How Blockchain Technology is Changing the Background Verification System?

Last updated on April 16th, 2024 at 09:43 am

Identity theft and producing fake information has been a long time menace that has been impacting the recruiting industry. There have been a number of cases where black hat hackers have been creating a breach in the systems to steal sensitive and protected identity-related data. These threats not only affect the individual at a personal level but also impacts the company at a bigger level, where the stolen data can be heavily misused for severe fraudulent acts and bigger hacks, resulting in a huge loss.

The omnipresence of technology and digitization of the entire ecosystem has made things even more vulnerable and prone to severe cyber threats. It thus becomes imperative to introduce a concrete security system that simply stops the breach of data and guarantees complete safety of the data stored.

As of now, all documents are kept in the form of electronic copies and the information is stored in centralized databases that are being safely maintained on fixed servers distributed across various physical locations. But even this makes the job simpler for the hacker to at least pinpoint the location of the server! Only if these databases are kept across distributed ledgers that can exist anywhere across an ocean of systems on a P2P (peer-to-peer) network, the breach would become impossible.

The emergence of Blockchain has been the one-stop solution to curb the menace of digital identity theft, but before pushing our precious digital data to this new technology, let’s understand some of its nuances.

What is Blockchain?

It is a decentralized repository of distributed ledgers containing a growing list of records, that allows only the addition of records to be built as a growing chain of blocks. The only ‘addition’ feature makes it impossible to hack because any attempt of deletion or altering the data would make the chain completely obsolete and unusable, thus making it immutable.

The immutable records or transactions, linked to each other cryptographically, after a certain period of time gets timestamped and are stored in a decentralized repository. The timestamp process authenticates and secures the data stored in every peer of the network, also ensuring that every block has a copy of every modification (addition) ever made to the chain.

As a result, Blockchain technology brings transparency, security, and efficiency to the storage and maintenance of the digital transactions of data.

The Pillars of Blockchain Technology

1. Decentralization – Before the emergence of P2P computing, there were centralized services, which meant a central entity that stored every single byte of data and the user only needed to contact the central authority to get the information required.

Banking institutions, BFSI sector, is one of the best examples that stored everybody’s money on a central server, and for every single transaction made the user was required to go through the banking system. This established the supremacy of the institution as it had every information regarding every legal transaction made.

Every time a user searches for something on a search engine, the query is sent to the server, which then calls back with the relevant information, this is called a simple client-server relationship. Although this central client-server relationship has catered to their users really well over the years, it still has some serious vulnerabilities, which are:

• As they are located and store data centrally, it is easier for hackers to pinpoint the location of the static server.
• In case of any software upgrades on the server, the whole centralized system halts.
• There is no backup plan for, what if the entire system shuts down for any random reason, then who would be responsible for the loss, or would there be any authority who can still have access to the information stored in the system
• What if the data on the system gets affected by a virus, malware or gets corrupted due to any unknown reason? Owing to the importance of the data, such failures have the capacity to cripple down an entire economy.

In a decentralized system, none of the aforementioned happens because the information is never stored in a single location, which means everyone on the network is the legal owner of the information.

The best part of a decentralized network is that if you want to get connected with an individual, there is no need to go through a third party, you can get connected directly. This mechanism gave rise to bitcoins, wherein only the sending and receiving party were the owners of the unit. Bitcoins were exchanged through decentralized servers, wherein no banking authority was involved. 

2. Immutability – Apropos to Blockchain, immutability simply means that once information or data has been fed into the chain, it simply cannot be tampered or altered, it becomes immutable.

This is safe as well as a chaotic function for many enterprises with fraudulent systems, wherein once an entry has been done in the account book, it simply cannot be changed. The immutability alarm on the safer side also warns the workforce about entering information carefully and assures the rightful owners that the information cannot be fiddled with.

Blockchain gets this property by the grace of cryptographic hash function, where hashing means utilizing an input string of any length and churning the output of a fixed length. When we talk about cryptocurrencies, the transactions are referred to as inputs and are run through a hash algorithm which gives a fixed-length output.

Irrespective of the size of the input, the output will always be fixed to 256-bit length. This hash function becomes critical in cases of big-data and huge transactions, as no matter whatever the size of the input is, all you need to remember is the hash to keep a track.

Cryptographic hash function is a special category of hash function whose properties make it the most suitable for cryptography and is thereby considered as secured. So, the Blockchain is basically a linked list that contains information and the hash points to every previous block thereby creating the chain. To understand, a hash pointer, not only contains the address of the previous block but also stores the hash of the data inside it. Any attempt, no matter how small, to tweak the data inside will change the hash functions completely, also one of the reasons to attain immutability.

3. Transparency – Often a confusing term, by users that if something is private how can it offer transparency? To resolve, the identity of the user is hidden via complex cryptographic methods and is represented by the public addresses. For e.g if you are looking up at a particular user’s transaction history instead of seeing it as ‘User Name sent you 1 BTC (Bitcoin)’ you’ll see it as ‘1MDFDdshjfr6564ERFFERFsccnhhER233ERF sent you 1 BTC’.

This keeps the equation balanced by securing the personal identity on one side while making their transaction records public on the side. This level of transparency never existed before as long as there were interventions from third party financial institutions. It adds an extra layer of accountability which is a much-required aspect in the digital ecosystem.

With this level of transparency in existence, if a user has the knowledge about the public address of a certain company, he/she can easily use it to see the number of transactions the company has made. The feature also forces the large enterprises to maintain loyalty and keep a stringent check on frauds and illegal transactions. 

Blockchain also offers a diverse set of applications pertaining to digital security, especially when it comes to online background screening companies.

Privacy of Personal Documents

Blockchain gives complete accessibility of the information to its rightful owner. When it comes to the safety and security of official documents it revokes the access from the companies and gives complete control of the document to the owner and enables them to share or grant permission according to their choice. It leaves the choice on the user whether they want to share their private data or not.

Use of Cryptographic Hash

By leveraging cryptographic it becomes impossible to produce the same hash sequence for different inputs, this functionality saves the recruiters from fraudulent candidates producing fake documents. Forceful attempts to imitate the document also leaves it completely useless or will produce a different hash function.

As every block is verified and connected to the previous block in a timestamped way it keeps a record of the exact time of verification, this keeps the information clear and undisputed.

Quick Online Background Verifications

The new age background verification companies are leveraging this technology to get rid of conventional methods of candidate screening which were expensive and time-consuming. With BGV companies such as ValidateMe Online, these processes are made quick and convenient. They make it easy for the recruiters to obtain digitally verified documents and therefore cut down the average time from days and weeks to a few minutes.

No Repetitive Verification Tasks

Once a candidate has been verified as an authentic user by a certain company, they need not re-establish their identities again to other companies. This creates a seamless connection between both the candidate and the company and for all future prospects for both the parties. With blockchain, they only need to be marked with trust once. This also enables the client to prove the genuineness of their digital identity without disclosing any personal information to the potential verifier.