Page 30 - Insurance Times September 2023

Block chain and

it's use cases in

Life Insurance

Industry Neeraj Kaushik

Blockchain offers numerous benefits, it also has limitations such as scalability concerns, energy
consumption in certain consensus mechanisms, and regulatory challenges. Therefore, careful
consideration of the specific use case and implementation is necessary to harness the full potential
of blockchain technology.

Introduction in blockchain networks to guarantee that members
agree on the authenticity of transactions and the
Blockchain is a digital ledger that permits multiple individuals
to create, maintain and verify a shared database without sequence in which they are added to the blockchain.
Common consensus techniques include, among others,
dependency on a centralized authority or administrator or
intermediary. It is a cluster of blocks, where each block Proof of Work (PoW), Proof of Stake (PoS), and Practical
Byzantine Fault Tolerance (PBFT).
contains a list of financial transactions or data records.
4. Smart Contracts: Smart contracts are self-executing
Characteristics of Blockchain agreements with predefined rules and conditions
encoded on the blockchain. They automatically execute
1. Decentralization: Instead of a central authority or in-
and enforce the terms of the contract when specified
termediary, blockchain relies on a network of comput-
conditions are met. Smart contracts enable automation,
ers (nodes) to validate
reduce the need for intermediaries, and facilitate trust
and store data. This and transparency in various business processes.
decentralized design
encourages openness, 5. Immutable and Auditable: Once a transaction is added
eliminates the need to a block followed by it's addition to the blockchain, it
for a single point of is extremely difficult to edit or delete that transaction.
control, and boosts This immutability ensures the integrity of the data and
system adaptability. enables auditing and traceability of transactions over a
period of time.
2. Transparency and Security: Transactions recorded on
a blockchain are transparent and visible to all Blockchain technology initially gained popularity as the
participants in the network. Once a transaction is added underlying technology behind crypto currencies such as Bitcoin.
to a block, it is difficult to alter or delete, ensuring the However, its applications extend beyond digital currencies.
integrity and immutability of the data. Cryptographic Blockchain has the potential to revolutionize various industries
techniques, such as hashing and digital signatures, by providing secure, transparent, and efficient solutions for data
provide security and authentication for the data. management, supply chain tracking, voting systems, financial
3. Consensus Mechanism: Consensus methods are used services, insurance, healthcare, and more.

26 September 2023 The Insurance Times