacting parties to provide a seamless exchange, eliminating the need for a third-party mediator.
The supply chain is another sector which stands to gain from the incorporation of blockchain technology. Organizations across industries such as manufacturing, agriculture, pharma, and others are collaborating for various purposes. However, it is difficult to ensure that either party will not default on their agreement when developing the product. The implementation of blockchain will enable companies to battle fraud in the supply chain process, securing the interests of both the buyer and manufacturer.
Even though the prospect of implementing blockchain technology has garnered a positive response, many challenges are hindering its adoption. Blockchain technology facilitates security to the stored data; however, it cannot guarantee the authenticity of the inputs. Cybercriminals can compromise the devices that feed transaction information into the blockchain systems. Even after considering the drawbacks, the future of blockchain technology in fraud detection and compliance sector shines as bright as ever.