Problems Solved by the Blockchain

Last Modified:10 Dec 2019 12:05:27
Problems Solved by the Blockchain

Blockchain, the technology behind Blockchain, and cryptocurrencies have brought about a big transformation in different technologies. Cryptocurrencies, tokens, and distributed systems became known via Blockchain. Blockchain has created many transformations in many areas, such as authentication and information security. When your information is stored in the Blockchain database, you can no more change it. Some of these key problems which have been removed by Blockchain will be addressed in the following parts.


One of the most important aspects of Blockchain is the scope of privacy that can be provided for the users, but it might distract you that how two subjects of privacy and transparency can simultaneously exit; however, Blockchain simultaneously covers these topics. In the Blockchain network, the users’ identity is hidden through encryption, and finding the relationship between the public address and the people’s identity is almost impossible. With this public address, you are able to see each user’s transaction while such transparency has not existed in any traditional financial system. Blockchain keeps the users’ real identity hidden, although all the people’s transactions and accounts are observable on the Blockchain network.

Prevent Fraud

According to a report published by the Association of Certified Fraud Examiners, the organizations annually lose 5% of their income because of the fraud. Because of the features Blockchain has, it can be assumed as a reliable third interface. In fact, you cannot manipulate Blockchain. 
The Blockchain features which cause avoidance of fraud and scam are:

Blockchain Is Distributed

Blockchain is a kind of distributed ledger which includes the data of transactions shared on a one-to-one network; that is, there is no single centrality to supervise this network, and the management and authentication are distributed in this network, and no one can make any plan for the fraud. The methods the people do fraudulent act in an organization include altering or removing the information and making fake files. As it was pointed out above, all transactions and accounts are clear on the Blockchain network and all gain access to it on a distributed network; hence, the fake transaction can be easily recognized. Moreover, the lack of a central server causes the hackers’ attack to get much harder. Normally and on the usual databases, hackers can find penetration ways to the central server and destroy or manipulate all the data.

Blockchain Data Are Immutable

On a usual database, the users can do 4 CRUD (Create-Read-Update-Delete) commands. But the data can only be added, and the previous data can be read on Blockchain. After Blockchain data are registered, they cannot be altered or removed. Before a block of the transactions is added to this database, its validity should be verified by network members, and this process is called consensus. This block receives a timestamp and is secured through encryption and is connected to the block before it, and finally, a chain of blocks is generated. Therefore with the use of Blockchain, you can understand where that block has come from and where it was and who is its owner. Blockchain has avoided fraud and scam in different fields, from industry to banking and supply chain. 

No Need to Central Management 

Traditional databases use client network architecture wherein the user can store his/her data on a central server. Besides more costs, it is possible to lose information there, and those servers should well be taken care of. Moreover, reading and writing on this database should be allowed by a central management, which causes an increase of scam. But Blockchain has been distributed on thousands and hundreds of nodes, and there is no need to any central management. In addition, removing a node does not damage the data, and network information has been stored on the other nodes. So there is no need to spend high charges to control the servers, and all the data are stored on all these nodes. For example, Ethereum Blockchain is composed of more than 15000 nodes. 
The points we have mentioned above are just a part of the issues solved by Blockchain, and it has made international exchanges and banking industry much more comfortable too. Imagine someone who lives in a remote city or village and has no access to the bank can enter the financial cycle with a PC or a person who works as a freelancer and cannot trust his employer to pay his wage; fortunately, Blockchain has efficient solution for all these challenges, but it is still in the first steps of its pathway, and surely more issues will be posed which can be resolved by Blockchain in the future. 


[Lisk] “Blockchain Transparency Explained”, Lisk Academy, 2019
[IBM] “Three features of blockchain that help prevent fraud”, Ross Mauri, Sep 19, 2017
[Medium] “Is Blockchain Better Than a Database”, Jason Yanowitz, Sep 7, 2018

Written by:

Dr. Pooyan Ghamari