When new technological solutions emerge, they are often considered a panacea for all things, including fraud. Is Blockchain a silver bullet to prevent fraud? No. But it is a welcome addition to the arsenal of fraud prevention and a significant step towards fraudsters' squeezing.
Eric Wall, a cryptocurrency blockchain at the Cinnober technology company, is contemptuous of the clamor. He says: "Everyone with blockchain knowledge agrees that, in reality, blockchains are specific solutions to a specific problem." The idea is a silver bullet is widespread in the media and by people new to technology. "
Because blockchain is a decentralized shared ledger resistant to tampering, it certainly offers some robustness to transactions. Verified users can store, view and share digital information in a secure environment. This helps strengthen trust, accountability and transparency in transactions, all important aspects of business relationships and can be applied to financial transactions, identity management and the supply chain.
It is used to keep resource registers for stocks, property, smart contracts and other property and documentation titles, all of which make this fraud more difficult. However, it should not be forgotten that technology is equally an enabling factor for fraud.
The increase in fraud and identity theft costs
According to Identity Fraud Study by Javelin Strategy & Research, identity theft and the fraud cost consumers $ 16 billion a year and 15.4 million have been victims. American Express is investigating ways in which blockchain can be used to safeguard users' identities, as well as helping traders to process transactions securely.
Tereasa Kastel, vice president of American Express technology, says the company is examining different avenues for blockchain. He says: "Being in the financial sector, we have to be a little conservative about what legal and regulatory requirements there are, but on the other hand, what I would say is that what authorizes a single user to do in terms of control of their identities, and having that identity be immutable, is something that can not be passed, despite what regulatory controls might be at this time. "
Specific sectors and services are particularly vulnerable to fraud. The National Healthcare Anti-Fraud Association prudently estimates that health scams cost the United States about $ 68 billion a year, equivalent to 3% of the total $ 2.26 billion of US health care expenditures .
On a global level, foreign aid is full of corruption and funds to help people on the ground make their way to corrupt officials and militia groups. John J. Sullivan, US Deputy Secretary of State, speaking on the Blockchain Forum of last year in Washington, explained: "Two major foreign assistance challenges that blockchain technology could face are, in the first place, corruption, fraud or the misappropriation of funds and, secondly, inefficiencies within
Blockchain is powerful, but not infallible
Don Tapscott, managing director of the Tapscott group and coauthor of Blockchain Revolution says: "That's why it's called blockchain, and that block is connected to the previous block and the previous block, ergo, chain. This blockchain is running on countless computers. I should be committing fraud in the light of the world's most powerful computer resource, not just for that ten-minute block, but for the entire history of commerce, on a distributed platform – this is not practically feasible. " However, we should be careful not to overdo it – Blockchain can increase transaction processing efficiency and reduce fraud, but it does not prevent it altogether and risk officials would not be wise to ignore its limits.
I should commit fraud in light of the most powerful computing resource in the world – this is not practically feasible
Mr. Wall highlights high-performance environments such as financial trading, where transaction speed can mean the difference between huge profits and even greater losses, Blockchain is inherently slow in the process of validation, says: "He can only see an order and process it; what he can not understand is the business context and see if fraud is involved. "
The first coin offerings (ICO) are another good example of limitations.They last year, JPMorgan Chase's managing director, Jamie Dimon, attacked bitcoin claiming that cryptocurrency is a fraud and a mania reminiscent of the tulip mania in the 17th century.If the prospect is based on a fabric of lies, then the blockchain ICO simply validates the integrity of an error, adds Wall: "In the ICO, blockchain can become the facilitator of a fraud. "
Blockchain can be just as safe – or fraudulent – of the humans behind
People commit fraud, not technology, and the art of fraud is entering and exiting the system. Succeeding in that and the rest is the system that does its normal job.If an employee or a person with the authority to act can find a way to enter the transaction, then it is difficult to control.
Mr. Wall says: "Any system of elabo ration of information with incorrect input gives negative results. Blockchain can only be aware of inputs, not reality. The blockchain will follow it as valid data, so if you have the authority to enter invalid data, the blockchain will validate invalid data. You still have a dependency on the real world, reliable sources of data and permissions. If it corrupts, the process is corrupted. "
To unlock the full potential of blockchain technology, governments will have to work as facilitators, providing an environment conducive to interested players.It is necessary to develop uniform standards, assess infrastructure requirements, address security issues, increase awareness of stakeholders and building trust within the financial ecosystem as a whole: this should be done in cooperation with risk managers, law enforcement agencies and other actors dealing with fraud  However, greed, speculation and fraud are not financial mechanisms, they are behaviors and, as long as we have human behavior, we will have frauds.
The National Fraud Intelligence Bureau (NFIB) of the United Kingdom defines fraud as "when you use deception to get a dishonest advantage, which is often financial, on one other person."
There are numerous forms of f rode, the most prevalent are Ponzi schemes, pyramid schemes, identity fraud, mortgage fraud and loans, phishing, card fraud, skimming, counterfeit cards, prepaid frauds, transfer of funds, frauds, false prizes, hereditary scams, fake wills and international lottery legacies and frauds. The more we digitize, the more we can record, track and detect patterns of such frauds.
What these frauds have in common is behavior. The NFIB notes there are many words used to describe the frauds: scam, scam, extortion, fiction, double cross, prank, trick, trick, cunning, cunning, trust trick. These have been around since the beginning of the human race, as they are all behaviors rather than the specific means of perpetrating fraud.
Technology has improved the media and made fraud more global, but the main goal becomes the entry point. If employees do not protect passwords or people give identifying information, scammers can use them as access points. The technology then simply automates madness.
The appeal of Blockchain is that all transactions take place on a public ledger; no individual or group of people can tamper with financial data and there is complete transparency. According to Certified Public Accountant Journal : "Blockchain can effectively prevent one or more individuals in collusion from override checks, or amend or delete unlawfully official accounting records." However, this does not address the point of entry problems or bad data at the origin. Blockchain is part of an anti-fraud ecosystem, which includes various new technologies such as biometrics, stricter regulatory regimes for customer identification, such as know-your-customer rules, anti-money laundering regulations and security laws data, aimed at defending fraudsters potential entry point.