The 3rd largest criminal activity is rapidly digitizing, but blockchain can fix it

V-ID’s tagline reads “Ending document fraud with blockchain powered validation”. In this post, I will try to explain the reasoning behind this ambitious goal.

Trend

On the one hand, digitalization, across the full breadth of society, is seen as the solution for a whole lot of things. A simple Google search is enough: digitalization is the key word in almost every facet of society.

sources: Bouwmachines, Feb. 2017, SpoorPro, Jan. 2018, Computable, Sep. 2017, CBS, Apr. 2017

In nearly every sector, digitalization is mentioned as the way to lower operational costs and increase efficiency. At the same time, as a side effect, we see daily reports about explosively growing cybercrime, data manipulation and identity theft in the media.

source: “Digital Technology, a Weapon against Document Fraud” Hélène Mouiche, Senior Analyst at MARKESS

Means

Moving your process from physical to digital, means more and more paper documents are replaced by digital documents. Traditional document fraud will not vanish because of this, unfortunately, yet it will follow the same path from physical to a digital manifestation. And the scary part is the fact that currently, digital fraud is extremely easy.

It even gets easier in time, thanks to the continuous development and broader availability of sophisticated image manipulation technology.

“While the scientists behind the work note that the method could be useful for VR, film dubbing or post-production movie work in general, there’s obviously some concern over more nefarious applications.” Source: Engadget, May 2018

Motive

So, document fraud is the third largest criminal activity. Why is document fraud so big, what is the motive? According to Europol, it is one of the “Engines of Organised Crime”, because it enables all kinds of other serious and organised crime.

Source: Europol, SERIOUS AND ORGANISED CRIME THREAT ASSESSMENT 2017, PDF file, page 17

Opportunity

source: Stichting Vervoeradres, March 2016

So, the means and motives are there, what about the opportunities?

Sadly, our business processes provide plenty of opportunities, due to the complexity and length of our workflows. Of course, big companies spent a lot of resources on security, but there is typically also more money at stake, which is the motivator for fraud.

Source: ITV News, November 2017

The small — and medium sized companies, on the other hand, often do not have the funds for serious security measures.

The animation below depicts a file and its possible journey from creation to archive:

As a file travels from the start to the end of a process, it passes dozens of stations. Through computers, modems, network towers, internet nodes and corporate networks that are managed by different organizations, the file, or one of its copies, ends up in an environment that may or may not be secure. Without the average employee, who is part of the process, being aware of this, this complex route creates numerous opportunities for unlawful manipulation.

The complexity of the route that a file follows is hard to reduce, but a watertight check on the contents of a file is perfectly possible.

In other words, if you eliminate the means, the motives and opportunities do not matter any more.

Utilizing blockchain’s safety in numbers

This is where V-ID’s blockchain powered validation comes in. It works as follows:

When a file is created, V-ID extracts and saves the file’s fingerprint in the blockchain. This is the validation process.

V-ID’s validation process

The file may now be e-mailed, renamed and copied, without losing its verified status. But if as little as one byte is changed in the content of the file, V-ID will detect it and the file loses the verified status.

Verifying a file’s authenticity can be done in under 5 seconds, for free and without logging in, by submitting it at the Verification Terminal at V-ID.org.

V-ID’s verification process
Blockchain technology is just one part of the solution. The process behind V-ID’s validation is perhaps even more important. Validation, and subsequently verification, is useless, if you can not guarantee who validated the file. This is why V-ID handles the validation process with strict procedures in 3 possible safety levels. With level 1, the publishing party hands over the files through a secure upload link to V-ID, and V-ID will secure the file’s fingerprints in the blockchain. Level 2 involves the same procedure, but on site at the publisher’s facility. Level 3 is the same as level 2, but now there’s also a V-ID-trained notary present to oversee the validation. In the near future, V-ID will also offer Self Validation, where, after all security checks are passed, the publisher will be assigned to a token wallet, with which validations can be done. These validations are recorded by token transactions, so V-ID can be sure that the validating party is the rightful publisher of the original file.

Digital files > PDF’s

Document fraud in digital form can manifest itself in many more filetypes than just PDF’s. Tampering also happens with files such as security footage, research results, phone records, tracking data, or audit trails. V-ID works with anything digital that is deemed important enough to protect.

Physical use cases

V-ID can be put to use in even more areas, besides document fraud, by pulling in physical objects into the validation process. Things like, video or photo material of the state of objects and buildings, HR scans of paintings and other art objects or video/photo material of inventories.

Blockchain as part of our future

V-ID uses the full security potential of blockchain tech to solve a universal problem. We see blockchain as the key technology to make sure that our digital advancements as a society are not held back by sophisticated fraudulent activities.

It is the progress that we make today against fraud, together with customers like Airbus Space & Defence, that strengthens us to further explore V-ID’s versatility.


Get in touch!

For more information, please visit https://about.v-id.org.