Yes, you heard it right. However, surprisingly no one seems to care about the power of underlying technology – blockchain. Apart from powering the cryptocurrencies such as Bitcoin, blockchain technology has the potential to create an unmatched level of trust in recording business transactions without third party involvement. To understand the phenomenon, all you need is to understand how blockchain works.
Blockchain technology is a decentralized network of computers, where data is cryptographically recorded, encrypted and stored in a block and each new block gets connected with the previous ones. Let’s analyse its few other benefits that how it can help limit fraudulent business activities.
Preventing Identity Theft
Identity theft can prove to be highly expensive for both businesses and individuals. On average, businesses lose almost $16 billion to identity theft fraud every year. Moreover, the time used to reconcile accounts details, emotional stress and fear of future happening that individuals experience are also the hidden costs of identity theft. You may not believe that blockchain technology can end identity theft crisis by powering a personalized, cryptographically encrypted and ID system.
The end-users will have more control over the kind of data that they choose to share with businesses such as credit card details will be shared once you buy the stuff. Moreover, blockchain offers strong security, which will protect personal data from unauthorized access as every log-in details will be recorded. Any malicious attempt cannot go unnoticed and it will become easier for businesses to take proactive and preventive measures instead of reactive ones.
Making Supply Chain Management Efficient
The global economy has become incredibly interconnected, so it has become hard to scrutinize the chain and find its origin. Along with supply chain, there is a massive value chain acting as a custodian of trade at the apex of every channel such as manufacturing, transporting, production, advertisement and banking. The issue arises when it becomes practically impossible to investigate, evaluate and verify the quality control from the raw material finding to the finished product along the entire stretch of supply and value chain.
For instance, if you buy a pure cotton shirt from a shopkeeper, you have to rely on the words of vendors that it is 100% pure cotton – the vendor has to believe on the words of supplier and the supplier relies on the words of the manufacturer. However, with blockchain technology, it will become easier to record every entry and verify the claims along the supply chain because the entry is encoded with the proof in the blockchain. And buyers would not have to worry about fraudulent claims as they can be verified at any level.
Outdone the Escrow System
If you are an international entrepreneur and work beyond boundaries then you must know about escrow services, as they are a significant part of business transactions. People use escrow system when it comes to buying international property, business transactions as it is a major driver of the international economy.
The issue becomes serious when you will have to tie huge sum of cash while waiting for the other party to fulfill their agreement. You will also have to pay a service fee to the escrow company. Along with that, you have risk that the escrow company may be compromised, fail in business transaction or may be tricked into releasing funds to the wrong person.
With blockchain technology, people can have seamless transactions between both parties where you may add a third party for trusted transaction. You can create simple contracts between counter parties. It means there will be lower cost of business transaction because you do not have to pay for service charges to the company. Both parties can place money into cryptocurrency form without having to worry about the credibility of company.