Blockchain’s initial development’s origin lies in preventing fraud in digital currency exchanges. However, in 2019, many key industry players found that blockchain provides strengthened security and numerous disruptive use cases for their industries. They found use cases that can revamp complex processes and prevent both fraud and dependency on intermediaries. So, let’s understand the use of blockchain in insurance to combat fraud and other complexities.
While purchasing a house, we know how complex the escrow and underwriting processes can be. Almost, at each step, we need to provide proof of our monetary transactions. With blockchain smart contracts in insurance, companies can replace legacy escrow and underwriting processes.
With smart contract solutions, sellers of anything, from entire buildings to medicines, can prevent fraud significantly. But, how is this possible? Smart contracts enable both buyers and sellers to build “if/then” contracts. They don’t fulfill a step in a process until the steps have been verified and fulfilled. For example, if we purchase a pair of shoes online, a “digital escrow” holds the payments until the shipper marks the package as ‘shipped’. It ensures that buyers are not losing their money, as well as sellers are not taking risk of not getting paid. Any exchange, deal, or agreement can use this concept. But, the issue is that an intermediary digital escrow service facilitates the process, which is costly and prone to errors and even hacks. If both parties use a single blockchain platform, it can remove any intermediary dependance like an escrow company to process further steps. Visit this page to understand how blockchain smart contracts work like a secure, efficient, and transparent escrows.
The most prevalent blockchain use cases we find are in the supply chain management. In today’s global scenario, we can observe that companies around the world are partnering for manufacturing, pharma development, and more. But, as the distance between companies increases, so does their potential to ensure that defined processes were followed before delivering final products. For instance, currently, there’s no defined way to ensure whether the happy eggs we purchased were really created at a free-range farm. Or, whether a ring you bought online was really prepared with 24k carat gold? In such cases, companies can deploy mechanisms to combat fraud with blockchain. With custom blockchain supply chain solutions, they can verify the authenticity of every part and step involved in the process. Then, questioning organic produce like those happy eggs will be out of the question.
Researches indicate that identity fraud can cost consumers up to $16 billion. With blockchain-based identity management solutions, personalized, user-controlled, and secure digital IDs can become a real thing in today’s digital space. For instance, blockchain’s distributed ledger is constantly reconciled across the network. It can be updated only when both parties or users have their consent. Also, blockchain enables permissioned networks, which could empower users to determine what part of personal information they want to share with whom and where. Imagine an online world where you allow Facebook or Google to track your moves or interests. It can definitely boost consumers’ privacy protection while preventing identity fraud.
Also Read: Self-Sovereign Digital Identity with Hyperledger Indy: Control Your Data
The use of blockchain in business processes can serve as a trustworthy, low-cost, and efficient intermediator in almost any interaction, partnership, or deal. It can establish trust and transparency in those ecosystems where parties or users don’t trust each other. That said, we can implement blockchain in copywriting, online shopping, and any transaction we can imagine. Fraud will become a thing of the past with blockchain. However, it will require you, your business network, partners, and everyone else in processes to run on the blockchain.