How Blockchain Technology Will Disrupt the Banking System

Currently, blockchain technology is being actively studied. Now it’s implemented by the world’s largest public companies. And not only tech giants – Google, Microsoft, Apple, Samsung, Amazon, IBM, Intel and Oracle. But also there are conglomerates like Alibaba Group, Nestle, Siemens. And also there is Walt Disney Company, automotive, insurance and retail corporations. And, of course, banks, financial and investment companies. Modern blockchain solutions for banking help to solve many tasks.

It is not easy for traditional financial institutions to adapt to the ever-changing technological environment. However, the benefits and opportunities of blockchain outweigh. By implementing solutions based on this technology, payments can be made faster. While transaction costs are reduced. And the security of data and money exchange is increased.

Blockchain

Blockchain vs traditional systems: which is safer?

Security is one of the key issues for banks in the process of introducing new technologies. Blockchain can be considered a secure, reliable, transparent technology. It is based on the use of an electronic signature (ES). It means cryptographic protection of information (CIP). It requires the passage of security certification procedures.

Right now, the Masterchain blockchain platform, on which banking services are implemented. It is at the final stage of certification. It’s used for the requirements for cryptographic information protection systems. And this is an unprecedented experience in the certification of systems of this class. Master chain is secure by design system with several levels of protection. It starts with ensuring the protection of all network connections and including protecting the data itself.

All confidential data is stored in separate user storage. Access to it is provided through the means of electronic signature. And cryptography is used to ensure security. Also, the Master chain has developed a system for controlling access to the network. The public blockchain platforms do not have them. This is another important level of protection. It is practically impossible to penetrate such a well-protected system from the outside. Therefore threats can come mainly from intruders inside the organization. And from its information systems. But such companies as https://diceus.com/industry/finance/ have considerable experience in dealing with such threats. In particular, through employee checks, monitoring information security. There is differentiating access to data, etc.

Speaking of possible vulnerabilities, one cannot fail to mention smart contracts (smart contracts). It’s a fairly new tool for the banking sector. Basically, it is the compiled code on the blockchain. There are a number of cases with ICOs with errors in the code of smart contracts of public networks. However, security confirmation in closed networks. These are such as Masterchain. It’s in compliance with mandatory procedures for the certification of cryptographic information protection tools.

There are several attack vectors. First, the very logic of smart contracts. When in fact the criminal is trying to execute a smart contract, which contains a fraudulent transaction. A striking example is an attack on the Ethereum-based autonomous investment fund. The DAO, when an attacker, using a vulnerability in the code, was able to transfer more than $ 50 million to his account. You can defend against such an attack by implementing the role of the network administrator. That is the organization that will be the operator of this network. In the history of The DAO, such an administrator made a hard fork. And, in fact, it rolled back the transaction, thereby saving funds.

How Blockchain Technology Will Disrupt the Banking System 2

To sum up

Another vector of attack is to intercept traffic in the blockchain network in order to try to create an alternative chain. Protection against it is also clear: it is necessary to build a secure perimeter, access to which is provided by the network operator. In the Masterchain, such protection is provided, the operator is now the FinTech Association.