Tracing the Origins of Crime: Blockchain’s Virtuous Role

Although most of us are aware that the amount of data being produced is growing, the speed at which data was produced in 2019 will probably come as a shock. It has been speculated that 90% of all data ever created on Earth has appeared in the last 2 years and that in the next two years ten times as much data will have been created as today . In the same timeframe, we may well see 100 times the existing data volume.

Our current strategies for managing data need to be rethought in light of the exponential growth in the amount of data we have.

Are the recent financial services facing a threat?

In 2019, even more sophisticated criminals pose a threat to the ever-increasing value of financial data. Today, it’s not just lone hackers, but entire criminal organizations and even enemy states that are looking for financial hacks to make a killing.

The villains are currently very successful. In 2018, studies found that only 1% of illegal profits in the EU are seized by the state, 5% of all operations evaluated by the bank’s external auditors are sent to law enforcement, and 0.5% of all activities reviewed by the bank’s external auditors auditors result in a corruption investigation.

Financial services providers such as quantum AI are keen to change this trend as they explore the new technologies now within their reach. The method for storing and using information is a good example of this. Of these, blockchain is the most talked about in some circles.

How Has Blockchain Became The Just Update?

Most people associate blockchain with cryptocurrency, especially Bitcoin. Bitcoin has a bad media image. It is often seen as the money of the dark web and a driver of cybercrime such as the Silk Road drug network. Critics argue that cryptocurrency’s greatest advantage over fiat currencies is the capacity to pay anonymously, and therefore its primary advantage is to avoid criminal prosecution.

Regulation of cryptocurrencies is also a major issue, as so many jurisdictions have none, and those that do have regulations vary widely.

So to argue that blockchain prevents financial fraud rather than enabling it is dubious. Blockchains are used to build cryptocurrencies, but they have many other uses.

Second, blockchain technology has several advantages over existing data storage operations:

Information is not filtered

Data in the financial sector is notoriously segregated due to the prevalence of legacy technology, making it difficult for CIOs and CSOs to see the whole picture. It is much easier for hackers to gain access to systems and commit fraudulent activity when monitoring and reporting of this data cannot be performed from a unified all-encompassing view.

Transparency

Because all agents with an entry on the ledger keep track of the same data rather than separate copies of it, a blockchain-based system is inherently more transparent than traditional data storage systems, alleviating anonymity issues. As a result, a blockchain network acts as a central repository of truth for all parties involved, including authorities who wish to monitor illegal behavior.

Data Probity

Since distributed ledger data can be accessed in real time, proactive monitoring of networks for fraudulent behavior is possible. Each node in the system can see and verify any changes to the data, and there is only one version of the ledger. Since data cannot be changed, it is considered permanent.

Safety

Instead of relying on a single server, information is encrypted and shared along a network of servers. Sharing data is safer because there is less chance of a network outage.

Digital identity in real time

Effective client authentication is a critical line of defense against cybercrime, and a blockchain network can provide a unified digital identity service where governments, financial institutions and service providers work together to deliver it.

The future and beyond

In light of the exponential growth in data volume that we are witnessing and will continue to do in the not-too-distant future, cybercrime prevention is sure to be a top priority for financial institutions.

Together, distributed ledger technology and artificial intelligence pose a formidable challenge to cybercriminals, as they could revolutionize the storage and exchange of financial data.

Human expertise and knowledge will always be required to monitor systems and detect suspicious activity, making technology an essential but insufficient component in the fight against cybercrime.

However, the difficulty of cybercrime can be overcome with the right systems in place to manage data in even the most secure manner and give specialists the tools they need to perform at their peak. The application of blockchain technology may be the answer to this problem in the long run.

Image by Gerd Altmann from Pixabay