Blockchain is the digital and decentralized ledger that records transactions without the need for a financial intermediary, which in most cases is a bank. A blockchain is an anonymous online ledger that uses data structure to simplify the way we transact. Blockchain allows users to manipulate the ledger in a secure way without the help of a third party. Blockchain is considered as the disaggregated and transparent nature of the technology, which updates information across all users simultaneously, ensures that various officials would have instantly been alerted.
Benefits of blockchain technology:
1. As a public ledger system, blockchain records and validate each and every transaction made, which makes it secure and reliable.
2. All the transactions made are authorized by miners, which makes the transactions immutable and prevent it from the threat of hacking.
3. Blockchain technology discards the need of any third-party or central authority for peer-topeer transactions.
4. It allows decentralization of the technology.
How Blockchain could have Averted Banking Scam?
1. In the the recent frauds that happened in Punjab National Bank, junior official send out Letter of Undertaking without any authority. However in blockchain, there are smart contracts which will not get executed until specified
people have not nodded.
2. Bank issued Letter of Undertaking without any security: There was no security kept before lending the loan which is totally against bank’s policies. Here also concept of smart contracts can fit in. Loan will not get approved until and unless securities from the person who is taking the loan are successfully deposited.
3. None of the transactions got logged on PNB’s banking system: There is a centralised database which has to be updated specifically by the bank manually. There are chances of manual error. In blockchain, there is only one ledger which is ultimate truth. There is no scope of manual error, foul play there.