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Blockchain: The Ultimate Solution to Fraud

by Matthew Harris
, Blockchain: The Ultimate Solution to Fraud

It’s no secret that I am a rather huge fan of blockchain. I’ve written quite a few articles on possible potential uses for the technology and I truly believe that it’s something that will usher in sweeping positive changes for a rather wide swath of our lives.

While cryptocurrencies are of course first and foremost on the majority of of our minds when it comes to the benefits of blockchain, I predict that one of the main “selling points” of altcoins will be what launches blockchain use into the stratosphere.

The ability to fight fraud.

Given a little time and pondering, I’m sure I could come up with numerous aspects where blockchain could be used to deter or even outright eliminate fraud. However, today we’re going to take a look at just a few off the top of my head.

Fixing Voting Once & For All

Okay, I know I already covered this topic a couple of months ago, but I truly believe this is one of the main areas where blockchain could usher in a new age for the entire world.

Just think about it — every single person on the face of the planet having a true vote for the first time in history. How, you ask?

An accredited voter registration agency verifies individual eligibility off-chain, issues a token, and using the same mechanisms in place to prevent double spending on blockchain, ensures that individuals are only able to submit a single vote. Furthermore, registered voters that meet certain prerequisites can opt to work as a system “node,” ensuring that all votes are accurately counted and that the voting system remains available throughout the election.

Utilizing distributed ledgers and blockchain technology would verify the legitimacy of votes and ensure that each and every vote is confirmed and permanent, completely eliminating the potential for fraud

Identity Theft

Of course identity theft isn’t a new issue by any stretch of the imagination. In fact, it’s getting worse on a literal daily basis. According to an online survey by The Harris Poll, almost 15 million Americans reported being affected by identity theft in 2017 while close to 60 million said they were victims in 2018.

With proper implementation, blockchain has the potential to frustrate criminals on a variety of fronts. Let’s just take a look at the top two types of identity theft that the Federal Trade Commission, the government agency that maintains a sort of warehouse for identity theft complaints, says are most common:

  • Employment/Tax-Related — At the top of the compliant list with 34% is when fraudsters use victim’s Social Security number and other personal data to gain employment or to file an income tax return. A distributed ledger based system would ensure that you and only you are able to use your SSN for employment and federal tax returns.
  • Credit Card Fraud — Coming in a close second with 33% of the complaints is the use of consumer’s credit card number in order to make fraudulent purchases. Once again, a proper blockchain infrastructure utilized to store and verify identity as well as funds availability and a variety of other prerequisites would come close to eliminating fraud potential.

The incidents rounding out the FTC’s list are ones you’d expect, but they are also ones that could be eliminated along with the first point above.

  • Phone/Utilities Fraud (13%) — Fraudsters using personal info to open a wireless phone or utility account.
  • Bank Fraud (12%) — Nefarious actors use victim’s SSN and other identifying info in order to take over an existing financial account or open a new account in the victim’s name.
  • Loan/Lease Fraud (7%) — They use the stolen information to obtain a loan or lease in the victim’s name.
  • Government Benefits Fraud (7%) — Using the victim’s personal info, the fraudsters apply for and receive welfare and other government benefits.

Blockchain, distributed ledgers and smart contracts could be the answer to consumer’s prayers. Identity theft doesn’t have to continue increasing day over day and year after year. The answer is right in front of us.

Saving Your Advertising Dollars

Most anyone that has a business in today’s digital world has at least heard about Pay-Per-Click (PPC) advertising. PPC is a type of internet marketing where merchants pay a small fee every time one of their internet ads is clicked and these days one of the most popular forms of PPC campaigns is with search engine advertising.

Unfortunately, a good portion of advertisers have lost untold sums due to fraudulent clicks. In order to get their brand in front of as much of their target audience as possible, many merchants opt to place their ads on “vendor” sites on a PPC basis, meaning they pay the site owner a few cents every time their ad receives a click. While in theory this is a great campaign to undertake, some unscrupulous site owners have used the model against itself in order to generate as much money as possible.

Utilizing proxy servers or other means of masking their internet location and bots or other auto-click devices, they make it look like they are sending a lot of legitimate traffic in order to rack up the clicks when in reality, they are sending next to none. In the early days of PPC advertising this was even more costly as PPC compensation could be as high as $1 each and generally averaged $.25 and fraud is the main reason that this model has decreased in popularity.

Utilizing blockchain and smart contracts could definitely be a huge plus for the advertising industry. By ensuring that not only the click is from a real, verified consumer but also meets certain requirements such as accepting cookies and other “fact checks,” would guarantee that the advertising budget wasn’t be pilfered.

Blockchain could verify accurately how many consumers actually view the ad versus clicking it, a feature that is strived for today but falls disappointingly short of the preciseness desired. Furthermore, it could be used to completely manage campaigns across the entire spectrum of the internet. Sure, there are ways to somewhat effectively manage them at this point, I’m just saying the technology could vastly improve it.

The List Goes On

As I said earlier, blockchain has the potential to completely change our lives in many, many ways, but just these three areas could transport us to the future at light speed. There will always be hackers, crackers, robbers, and fraudsters but the technology we have in front of us has the ability to thwart them on numerous fronts.

Now that banks and big name tech giants like Facebook are throwing their hats in the crypto ring, we’re quite likely to see governments around the world start taking a closer look at the true potential of the underlying technology.

Every advancement, breakthrough, and cutting edge startup needs to be highlighted and brought to lawmakers attention. Lastly, we need the real brains of the world to start looking at the fraud prevention potential the trinity of blockchain, distributed ledgers, and smart contracts bring to the table and start working towards making a real difference in the world.

We don’t need yet another cryptocurrency or stablecoin, we need systems that protect the citizens of the world and ensure that fraud is diminished as much as humanly possible.

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