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Here is how blockchain can reduce frauds

Here is how blockchain can reduce frauds

Each and every business working around the world loses at least 7 percent of its revenues to fraud each year. Blockchains are created to prevent internal and external fraudulent attacks in firms. Blockchains provide tight security against tampering, fraud, and cybercrime, and eliminates the replication of human efforts. The blockchain technology is programmed to record all the financial transactions and distributes the information (not copied) digitally. The following are the features of blockchain that helps you from the attack of fraud.

1. Transactions

Blockchains transacts data to network because it is a distributed digital record. They don’t have a central administrator; instead, they have management and authorization department. So there is no space between to protrude by the frauds. The frauds can indulge cybercrime activities by either altering or deleting the business information, or changing the files and replacing them with an unauthenticated record. Blockchain having a digital recording system reduces fraudulent activities by increasing the transparency of the transactions and restricted between the members of the business only. The system members have access to see the history of transactions done from the recording made by this blockchain shared digital recording system. So this feature enables us to find the fraud easily.

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2. Alterations

The transactions recorded on blockchains cannot be altered or deleted. Not even the system administrator can remove it. There is a process called consensus through which the members should accept that the transaction processed is authentic. After authentication is done, the block then is given a timestamp, secured through cryptography, and then they are connected to the previous blockchain. You also have access to do new transactions. This newly made transaction will be added to the blockchain, and the previous records will still be accessible.
The blockchain gives the complete information of viewing the asset, where it came from, where it’s located, and who is the owner of that asset. For example, counterfeiting is a major problem faced all over the world. Counterfeiting affects clothing, food, goods, etc. It isn’t easy to prove that all the transactions are authentic as the chain is too long. So if we place all the transactions on a blockchain, the information is secured as the blockchains are immutable.

3. Permission

Permission is an essential need as the business deals with a lot of confidential data. But not all the blockchain transactions are permissioned. The blockchain that has permission is a great factor in preventing fraud activities. Members of this blockchain must be validated before they start transacting. The primary key of these permissioned networks is the control access and identity management. The Linux Foundation provides cryptographic membership cards to the participants. These cards have access to the transactions that are concern to them. These blockchains are encrypted so that no one can add their blockchains without consensus and cannot replace records

How blockchains are used in the diamond industry

The journey of a diamond from the mine to the consumer has a complex landscape. Diamond smuggling and fraud can happen during the collection of fair export taxes. Consumers and retailers face the problems of purchasing a counterfeit. This is where hyper-ledger blockchain technology comes into picture. This technology can eliminate all these vulnerabilities.
Blockchains offers a synchronized and clean record of transactions. The ledger technology records each and every sequence of transactions, no matter how long the chain is. Each transaction made is secured in the block, and each block is connected to the previous block making a network of blocks. That is why blockchains are used in mining, refining, and distribution of diamonds. These blockchains trace the path from the extraction to the hands of the consumers with exceptional security and transparency. It is basically distributed, permissioned, and secure. The transactions are shared between the members-only, and each and every transaction is permissioned to have a copy of it. No one can add a block to the network without proper validation and authentication making it resistant to tampering. During the process, each block has a high-resolution photo of the diamond and other details. So the consumers receive the diamond with 100 percent quality. Therefore, blockchains provide low transaction costs, speed processing, trust, and security.

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