Blockchain not only has the potential to disrupt almost everything that includes exchange of information and value but also delivers a ‘quantum’ leap in efficiency
Blockchain technology is being hailed as the next best invention in the technology world, only next to the invention of internet. Rightly so! Blockchain by its virtue is about being open to participation, immutable or unchangeable and eliminates intermediaries.
It not only has the potential to disrupt almost everything that includes exchange of information and value but also delivers a ‘quantum’ leap in efficiency.
All this, while ensuring unprecedented levels of security, unlike other computing platforms available today.
The technology warrants security through a distributed ledger, a peer-to-peer database with a set of rules and protocols detailed in computer code alone.
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These protocols are then enforced through smart contracts via different forms of voting mechanisms among the blockchain participants, which results in an added layer of security for exchange of information.
While supply chain is one of the use cases of blockchain technology in banking, there are several fundamental elements imperative to the technology that empower participants to conduct highly secure and transparent transactions and establish mutual trust which also form the backbone of banking business.
Some of the advantages:
Distributed Ledger: Elimination of a centralised ledger or a register by virtue of the solution and relaying information via innumerable nodes makes blockchain networks highly secure and almost near impossible to hack.
In absence of a centralised ledger, it is difficult for security breaches to happen on this network since any such intended breach has to go through the process of cracking all the umpteen nodes together by taking consensus from each one of them which is a very complex process.
This feature of blockchain aids to not just prevent but also detect potential frauds in business workflows.
Immutable: An inherent feature of Blockchain is that, data once recorded on the network cannot be changed, in retrospect.
Any change would require changing all subsequent blocks and consensus from the entire network for the change as well as significant investment from each participant.
Ergo, making the process fool-proof, transparent for all participants and secure from any record tampering preventing chances of fraudulent transactions or any malpractice.
Intermediary Elimination: Because establishing trust is characteristic of the solution, an important feature it presents is the elimination of intermediary.
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It allows for participants to directly exchange information without any platform intermediating the same, essentially enabling mathematics to replace middlemen, thereby, improving efficiency and establishing trust.
For example, one of the blockchain solutions provides for the bank, client and its supply chain vendors to interact seamlessly with no involvement of any third-party.
Apart from reduction in transaction time (from almost four days to real-time), the solution also makes information readily available and accessible to all parties online, secure and tamper-proof transactions. This reinvention of the workflow helps contain fraud to a great extent.
It is noteworthy to mention that as privacy and security concerns become paramount for not just organisations but also governments around the world, several public blockchains will be built around use cases from establishing cryptic identities to developing authentic record-keeping mechanisms making use of tokenisation and biometric authentication, fraud-proofing the network further.Tags: Blockchain, Blockchain Is Strongest Test Case