Blockchain technology is believed to be the future of many industries. Cited for its safety and transparency, specialists expect much from it. One of the benefits of distributed ledgers is the opportunity to transfer money without the need of banks acting as mediators.
Blockchain technology is believed to be the future of many industries. Cited for its safety and transparency, specialists expect much from it. One of the benefits of distributed ledgers is the opportunity to transfer money without the need of banks acting as mediators. So those who are not customers of those institutions are now no longer outsiders to internet transactions.
Individual credit history is the main factor when it comes to loans. Banks and other financial providers require that information and decide whether the person is eligible for credit drafts. Personal data is stored in large credit bureaus like Equifax, Experian and TransUnion. Their services offered enough data protection in the past as only trustworthy people had access to it. Unfortunately this is no longer the truth.
However, nowadays tons of information is susceptible to attacks, because the security is outdated. Experian and Equifax databases have both been compromised recently and personal records were practically in the hands of the hackers. The attacks go to show that the information stored is not protected properly.
Personal financial history data is not shared between different credit bureaus and it’s quite difficult to look at the whole picture when one person can have different records among agencies. Furthermore, it is not only complex to gather data but it’s expensive as well. $15 billion is the total revenue stream of Equifax, Experian, TransUnion and FICO for 2016. The amount is collected from the fees and taxes which banks pay to access the credit information they need. But the problems do not stop here. It is almost impossible to enter the market as an agency, because regulations on personal information processing and storage are very strict. This, on the other hand, creates a market with almost no competition.
Briefly explained, credit agencies are not protecting data, are expensive and store information which is sometimes fragmentary.
In contrast, blockchain offers distributed data storage across a multilevel network of computers which is regarded incorruptible. Not surprisingly it is the technology behind cryptocurrencies. Thanks to the decentralized system unwanted penetration is almost impossible. Moreover, the costs are significantly reduced because blockchains do not require that heavy administration as centralized storages do. And lastly, users own their data; they easily access it as it is no longer held by an agency. In addition, every action taken within the blockchain is easily traceable.