Blockchain Technology Application to Prevent Fraud
As a result of Bitcoin and other cryptocurrencies growth, blockchain is now more popular than ever. It’s known for its features such as transparency, security and essentially being unhackable, to name a few. It not only offers support for the Fintech industry but also for other industries. Recently, research is being conducted on blockchain to become a tool against fraud in many fields like banking, advertising industry and supply chains.
Finance and Banking Sector – Blockchain Preventing Check Fraud
According to the report Financial Fraud Action UK, financial fraud losses occur across card payments, remote banking and checks. The loss was calculated to be up to £768.8 million in 2016, an increase of 2% compared to 2015. The report described that there were 3,388 cases related to check fraud and accounted for a £13.7 million loss in UK.
Meanwhile, Australia in 2016 had a fraud loss of $540 million using cards and check. In that, the total amount of check fraud was $6.4 million.
The Largest Bank United Arab Emirates – Test Blockchain for Check Payment
Emirates Islamic Bank – one of the largest commercial banks in the UAE, announced the introduction of blockchain technology for checks in order to prevent fraud in banking systems and to facilitate verification.
As a result, the bank development team is trying to strengthen the security of the banking business by building a policy to prevent fraud by blockchain technology.
Specifically, the system called Check Chain will issue each check with a unique QR code and a string of 20 random characters which will be scanned by the bank’s blockchain system, which will then autonomously verify and confirm the check.
The bank has already registered each check to the decentralized ledger of the blockchain, establishing unique timestamps and cryptographic proof for each check.
The demand from Chinese banks for blockchain experts has more than doubled since last year in order to increase transparency and combat fraud in the financial sector. As said by Fortune, lenders have struggled for a long time with outdated and disparate technology, and some banks already faced multiple cases of fraud in archaic bills to raise margin financing.
In October last year, the Ministry of Industry and Information Technology identified Blockchain as a fraud-against tool and encouraged large firms to invest more in this technology.
Supply Chain Sector – Blockchain Certificating High-Class Goods
London-based startup Everledger has begun to apply blockchain as a platform for provenance and combating insurance fraud and they started with diamonds. Later on Everledger will expand into all sort of luxury goods such as high-end watches, designer handbags and fine art. These high value items mainly rely on paper certificates and receipts for provenance which can be easily lost and tampered with.
At the moment, Everledger is now focusing on collecting diamond pipeline producers and popular insurers to adopt its system.
If this project succeeds, the luxury goods can be assured that they are genuine by the blockchain. In the future, it may become possible to prove whether various products are genuine one in the entire distribution industry.
In the advertising industry, click fraud is a significant issue. Advertisers usually pay advertising expenses based on the number of clicks. However, click fraud is rampant, as malicious suppliers increased clicks on ads by using bots (a program that automatically runs specific software that will auto-click repeatedly on advertisement). In fact, even though the user is not actually watching the ads, the advertiser pays an amount that does not match the effect of the ads. It is said that advertisers are spending around $7 billion per year on ads without people seeing them.
To find solutions for this problem, BitTeaser is one of the first major players in the challenge. BitTeaser is a advertising network agent that applies advanced blockchain technology in an open market. Launched in January 2015, it displays all click-throughs in the blockchain in real time and can easily be tracked by users.
By adopting the blockchain, it is possible to detect whether the advertisement is delivered or not and whether the advertisement is displayed in the proper place, and it will be greatly expected in the future.
Blockchain technology has the strong potential to be applied to management fields because of its transparent nature. It is also considered one of the best solutions in the market to solve fraud issues. In the near future, we absolutely believe that blockchain will be applied to many different industries throughout the world.
Our Wrappy is an SNS application with the advanced blockchain technology. The blockchain can prevent fraud or misbehavior, and create a transparent and reliable evaluation system. In other words, we are aiming to realize a trustless world that does not involve third parties, such as rating agencies and credit evaluation services.