Greater transparency:
Blockchain is a distributed ledgerâas such, all participants in the network retain a copy of transaction histories without having to rely on a third party or intermediary to confirm those histories. Instead, transaction histories are verified by means of unanimous consensusâall participants in the network must agree. To change one transaction in a history of transactions would have a knock-on effect of altering all subsequent transactions in the blockchain. For this change to be successful, all participants in the network would have to verify the changeâsave for the event of whole-network collusion, this functionality makes the risk of fraud or corruption negligibly small. Compare this to paper-heavy processes, or even processes that rely on centralised databases: in these processes, changing records/transactions is very easy and concealableâany one entity with access to the document/database could alter a record/transaction with no repercussions and very little chance of being found out.
Enhanced security:
Before transactions are âcommittedâ to the chain, they have to be verified by means of a consensus mechanism. There are several ways blockchain is more secure than other record-keeping systems. Transactions must be agreed upon before they are recorded. After a transaction is approved, it is encrypted and linked to the previous transaction. This, along with the fact that information is stored across a network of computers instead of on a single server, makes it very difficult for hackers to compromise the transaction data. In any industry where protecting sensitive data is crucial â financial services, government, healthcare â blockchain has an opportunity to really change how critical information is shared by helping to prevent fraud and unauthorized activity.
Improved traceability:
For companies that make or work with products that are part of a multi-layered or complex supply chain, tracing the origins of those products using traditional methods can be difficult. When exchanges of these products are recorded on a blockchain, it essentially provides a real-time, instantly and publicly accessible audit trail, in which the journeys of each and every product involved in the creation of the final product are rendered transparently, with an infrastructure that neither permits nor incentivizes fraudulent or inauthentic activity. Instead, the record of transactions holds producers accountable, and is used to verify claims of authenticity etc.
Increased efficiency and speed:
Traditional (often paper-heavy) record-keeping processes are time-consuming, susceptible to the introduction of human error, and often require third parties to mediate. Blockchain allows for the streamlining and automation of these processes. All records on a blockchain are kept in one place, removing the need to refer to multiple ledgers. As the authority figures controlling information becomes decentralized, access to the information itself becomes more centralized, facilitating an overall more trusting environment that needs no process-slowing intermediaries acting as central authorities. Particularly useful for speeding up clearing and settlement.
Reduced costs:
In swapping out third parties and intermediaries for a blockchain, financial costs can be cut. Instead of trusting a trading partner via verification help from these third parties, the blockchain itself provides trust in the form of data. Documentation neednât be reviewed as much in order to complete a trade, as all participants will have access to one unalterable version.
