Illegal activities associated with cryptocurrencies are not a new thing and it has been raising mammoth concern in the financial markets as well. The government is taking precautionary measures in every way possible, to stop these illicit activities involving crypto-assets. In fact, the Government is seeking the help of blockchain technology to combat illegal activities and emerging crime rates. This article puts light on how blockchain technology can be used to deal with these problems.
Decentralized systems prevent data manipulation
The relationship between the government and the people is purely built on trust. Therefore, the government has the crucial responsibility to maintain this trust by safeguarding the confidentiality of each citizen. However, mistakes do happen, and the citizens become victims of identity thefts, thereby adding up to their worries.
Therefore, the Government is seeking new ways by implementing blockchain technology, which is a decentralized system of the ledger, makes it nearly impossible for the hackers to manipulate any record that is stored into the decentralized database.
Each transaction in the decentralized system is considered as a block. These blocks are tied to each other using the cryptographic blockchain technology. Adding each block to the chain makes the chain longer; therefore, in the event of any single block being tampered, it instantly signals that the ledger is corrupted. In such a case, the corrupted ledger can also be replaced by the multiple copies stored in the databases. This way, the government generated documents like birth certificates, drivers’ licenses, passport, etc. can be safeguarded by using blockchain technology.
Immutability helps in tracing transactions
Blockchain transactions are immutable, that helps in tracing out any particular transaction from the whole chain of transactions. It also makes it easier for the Government to figure out if there is an anomaly in the financial and business transaction. In fact, criminals find it impossible to hide their illegal activities if they are constantly monitored by the blockchain technology. Therefore, it promotes transparency and trust.
Trustless Transactions offer peer-to-peer interactions
Blockchain offers direct peer-to-peer transactions within the private channels together with the verified trustless transactions. Moreover, using blockchain technology in registering citizens involves issuing a blockchain ID to them that can be used in all the future transactions done by them. This prevents identity thefts because these encrypted blockchain IDs cannot be tampered so easily. It harnesses privacy and security, along with making all the transactions bureaucratic and trustless.
Authentication limits the access to only a few verified persons
By using the blockchain technology, the government can give access to the confidential information to only a few selected persons who hold extremely high ranks and responsibilities in the government sectors. No other users will have access to that information, thereby lessening the chances of hacking and tampering of important data.
Automation reduces the chances of error
With the help of the trusted nature of the blockchain technology, many current manual record verifications can be automated, thereby saving a lot of the human efforts and time in finding out, exactly where the conflicts in data entry lie. It also reduces the chances of human errors while feeding the data manually. Also, with the help of program codes like the ‘smart contracts’, on the blockchain technology, the automation can be taken to the next level. Blockchain can easily do the work that previously needed to be done by experienced lawyers and accountants.
Therefore, the government needs to update its ways of dealing with the management and thus implementing blockchain technology to combat the illegitimate and illegal activities. To glorify the paperless transactions, implementing blockchain technology can be of great help.