Blockchain Technology Aims At Saving Trillions of Dollars Lost on Document Fraud

As the world moves to a completely digital metaverse, cases of document and identity fraud have been on a steep rise, stifling financial institutions and costing the global economy trillions of dollars. According to research by Aite Group, a financial and insurance company in the U.S., nearly 47% of Americans experienced financial identity theft in 2020. The research found that losses from identity theft cases cost $502.5 billion in 2019 and increased 42 percent to $712.4 billion in 2020.

The research explains that most of these cases could possibly be fueled by the increasing unemployment cases due to the COVID 19 pandemic which has pushed many towards faking documents as increased and extended unemployment benefits made the sector an attractive target for fraudsters. The identity and document fraud losses are expected to grow to $721 billion in 2021, showing the need for better document management systems. 

Notwithstanding, over 3.3 million cases of identity fraud were reported to the FTC in the U.S. in 2019, and the number grew 45 percent to 4.8 million identity theft and fraud reports in 2020. According to the report financial and insurance industries suffered the most from document and identity fraud cases in 2020 and it is forecast the trend will continue in 2021. 

Defined as the act of “manufacturing, counterfeiting, alteration, sale, and/or use of identity documents and other fraudulent documents to circumvent laws or for other criminal activity”, document fraud is at its peak in 2021 with authorities looking for ways to combat the vice. 

The digitization of documents and identities has been a tested way to detect and prevent document and identity fraud. Through the use of microscopic scanners for texture analysis, advanced visual authentication techniques using artificial intelligence (AI), and live identity verification (on spot selfies and pictures) authorities have been able to curb fraud. However, criminals are finding new ways to commit document and identity fraud hence the need for foolproof methods such as blockchain technology in the field. 

Over the past half a decade or so, institutions and corporations have taken up blockchain technology to fully detect and prevent document fraud, verify documents and authenticate that each document belongs to the right identity. Cardano-based platform, Blockademia leverages blockchain to provide users with one of the leading solutions to the pertinent issues of document and identity fraud. 

Companies Leveraging Blockchain to Curb Fraud

To understand how Blockademia curbs fraud you need to know some properties of blockchains. The solution is innate in how blockchain functions. Users leverage the immutable, public, and secure features of a blockchain to verify and authenticate their documents. 

At its core, blockchains create a chain of transactions that are verified and signed by “miners”, ensuring every document and corresponding identity is correct. Miners need to reach a consensus to verify a document and once verified, the document is stored on the chain of transactions making it immutable (can’t be changed or altered without consensus) and encrypted. This means that only the verified documents will be broadcasted on the network and must be authorized to ensure they are the real document. 

Additionally, blockchain secures the document using cryptography meaning it is practically impossible to hack the blockchain and alter the documents stored as every computer in the network has a copy of the document. This is a major improvement from the traditional document management servers which stored all documents on one server, which if hacked, could lead to loss of important documents. 

The Rise of Blockademia Solution

Blockademia leverages the features of the Cardano blockchain to provide users with a foolproof authentication system. To secure and authenticate a document, blockchains create a unique hash assigned to every document posted on Blockademia. The hashes are then stored on either a private or public blockchain and can only be altered when consensus amongst the parties involved is reached. If altered, there will be a trail showing the hash has been tampered with. 

Launched in 2020, Blockademia provides a decentralized information system that issues, verifies, and authenticates any type of document. Built with academic certificates in mind, the platform has expanded its document authentication parameters to other important documents including issued diplomas, certificates, title deeds, insurance policies, state documents, certificates of ownership, etc. 

So how can you verify a document using blockchain? 

The protocol uses a dual-layer structure to ensure the security and scalability of the network. The first layer carries out the process of issuing, verification, and authentication of the documents while the second layer connects to the blockchain. Having a “dual-layer structure” allows the platform to reduce the blockchain transaction fees on the blockchain, minimizing the cost of verifying a document. 

To start verification, the administrator (or owner of the document) needs to provide relevant data on the Blockademia’s app to create a document. Once entered, the system generates a unique hash function which is then copied to the blockchain and its metadata stored. To facilitate the verification of documents and curb fraud, The project introduced its own tokens, ACI tokens. These tokens are the fuel to the platform as every issuer requires to purchase them and pay fees using them for the document to be stored on the chain. 

? Working Demo Video ?#Blockademia is flying under the radar❗️❗️ Check the working demo (MVP) video below, it's a project with a real use case! Like & RT! ☺️??https://t.co/H4kW2SAWz2 Documenting the undocumented!#Cardano #ADA @IOHK_Charles @IOHKMedia

— Blockademia - ACI (@blockademia_aci) November 10, 2021

Once the issuer enters the data and confirms it, the dApp charges the fee in ACI tokens and writes an entry to the blockchain. The Issuer then receives a QR code which can be used to verify and authenticate the legitimacy of the document. To verify a document, users, organizations, or authorities only need to scan the QR code on the Android or iOS app or the Blockademia webpage, and a pop-up will appear showing if the document is real or

Blockchain Technology Shapes the Future

The world is gradually embracing the features of blockchain to create new digital solutions to problems that have persisted over the past decades. Document fraud and identity fraud could be a thing of the past with the rise of blockchain technology. Innovative solutions such as Blockademia will be at the forefront of solving document fraud as the world moves into a new metaverse. 

Future generations will enjoy a “fraud-free”, open and secure decentralized experience with no fear of identity theft or document counterfeits, thanks to the groundwork of trailblazing blockchain-based players such as Blockademia.