Author: Mohamed Hamza Ghaouri, Intern at FINTERRA
Blockchain has an enormous potential for improving existing business processes, as well as improving the efficiency of existing transaction systems, leading to exponential cost savings for the business and the end consumer. While it is viewed as a disruptive force for the existing financial systems and market infrastructure and fundamentally change the way the financial services operate, it is less recognized for its major role in other fields.
As a cryptographic database technology, it is known to the masses through its association with electronic currency (bitcoins, etc). However, the use of this technology can be way much broader than that. Although the primary use of blockchain is in cryptocurrencies, blockchain technology has many applications. It can be used to record virtually anything of value – identity, a will, a deed, or almost any type of secure transfer of information in different fields.
Blockchain technology has the power to provide a platform to cut out middlemen, regardless of industry. Real business models that rely on this technology are emerging. These business models, based on concepts such as cyber-trust, cyber-fairness, inter-ledger, and cyber identity, all reflect the goal of establishing a trustless and yet secure network.
With blockchain, we can imagine a world in which contracts are included in digital code and stored in transparent and shared databases, where they are protected against deletion, tampering and revision. In this world, every agreement, every process, every task and every payment would have a digital record and signature that could be identified, validated, stored and shared. Intermediaries like lawyers, brokers and bankers may no longer be needed. Individuals, organizations, machines and algorithms would trade freely and interact with each other.
Indeed, previously investigators and governments struggled to identify and trace transactions on cryptocurrency exchanges. This has facilitated the proliferation and development of black-market activities. However, as criminals have evolved, the tools and expertise necessary for law enforcement have also evolved to identify, track and intervene in illegal financing.
Ensuring transparency and traceability of the stored transactions, it is an immutable, decentralized, distributable ledger of transactions. This means that any data passing through it is not held by a single entity. It is transparent because all computers that have access to the blockchain can track the data entered. The data is also stored cryptographically inside which, in addition to other factors, makes it immutable, so that no one can tamper with the data inside the blockchain nor hack it.
These features make the platform almost immune to digital scams, Ponzi schemes, and frauds. But, in the event of fraud, the blockchain is considered a practical basis for forensic investigations. In the field of finance, forensic accounting provides an appropriate accounting analysis for use in legal proceedings. It is frequently used in fraud and embezzlement cases to explain the nature of a financial crime in court. It is conducted by forensic accountants who use accounting, auditing and investigative skills to conduct a review of the finances of an individual or a business. Forensic accountants analyse, interpret and summarize complex financial and business matters. They can be employed by insurance companies, banks, law enforcement agencies, government agencies, or accounting firms.
Accordingly, Finterra offers the next generation of blockchain technology known as Gallactic Blockchain. The development of the GALLACTIC architecture aims to address the pressing challenges and limitations of existing blockchains, while also filling the gaps in supporting new and existing blockchain adoption scenarios in existing and new businesses in multiple sectors including finance. Finterra is deploying its expertise in the field to provide this technology to all private and public institutions aiming to include blockchain in their activity.
Although the blockchain is decentralized, the Finterra Gallactic blockchain complies with Malaysian Security Commission regulations. This reinforces the entire ecosystem and makes it more secure and immune to scams and fraudulent transactions. Additionally, the Gallactic blockchain is designed in a way that makes it practical and convenient for forensic investigators to trace any suspicious activity or transaction.
Gaur, N. (2020). Blockchain challenges in adoption. Managerial Finance, 46(6), 849–858. https://doi.org/10.1108/MF-07-2019-0328