Blockchain is a revolutionary technology that has the potential to eliminate intermediaries, reduce transaction costs, and enhance security and transparency in various industries. From the financial sector to supply chain management, blockchain has revolutionized many industries. However, in certain situations, blockchain may require the involvement of third-party intermediaries to perform specific functions. In this post, I am going to tell you five instances where blockchain needs a third-party intermediary.
What is a Third-Party Intermediary?
A third-party intermediary is an entity that performs a function in a transaction or exchange of value between two parties. The intermediary acts as a trusted third party to ensure the transaction is completed successfully.
They may provide services such as verification, validation, dispute resolution, and payment processing. In traditional systems, intermediaries such as banks, payment processors, and escrow agents play a crucial role in facilitating transactions and ensuring they are secure and reliable.
Blockchain technology was designed to eliminate intermediaries by enabling direct peer-to-peer transactions without the need for trusted third parties. The decentralized and transparent nature of blockchain eliminates the need for intermediaries, making transactions faster, cheaper, and more secure. However, there are situations where blockchain may still require the involvement of third-party intermediaries.
When Blockchain Needs Third-Party Intermediaries?
Here I am going to share five instances when you may think about third-party intermediaries even in the blockchain ecosystem. Well, it proves that artificial intelligence, and blockchain cannot alter human functionalities, but all these can reduce workloads. The first and most important case is:
In some industries, compliance with legal regulations is mandatory. Blockchain-based applications may require third-party intermediaries to ensure compliance with regulatory requirements.
For instance, in the healthcare industry, healthcare data is subject to strict regulatory requirements to ensure privacy and security.
Blockchain-based healthcare systems may require the involvement of third-party intermediaries, such as regulators or auditors, to verify compliance with regulatory requirements.
Dispute resolution is another area where third-party intermediaries may be required in blockchain-based systems. In case of a dispute between two parties, a third-party mediator may need to resolve the issue in a human way. In traditional systems, intermediaries such as courts and arbitration bodies are used for dispute resolution.
In blockchain-based systems, smart contracts can automate the dispute resolution process. However, in some cases, a human mediator needs to resolve the dispute.
Identity verification is another area where you may need third-party intermediaries instead of completely relying on blockchain-based smart contract systems. In some situations, you may need to manually verify the identity of a user before allowing them to participate in a transaction.
For instance, in the financial industry, Know Your Customer (KYC) regulations require financial institutions to verify the identity of their customers.
In blockchain-based financial systems, third-party intermediaries such as identity verification providers can conduct such steps safely to enhance another layer of security, especially in a private blockchain for an organization.
Do you want to take any risk for your business transactions? Relying completely on automated processes may not be safe! You need an intermediary (maybe from your organization) to verify the payments, even in blockchain-based systems.
While blockchain technology enables direct peer-to-peer transactions without the need for intermediaries, payment processing may still require human intervention.
This word is enough to understand blockchain technology is designed to eliminate intermediaries. However, some blockchain-based systems require the involvement of third-party intermediaries to maintain decentralization.
For instance, in proof-of-stake (PoS) blockchain networks, validators maintain network security and validate transactions. In this case, the validators all around the world act as third-party intermediaries to ensure the network is secure and reliable.
Are Human Jobs Still Safe?
Blockchain technology is disrupting industries by enabling direct peer-to-peer transactions without the need for intermediaries. However, there are situations where blockchain may still require human involvement and third-party intermediaries.
In this post, I have shared my views when I think most organizations may need human help instead of completely relying on smart contracts. Do you want to learn more about different aspects of blockchain and how it revolutionizes your industry, read the following posts:
Meet Rohan, a writer who loves to inspire and motivate others. He’s all about those feel-good quotes that can light up your day! When he’s not crafting words of encouragement, Rohan dives into the world of the latest technologies, exploring what’s new and exciting. But that’s not all—his heart beats for solar products, the kind that harness the power of the sun for a greener future. And guess what? He’s a total pet lover too! When he’s not busy writing, you’ll find Rohan surrounded by his furry friends, spreading joy and cuddles all around. Follow Rohan on Twitter and Facebook