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Technology

How does Blockchain provide the required transparency?

Answers 1

The blockchain is the new technology which has already proven itself and has outstanding results in the field of cryptocurrency. The basic “funda” of blockchain is with the maintenance of its ledger. A ledger that can be controlled with the help of the rules made by the parties involved without the interference of the third-party agent or a middleman. For eg: - Consider that a buyer named Alice who lives in the Netherlands wants to purchase 500 tons of raw iron from Bob who lives in India. Now, in order to make this happen between Alice and Bob, a contract needs to be pulled. And Before the actual process starts, they need to take many steps into consideration. Firstly, Bob needs to transport the material to the shipping dock. After its loaded and shipped by the shipping company. The shipping company gets paid for their provided services. Alice needs to check for the quality of the material that they agreed upon and then transfer the money to Bob through proper channels. The issue with this type of arrangement is that all of the dealings that take place between Alice, Bob, and the shipping company, it needs to be managed by a third-party for the sake of guarantee. And for this, the third party may charge a hefty price for their services. Now, this can be overcome by making a “smart contract” between Alice and Bob and all the parties in between. Where all of them will be in a loop and if any one of the conditions are not met, then as per the clauses that are written in the contract actions will be taken. This will not only allow Alice and Bob and all others to make the process fast but also secure. All the conditions can be written in the contract and the money can be in escrow till the contract gets executed successfully. Conditions can be as follows: a) Independent Storage is being created by all the parties involved and a value is being put but can’t take out easily. b) Alice puts the money or cryptocurrency in the storage for the materials. c) Alice brings up the amount of material she needs. d) Now, Bob gets the payment confirmation and starts with the procedure of delivering the goods. He gets the material loaded and ready for shipping. e) The shipping company then gets the product delivered at the Netherlands to Alice and receives the amount of their share. f) Once Alice gets the goods, the amount is being received by Bob. g) If the material is not being delivered by Bob, Alice receives her liquidated damages payment and the rest is being returned to Bob. h) If Alice refuses to accept the materials for some reason, Bob receives her liquidated damages payment and the rest is being returned to Alice. i) At the end of the agreement, the “smart contract” drawn up by Alice, Bob, and the shipping company is considered completed and get stored in the blockchain network for eternity.


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