There are several fraudsters around the world that affect not only individuals but also companies and organizations of all types and sectors.
These fraudulent schemes can create large financial losses, fines and deteriorate the reputation of a firm. In a recent report released by the Association of Certified Fraud Examiners (ACFE), in 2018, firms worldwide lost more than $7 billion due to internal fraud schemes.
Blockchain Technology To Reduce Fraud
Distributed Ledger Technology (DLT) expanded all over the world during the last few years. There are many different positive things related to it since it can be used to tackle these fraudulent activities in these organizations.
In the recent 2018 Report to Nations uploaded b ACE, they explain that fraud has heavily damaged companies from all over the world and in many different industries. Blockchain technology could be applied to these organizations so as to reduce fraud.
Blockchain is a technology that works as a shared and tamper-proof record of activities that are time-stamped and verified by a distributed network of individuals or organizations. Thus, is decentralized and is not dominated by a central authority.
Even if there is fraudulent information registered in the blockchain, it is possible to audit it in real time and eliminate this wrong information. It is almost impossible to send fraudulent transactions on the Bitcoin (BTC) network, for example. This shows that it would be very difficult to change payment records, that represented 89% of the fraudulent cases.
Public blockchains allow users to have access to information that is stored on it knowing that this information cannot be changed or edited. This provides full accountability to other parties that want to control that everything is correct, including regulators and auditors.
This is why DLT could be very effective in order to address financial fraud around the world and in different industries. Each of the fraudulent cases cost organizations a median of $800,000 per case.
Although blockchain technology is not pretended to solve all the problems that companies are currently facing, it will be able to help organizations reduce administrative costs, and become more efficient by being prepared to fight against fraudsters.