Blockchain was originally developed to prevent fraud in digital currency exchanges. But fast forward to 2018, and many industries are finding that blockchain serves endless protective and even disruptive use cases for their businesses—ones that could change processes and wipe out both fraud and “the middle man” altogether. Let’s take a look at how businesses can combat fraud with blockchain.
Hello, Smart Contracts—Goodbye, Old School Escrow?
If you’ve ever purchased a house, you know how taxing the escrow and underwriting process can be. Every other day, you’re sending proof and more proof of where your money has been, where it’s going, and where it came from. With blockchain, both old school escrow and underwriting may be a thing of the past. What’s more, online buying and selling of just about anything could become an even bigger industry.
With the use of smart contracts, such as those developed by Ethereum, sellers of anything—from Lularoe leggings to entire buildings—can combat fraud with blockchain technology. How? Smart contracts allow both buyer and seller to create “if / then” contracts in which one step of the process won’t be fulfilled until the one before it has been verified complete.
For instance, if you’re buying a pair of shoes online, the payment is held in a “digital escrow” until the package is marked “shipped.” This way, the buyer isn’t taking a chance on losing their money—and the seller isn’t risking the chance of not getting paid. This concept can be used in literally ANY exchange, deal, or agreement. It doesn’t matter how big or small—both parties can combat fraud with blockchain, and it removes the need for a physical mediator like an escrow company to ensure it. This is going to be a huge game-changer in almost every aspect of our lives. (And it isn’t good news for escrow companies, either.)
A Smarter, Tighter Supply Chain?
In my opinion, one of the most exciting places to see blockchain grow is the supply chain. In today’s global economy, we’re seeing companies all over the world partner for manufacturing, agriculture, pharma development, and everything in between. That’s great, right? But as the distance between these companies grows, so does the ability to ensure that the products and processes agreed upon are actually followed when the final product is made. As a buyer, we are well aware of this issue. Were the expensive free-range eggs we purchased really created at a free-range farm? Was the gold ring I bought online really made with 24K gold? Companies can combat fraud with blockchain by verifying the legitimacy of every part of the supply chain process, helping both the buyer and manufacturer. You’ll never have to question that organic produce and those free-range eggs.