Blockchain’s features like tamper-resistance, decentralization, and immutability make the use of the technology for fraud prevention promising.
We live in a digital age. We are, knowingly or unknowingly, using technology on a daily basis. Millennials prefer convenience and comfort over anything. While we crave for prompt service and comfort level, we compromise on security. People today often rely on digital services to get their work done. As a result, we hardly realize that we give away tons of our data (probably, confidential information too). There are digital spies waiting lustily to steal our data and carry out malicious activities. One such fraudulent activity that tops the concern list in 2019 is online payment theft.
Striking a perfect balance between speedy services and infallible security has become a challenge. One way companies can try to combat this issue is by leveraging blockchain. Jun Dai and Yunsen Wang, professors of a China-based Southwestern University of Finance and Economics, believe that leveraging blockchain for fraud prevention will offer tremendous cost-savings. Let’s see how:
Blockchain for Fraud Prevention in Payment Processing
Today, criminals are evolving their deceitful schemes with the aid of new-age technologies. Hence, it’s important to leverage a technology that can combat and counter any scam schemes. Blockchain, the technology that is inherently known to solve trust-based inefficiencies, can actually make this possible.
What makes blockchain stand out from other security solutions is decentralization. Blockchain records transaction data in multiple systems worldwide, independent of intermediaries or middlemen. This ensures that there is no single point of failure. Plus, if anyone tries to tamper with the data, the participants in the blockchain network can be notified.
The second compelling feature of blockchain is immutability. Any data that is registered on a blockchain cannot be deleted or changed. If a member wishes to store a new transaction data, she has to go through a validation process called consensus. After validation, users can enter the payment data to the chain. Any new block added to the chain will not affect the blocks that are previously stored.
High-level visibility of distinct blocks is another feature that blockchain is popular for. In our scenario, blockchain stores all the transaction details in a decentralized ledger. Because of the immutable nature of the technology, the stored data cannot be forged or altered. Also, to check, monitor, or add any new data in a blockchain network, users must first identify themselves. They must enter an authentication code, which is difficult to hack. By any chance, if an intruder happens to enter the network and change data, the participants will know about it. A complete history of transactions can be viewed by participants, which will help them understand if hackers have entered their private space.
Now you know what makes blockchain so special. Companies should rethink their security solutions and consider leveraging blockchain to combat payment frauds. This way, companies can build brand loyalty by improving customer experience, which will ultimately bring in higher revenue.