USE OF BLOCKCHAIN IN THE PREVENTION OF FRAUD
Fraud just does not cause a company its customers, they face a huge loss in financial terms as well.
USE OF BLOCKCHAIN IN THE PREVENTION OF FRAUD
Nowadays, companies are dealing with a lot of data that is there in the cloud and the biggest problem they face is the security threat. All the companies take the confidentiality of their customers’ information very seriously because any problem can lead to a negative impression of the company towards its stakeholders.
Therefore, fraud cannot be tolerated or ignored in any of the companies; it is not just a costly expenditure, it can also harm the company by decreasing the morale of employees. Moreover, if a case of fraud happens in a company, an unstable environment gets created regarding its business, the customers become hesitant while trusting them, and they have to undermine consumer and business relationships.
Fraud just does not cost a company its customers, they face a huge loss in financial terms as well. As per the study of the Association of Certified Fraud Examiners, the organization faces a hit of almost five percent on its revenue every year while dealing with fraud. This includes the loss of customers and less income in the upcoming months and the payments for legal actions to get the problem solved. Also, they may have to pay the penalty fee if required.
One of the most difficult things with fraud is that it can stay hidden for a very long time and it can go undetected while harming the company internally. It works as a disease for the company that can keep on eating the company from the inside and keeps the appearance fine and by the time you find it, the company is already half-eaten. It can be as fatal to the company as cancer is to a person!
In order to save the company from going through this process and letting this disease eat it, the management takes the help of Blockchain. The concept of Blockchain seems complicated because it covers a lot of things but the basic concept is a very simple one. It is a form of a database where the data related to the customers and other stakeholders is stored electronically in a company.
With the help of Blockchain, the digital asset of the company becomes transparent and unalterable. To understand this, the example of Google Docs. can be taken. When a doc is created, it is shared in a group rather than being transferred or shared making the distribution decentralized and only the creator or the owner of the document has the access to change it.
The various features of blockchain technology make it reliable and the companies use it to prevent fraud and fight against it if it happens in a business network. One of the best features of this technology is that the creator can share data quickly in the most secure way possible. Also, the creator does not have to take the responsibility or give it to anybody else so that the data stays secure; instead, the document keeps itself safe without anyone safeguarding it. Therefore, this technology has gained the trust of many companies because of the leading benefits it provides.
The type of security that is offered by blockchain technology is because of the way this system operates. A record of transactions is created by a blockchain that works on end-to-end encryption which helps in blocking unauthorized and fraudulent activities.
Moreover, most of the data was used to be saved on servers traditionally but with the arrival of blockchain technology, the companies have changed the trend and now the data is saved in a bigger computer network. Previously, it was easier to hack the data because everything was saved on one server but this network of computers makes it difficult to enter the information and hack it.
Other than being the most secure data storage center, blockchain technology is well known for its privacy measures. In this technology, the concerns can be catered to privately by providing anonymous access to the data. Also, the creator can limit the access so that the users cannot make any changes to the data.
Since nobody gets the access to delete or change the data on blockchain other than the creator itself, the data becomes immutable once transactions are recorded on it. In order to make the process valid, the participants of the network have to agree to the consensus before appending the transactions to the block chain.
The block chain professor and expert of accounting and finance in American University’s Kogod School of Business, Casey Evans stated that fraud can be detected by the block chain technology because the information is shared in the real time and all the transactions are visible to all the participants. This makes it easier to track to know who made what transaction at what time.
Just like any other criminal activity, the fraudsters use a lot of ways to hide their activities and processes including changing the paper or electronic documents, deleting or altering the information and details in the accounting systems of the company, and creating wrong files. However, if the shared digital ledger is used, the probability of fraud reduces because the transactions are transparent and they are visible to all the members of the business network with the help of a supply chain method.
Due to the transparency feature, the participants are able to see the transfer and history of assets which makes it easier for them to identify fraudulent transactions. On the other hand, if somebody wants to tamper with the transactions, he needs to gain access to the majority of the system which is technically not possible. Moreover, the other feature of blockchain technology that prevents fraud from happening is that the user needs to get permission from the creator to access and make changes in the data.
There are a few blockchains where permission cannot be given which cannot be used for highly sensitive data which can only be used and accessed by the authorized personnel. Therefore, it can be said that the usage of block chain technology will make the businesses less exposed to fraudulent activities.
Go for Your Blockchain Initiative!
Frequently Asked Questions (FAQ)
Web Development refers to all the effort that goes into the construction of a website. This pertains from a single-page webpage to a complex website with hundreds of web pages.
Pluton prides itself in having a team of expert web developers including experienced UX design specialists, graphic designers, and software engineers with expertise in website design and development services and technologies like PHP, .NET, HTML5 Web Development, and custom web design.
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This totally depends on how complex the website is and how cooperative the client is during the whole process. If all the information regarding the web development process and the business is provided effectively and timely, then our web developers can work quickly.