One maynot hear the word “immutable” used as often anywhere else as within the countless words written or spoken about blockchain. The immutability of a blockchain–, that is, its ability to maintain a permanent, indelible and unalterable history of transactions, is a defining quality that proponents stress as a fundamental value.
Immutability simply means that data cannot be changed after it is verified and recorded on the blockchain. In the financial services industry, immutability of data is crucial because of the proliferation of bad actors and malicious attackers who alter data to commit fraud. According to a 2022 report by the Association of Certified Fraud Examiners (ACFE), 5% of corporate revenue is lost to fraud annually, and eight percent of the cases involve cryptocurrency.
This is mainly due to manipulation of data, and this is what a truly immutable blockchain can prevent. For an attacker to succeed in manipulating data on a blockchain, they need to make a chain of blocks that is longer than the one that is already there, or have the consensus of all other nodes on the network. The fact that each node has a copy of a hash of the history of all transactions on all blocks on the chain makes it almost impossible to manipulate.
Because it boosts trust and integrity in the data used and shared by businesses on a daily basis, blockchain for enterprise has revolutionized auditing as a faster, more efficient and more practical practice, especially within financial technology. Businesses can now demonstrate to their stakeholders that the data they provide and utilize has not been tampered with.
For businesses, the immutability made possible by blockchain reduces administrative costs and makes auditing and preventing fraud easier. Because each transaction is permanently recorded, digital ledgers that utilize blockchain technology ensure the complete history, data trail, and even transactional communications of an application.
If there is a difference between transactions and their matching hash, then they are automatically invalidated because data integrity cannot be verified. With this, businesses in the private and public sectors can immediately identify instances of data manipulation. Consequently, these fraudulent activities can also be prevented before any real harm is done.
With blockchain’s data immutability, proof of fault can also easily be distinguished, and claims of wrongdoing in commercial disputes may easily be resolved. For instance, in the construction industry alone, costs of outstanding lawsuits have amounted to a staggering $1 trillion, which stem mostly from a lack of checks and balances. A majority of issues involving data provenance and integrity could be avoided through the data immutability provided by blockchain.
Additional measures, such as directly sharing hash outputs with stakeholders (customers, auditors, etc.), or building up a decentralized network of validation nodes, similar to those of public blockchains, are also necessary. The stricter the enforcement procedures, the more trustworthy the blockchain data.
It cannot be denied that one of blockchain’s most notable qualities is its inherent immutability. There is no magic involved; rather, it is a mechanism for spotting dishonesty. Immutability will render obsolete the data-related challenges that currently plague systems.
Learning about the many ways it may be put to use is essential to utilizing and maximizing its potential. Attend the London Blockchain Conference at the Queen Elizabeth II Centre on May 31 to June 2 or watch its livestream to better understand what enterprise blockchain can do for businesses in different global industries.
