TLDR;
- Digital transformation increases the need for transparency and trust.
- Blockchain offers a decentralized, secure method for data storage and transactions.
- It acts as a digital ledger without intermediaries, preventing data modification.
- Participants can view transactions, enhancing security against fraud.
- Removing central authorities reduces fraud risk and maintains data integrity.
- Immutability and transparency foster trust, making blockchain appealing across industries.
Everything is now digital. However, transparency and trust have become increasingly important in a highly digital and global world. No matter the business, people rely more on transparent and reliable practices.
That is where blockchain technology comes in. It was introduced through cryptocurrencies like Bitcoin. Now, it offers the world a transformative solution by giving it a great decentralized and secure way to store and record all the data.
Read more: The Fastest Supercomputer Can’t Crack Blockchain Encryption
How Does Blockchain Exactly Work?
Understanding blockchain functionality will help us understand how it promotes more transparency and trust. Now, we know that in any transaction, there is a sender and receiver. In conventional banking systems, the bank holds the information of both the sender and receiver. In blockchain, we are still dealing with transactions, but there is no third party like the bank.
It is a decentralized digital ledger where the transactions and relevant data are recorded in blocks. The blocks are chronologically linked to each other, and once the data is inserted into the blockchain, it cannot be modified retroactively. This factor makes them extremely transparent because all the records are public and unchangeable. Once added, they cannot be changed and are forever stored in the blockchain.
The blockchain also offers an auditable trail that anyone can easily access and verify. So, there is no need for a third-party organization like a bank to act as an intermediary. This creates an environment where its users can put their trust in the proven technology rather than relying on third parties.
Permanency in Records Helps Make Them More Secure
These records on the blockchain are not only transparent so anyone can view them, but they are also permanent. They cannot be changed by anyone. All the participants in the blockchain can view all the transactions that occurred in that particular chain, each of them get their own copy of it.
Since everyone has their own copy, they can view any changes made to the data. So, this makes them very difficult to alter by criminals. The records are open for everyone to see so clearly it would be very difficult to make changes and get away with it. This openness allows industries to easily store information that is sensitive in nature.
Another positive element of blockchain’s decentralized nature is that it will enhance protection from fraud, corruption, or cyber-attacks. When the transactions are stored in one bank, they can easily be tampered with by people inside that organization or a hacker outside of it. However, blockchain technology is designed to be impossible to modify. A network of participants is called nodes, and these nodes as a whole maintain and validate their blockchain. Any transaction that takes place has to be verified by the network before it can enter it. Hence, the risk of fraud is immensely reduced, and the integrity of data remains intact.
Hence, blockchain helps in promoting trust as well as transparency for those who use it.
