Explain with your own words, why these are the benefits of using a blockchain.
1: Transparency
Blockchain is a type of open distributed ledger where all permitted participants on the network access and share the same documentation which can only be updated through consensus i.e. when everyone agrees on it.
A change to a single transaction record requires the alteration of all subsequent records and the collusion of the entire network.
Therefore, data on a blockchain is accurate, consistent and fully transparent
2: Security
Transactions must be always agreed upon and approved before they are recorded/committed.
Each and every record is encrypted and linked to the previous transaction.
Because of this and the fact that the same information is stored across a network of computers instead of on a single server, it makes it very difficult for the transaction data to be compromised and thus prevents fraud and any type of unauthorized activity.
3: Improved Traceability
A blockchain database will always provide a full audit trail which will included a record of where an asset originated from and every stage in the process up until completion i.e. from beginning to end.
This type of historical transaction data helps to verify the authenticity of assets and ultimately prevent fraud.
4: Increased Efficiency and Speed
Blockchain facilitates automated processes which allow transactions to be completed faster and more efficiently than traditional paper-heavy time-consuming systems.
Record-keeping is automatically performed using a āsingle digital ledgerā that is shared among participants avoiding the need for multiple ledger reconciliation.
Since all permitted participants have access to the same information, there is know need for any type of of intermediary and thus clearing and settlement can occur much quicker.
5: Reduced Cos
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Since blockchain is a āTrustlessā system, there is no need for expensive third parties and/or middlemen to make guarantees.
Instead, trust is provided by the blockchain data and network avoiding the need for typical large amounts of time consuming documentation.