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As the blockchain continues to mature, many financial institutions are starting to experiment with technology. The Bank of America, for example, has collected over 50 technology patents. Most of the financial institutions, however, have not yet made the leap, mainly due to security problems and scalability.
Bradley Cooper, editor of Blockchain Tech News, moderated a panel at the Financial Data Security Summit sponsored by Thales and Networld Media Group, with Jose Diaz, director of payment strategy for Thales eSecurity and Sudhakar Kamalanathan, associate director for security of Cognizant information Technological solutions on the subject of blockchain and security.
The speakers shared key reflections on why blockchain acceptance is slow for financial institutions, security issues and how to secure the blockchain.
Why is it going slowly?
Diaz pointed out that one of the reasons blockchain technology is going slowly is that it was originally created for an open system, in which anyone could read transactions. Financial institutions, on the other hand, are looking for a closed system.
Kamalanathan said that one of the biggest challenges is that there is a "lack of general standards while the legal / compliance structure is in its nascent phase".
Both speakers also said that scalability and data confidentiality are key issues with private / licensed blockchain technologies, as many chains are not able to handle the type of data quickly and securely that financial institutions manage. regularly.
There is also the simple problem that standards and best practices for blockchain applications are still evolving, according to Kamalanathan. Many financial institutions will not want to try to hit a mobile target.
Safety issues
While blockchain offers value for secure unchanging transactions, there are still some security problems for financial institutions.
Kamalanathan mentioned that there is "a lack of consistent good practices exposing vulnerabilities in the underlying protocols for public blockchains, no central source that documents known vulnerabilities, attacks and problematic constructs."
The speakers also stressed that it can be a challenge to manage private keys, such as who owns the keys and how to keep them secure.
A third concern concerns vulnerabilities in smart contracts. Kamalanathan said: "Any security holes in smart contracts are visible to all participating nodes and can be exploited and are subject to all risks associated with a software development life cycle."
How to make it safer
In order to make secure blockchain solutions for financial institutions, Kamalanathan advised financial institutions to pilot all potential blockchain projects and set "realistic participants and environments before using them as valuable tools".
He also recommended "reinforcing security reviews of code-based entities". If your smart contract program, for example, allows for any unexpected behavior, it can be difficult to determine whether an action is harmful or neutral.
Finally, in order to manage private keys, Kamalanathan recommended using good public-key infrastructure lifecycle management. In this way it is possible to "protect private keys relating to consent entities, transactions or customers".
Closing thoughts
That said, Diaz and Kamalanthan have both said that the general acceptance of the blockchain is still a way for many industries.
Financial institutions should focus on authorized, scalable, programmable, interoperable, and Layer 2 (off-chain / sidechain) compliant blockchains for enterprise-wide adoption, said Kamalanathan.
Blockchain, however, still has a wide range of use cases, ranging from identity management to cross-border payments to claims management. With this in mind, financial industries should pay attention to blockchain developments and carefully consider how they can benefit their businesses.
Image via Istock.com.
Bradley Cooper is a technology editor for DigitalSignageToday.com and BlockchainTechNews.com. His background is in information technology, advertising and writing.
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