Blockchain technology is quite complicated even for mathematicians and programmers. And it can get even more complicated. But in a nutshell it’s all about solving real life problems that are currently showing up in provided services, from banking to legal services and more. The idea is that blockchain technology can create immutable records of financial or legal data, that will eventually do the same job that banks and lawyers do, except there will be much more security and trust. This will be so because no single person will be able to manipulate data, in any way.
Take as an example land registry records and trying to figure out which piece of land belongs to which person. In today’s world, it is very easy for lawyers to forge the required documents and steal the land in question. Or consider the big financial scandals that occurred in America in the last 20 years, where corporate fraud consisted of accounting fraud. This kind of accounting fraud can be prevented on a decentralized, blockchain based platform, where data cannot be changed arbitrarily by any single person.
Global trade is said to benefit greatly from blockchain technology in various ways, and specifically from smart contracts. Today’s scammers are able to literally steal money from their victims, simply by fooling them into thinking they have a good deal in their hands. Everything from banking, escrow services and feedback ratings are prone to fraud because the critical data can be forged and there’s no decentralized mechanism in place to prevent that fraud. Hopefully blockchain will help put a crimp in that system.
Smart contracts have yet to prove how they will work in the real world. Scammers can still fool a single smart contract, creating various data inputs that indicate they actually have the goods they want to sell, whether or not the goods have been shipped. But it will be extremely difficult to fool a sophisticated network of data, where feedback, prior work history, proof of inventory and other critical information is slowly and safely built up.
Everything in this world that relies on paperwork, signatures and stamps can be manipulated by scammers. It is possible to forge paper documents, it is possible to perfectly clone someone’s signature, it is possible to sign a document, but with an ink that will disappear 30 minutes later, with no record of how many times a person puts their signature on important documents. With blockchain technology and smart contracts, however, there will be records of the entire history of transactions, and it will be extremely difficult to commit such fraud.
People claiming to be merchants of goods will have to prove the existence of inventory, and in cases as with a commodity such as crude oil for example, its entire history from the oil rig to the tanker will need to be shown. It won’t be possible to forge such data because a lot of critical data would have to be exchanged around the world, and complexity will be significant.
So blockchain may prove to be a very good thing, making transactions safer. If blockchain can do that on a large scale, it will prove a very promising technology indeed.
Information above cannot be considered as an investment advice and past results do not indicate future performance.
**Investors should have experience and understand the risks of losing all the initial investment