Everyone knows somebody who refuses to transact in anything but cash. They don’t understand transacting without a physical medium; they enjoy the feeling of control and security that cash brings, as opposed to numbers changing on their phone screens.
Anecdotal evidence of a variety of different scams utilising frailties in digital payment systems further encourages this belief. Fraudulent transactions cost companies and individuals billions every year, and in 2015 losses from worldwide fraud on payment cards amounted to USD 16.31 billion. Nearer home, a digital wallet provider lost INR 19 crore due to technical glitches in its payment system.
This is why some people are loathed to transact digitally, in spite of the many benefits; even those who do transact digitally prefer bank transfers and cheques for large payments due to the perceived security these modes of payment offer. For digital payments to successfully supplant cash as a medium of transaction, it must adopt some new methods to ensure security – and this is where Blockchain comes in.
What Is Blockchain, Anyway?
The development and popularity of cryptocurrencies like Bitcoin have made blockchain a popular term, but few are familiar with how the technology works.
Imagine if every cash note that you acquired carried with it a ledger of encrypted data, upon which the details of every prior transaction carried out through it would be stored. Further, every person who had transacted on that note would also carry the same record, which will keep getting updated through the life of that currency note in real time.
At the point that you’re receiving the note, you’ll also be able to see how the previous holder has transacted; that information would be an aid to figuring out whether that person is trustworthy enough to transact with or not. And this is the main feature and quality that blockchain technology provides.
A blockchain is a distributed database that records and maintains a list of all transactions taking place in real time. Each blockchain record is time-stamped and stored with high levels of encryption, making it tamperproof and immutable.[“Source-timesofindia”]