With the growing number of participants, data systems are not only expensive and impractical to build, but they also present practical challenges in auditability. If you want to start bitcoin trading in only three steps, visit Top skills for crypto trading, you will get the best guide, and the platform is immune to volatility risk. It is vital to track the movement of assets on a global scale.
The below-mentioned portion will explore blockchain technology’s role in modern supply chain management and finance. We will explore how it differs from traditional database technology and what that means for the industry. Finally, we will discuss some use cases for blockchain in finance and its benefits over other technologies in this field.
The Threat of Data Fraud
Supply chain management is one area where blockchain is beneficial and better than the traditional data system. Supply chains are complex phenomena involving various actors and assets and complex interactions between them. One solution, the use of blockchain technologies for supply chain management, was proposed in 2014 by the World Economic Forum (WEF).
This organization sees blockchain technology as a way to reduce “fraud and inefficiency associated with paper-based transactions, inadequate information sharing and manual reconciliation”. However, before exploring how this is possible, it’s essential to understand why fraud occurs. In any field where data manipulation is possible, fraud will occur if the incentive exists.
For example, if a person were to double-spend on their bank account, banks would lose money in the process. They would likely take action to punish them for defrauding them. On the other hand, with blockchain systems like Bitcoin that use proof-of-work to reward miners, it is impossible to do anything other than mining and transaction verification or mining and block creation (since transactions are placed in blocks). Thus these activities require an almost infinitesimally small amount of electricity.
How ordinary database is different from a blockchain?
1. Transparency:
It makes it easier to track products because the total time when products are being shipped, and the amount of money spent on shipping are all recorded and can be accessed easily. This transparency will help to eliminate any fraud.
2. Decentralized:
In a blockchain network, all records are stored in every computer and not maintained by a single trusted authority. The ledgers are duplicated across multiple nodes, which makes it harder to forge any records and very easy to detect such an incidence.
3. Immutable:
Blockchain does not allow any changes or tampering of records once it has completed the execution of a transaction or escrow payment process. Any change in the record would mean a new block is created with new data and require a consensus of all users. It is impossible to fake such records with blockchain.
All relevant records are synchronized across an entire network. Information stored on any single node cannot be tampered with or renamed by a malicious party. Changes are reflected across the entire network in real-time, preventing hackers or other third parties from making changes to records in any one node and passing off the changes as their own when the rest of the network has not authorized them.
4. Scalability:
The blockchain infrastructure allows it to store large volumes of transaction data. It is not subject to the same constraints and limitations as other peer-to-peer networks that function on a block-by-block basis. The blockchain allows for a single network that can handle an infinite number of users and transactions. Since the network is connected to every computer, changes on any one node are immediately replicated to all other nodes in the network.
5. Cost-effectiveness:
The blockchain is a less costly solution for tracking product shipments than other existing solutions. A centralized database requires a lot of expensive hardware and associated costs. As long as the information is available on a blockchain, there would be no need for costly specialized hardware and no opportunity for fraud or malicious alteration to data records.
What makes blockchain excellent or bad?
Many industries exploit blockchain’s benefits, but the technology is new and still in its infancy. As a result, the blockchain would have to be developed further before becoming a viable and valuable technology. For example, the technology allows parties who don’t know each other to transfer money or assets (like property) over the Internet without requiring a trusted third-party broker. One prominent example of blockchain’s potential is Bitcoin, the online currency that uses blockchain as its underlying technology.
While there are concerns about how secure Bitcoin transactions are, there is no doubt that blockchain could significantly reduce transaction costs for online financial transactions. Many rightly consider its creation a revolutionary development, especially considering that its principles of decentralization and potential for transparency were not conceived until the later part of the 20th century.
Blockchain has been predicted to revolutionize many industries, including finance, by bringing much-needed transparency and security to transaction-based applications. For instance, the blockchain could become a possible solution to the problem of data manipulation in supply chain management. One such company is IBM, which recently announced plans to integrate its Blockchain platform with its supply chain services.
