When you want to continue to offer a valuable service over the years, in a competitive market such as technological innovation, one characteristic is that of being informed about the latest technologies and knowing how to anticipate trends.
This is why we at GreenVulcano not only inform ourselves but try to understand the true essence of the new technology by understanding it in its entirety.
Therefore we find it incorrect that the common opinion identifies the Blockchain to bitcoins, almost as if they were a synonym of the other.
In reality the Blockchain is a much more complex technology, and therefore more interesting, as it can be used in the most disparate fields.
This article aims to highlight this type of application, bringing real examples beyond the virtual blockchain / coin association such as money laundering, fraud detection and better banking services.
Why Blockchain is a Powerful Tool in Combating Money Laundering
History has dealt with its share of trickery and evasiveness when it comes to tracking the origins of money. Criminal gangs, drug lords and terrorists groups each year manage to illicilately evade authorities by transferring money to different parts of the world. It is estimated between 2- 5 % of the global economy involves money laundering. Armed with technological advances, these wrongdoers continuously find new avenues in bypassing the regulatory authorities. Blockchain and its recent advancements have the potential of eradicating this practice.
The process of blockchaining involves a decentralized approach to information, where it is stored across an entire network. The network contains different interactions involving proceedings like tax fillings, wire transfer, bank deposits, which are accessible by a single person owning a computing. Transactions are authentified with participators known as nodes that work to verify the network is free from tampering while at the same time checking and reducing the chances of falsified documents from entering the exchange. Once authentication is processed, the transaction is then viewable to the rest of the entities in the network.
Blockchain has the capacity of tracing back identifiers of previous transactions because the transactions happening in the block cannot be altered in any way. The block in the chain contain information about the transactions, who was involved ( though this lies strictly within a digital signature) and a unique identifying code called a hash, which separates each transaction. The hash is configured information that uses math functions and string of lettering. If any of the functions are altered, the hash will also change. Therefore, if anyone changes the hash in one box the old hash moves to the block that follows, this would require the person involved to revise the hash alongside the rest of the ones in the chain with much time needed. Though it is not impossible to carry this out, it proves to be fruitless because it is impossible to delete.
The developmental aid sector is curtailing money laundering through blockchain. A student in the University of Cape Town used blockchain to develop a way to counteract possible corruption and fraud when donors transfer money intended for aid to beneficiaries. The process works by having the money transferred into an escrow account through a bank that distributes tokens resembling fiat money to the beneficiaries. They are the only ones able to redeem the token, thus, eliminating fund interception. In this sense, Blockchain technology offers clarity and support for donors, while at the same time providing organizations a way to track where and how the money is being distributed for direct and indirect expenses.
Another example is Honduras’s government that has partnered with industry based expert, Factom to monitor the registration and recording of land claims due to its history with land-title fraud.
Similarly, IBM is jumping on the bandwagon moving beyond partnerships with industries implementing blockchain. The company submitted a patent for “Node Characterization in Blockchain” system, the transaction identifiers found in the nodes. The data from these nodes will be used to collect information on the different types of transactions that compose the network.
Blockchain and new services for banks
Banks and economic sectors are also looking at the potentiality of Blockchain. 69% of the worlds biggest banks are experimenting including: Goldman Sachs, Microsoft and Bank of America Merrill Lynch, Barclays, BBVA, CIBC, Commerzbank, DNB, HSBC, Intesa, KBC, KB Kookmin Bank are just a few. Highly known for its strict regulations led by conservative attitudes, banks are seeing the promising benefits and possible solutions their most pressing challenges.
Traditional banking relies on mediators to carry out various functions. These participators make them more expensive; Blockchain eliminates the need for these mediators, making services more affordable for the bank and consumer. A popular area that Blockchain seems to be of value is in international money transferring for its reduced costs and faster processing. User banking transactions online can also be effectivized by cutting the steps for identity verification. If the user is given the choice to select who they wish to identify themselves with and how they are identified, then that can be transported over to other services found in the same blockchain without the need to reverify who they are.
Civic is a identity verification system that does exactly this without actually collecting or storing data. In the decentralized system it works as a digitized form of a wallet where a verified identity is used and checked independently across a range of services from a single blockchain, thus eliminating the need for the user to identify themselves every time. Bank of America started last December implementing Blockchain in its ATMS. The aim of the project of is to improve the communication within the systems by facilitating transaction services involving cash withdrawal and other service to consumers who may not be in the same bank, but are part of a partner bank that lies within the same ATM network.
Although Blockchain is not a recent technology, it is certainly something that has gained some interest over the past two years. The advantages of its use have opened new perspectives in the fight against money laundering around the world, as well as helping the banking sector to improve its services and to be less expensive.
But it is not only this, in Greenvulcano we think it will be a revolutionary technology especially for companies within the industry 4.0 sector.
This is why in all our IoT projects we are configuring our integration systems so that we can support a Blockchain network.
If you want to know more, visit the section of the site that explores the topic at this link.