Transparency

In the traditional centralized approach to application and data management, the primary owner of the central database is free to manage the data as they wish. Participants in a transaction may send the correct data but have no assurance, and there is no way to confirm that it was recorded correctly in the central system. Further, the mechanisms to retrieve and view or use the data from the central database could be user interfaces for human access or APIs for system-to-system access, which are also developed and managed by the administrator.

Errors may inadvertently creep in at either the point of data recording or data retrieval. It will result in the most common challenge faced in multi-party transactions today, and that is reconciliation. Significant time and effort are spent on reconciling the discrepancies in data across multi-party systems, where both parties attempt to convince each other that their data is correct. Reconciliation issues could lead to significant financial losses for either or both parties and possibly lead to regulatory issues.

Many transactional systems, especially banking and financial systems, often have a government-controlled authority such as a central bank or a trading exchange, that provides systems and mechanisms that facilitate the reconciliation of transactions across multiple participants. This approach takes away the challenges of reconciliation to some extent, but it requires a high level of trust in the central regulatory authority. It is possible in large, public systems but not in small, private systems that have transactions between a few private entities.

In a decentralized Blockchain solution, every participant maintains a copy of the data for all transactions between participants in the network. All copies are synchronized in real-time across the network, resulting in a high level of transparency. While discrepancies and errors may still occur, they will be replicated across all participant systems, and this transparency will enable faster reconciliation.