Data security is one of the biggest threats for all internet-connected companies. However, financial firms tend to be especially attractive targets for thieves and other cyber criminals. Often it seems the companies and hackers are in a cyber security arms race, and that the hackers are winning.
But, a technology that has emerged from the cryptocurrency world has been a game changer for data security. Blockchain is a powerful tool for anyone who wants to preserve transparency while also making sure data is secure from unauthorized access.
Biggest Cybersecurity Threats
Deception is one of the most effective tools cyber thieves have. They create elaborate phishing schemes to trick employees into downloading malware that then compromises the organization’s systems.
Sometimes cyber criminals will setup fake Wi-Fi networks to try and trick unsuspecting users into giving away their usernames and passwords.
Another tactic is to try and hack into a poorly secured web portal, and try and steal data linked to the portal through the backend.
However, virtually all of these attacks are possible because all the data is stored in a central location. The criminals know where the gold is; all they have to do is find a way to get it.
Blockchain changes this dynamic.
How Blockchain Works
Blockchain does not have a centralized data set. Instead personal data or transaction data is recorded on a block. That block is sent to the other stakeholder computers in the network for verification. If the other computers verify the data as authentic, the block is added to the blockchain.
Once it is part of the blockchain it cannot be overwritten. Because the stakeholder computers verify every transaction, it also makes data manipulation impracticable. It would cost criminal more in time and money to try and manipulate the data than they could possibly benefit from the manipulation. Additionally, because of the verification process the criminals would most likely be quickly detected.
This technology makes a centralized attack useless.
Blockchain technology can also be paired with Keyless Security Infrastructure (KSI) to provide another level of security to authenticate the identity of any user. Again, the decentralized nature of blockchain and the requirement for multiple sources of verification make blockchain with KSI much more secure than most other alternative technologies currently is use.
How Entities Most Concerned About Security are Using Blockchain
Blockchain is a remarkable technology because not only does it increase security by decentralizing the data, but it also works to make transactions more transparent. It seems likely that before too long blockchain will be a financial industry standard.
Banks are turning to blockchain because in addition to its security features, it also allows the banking ecosystem to do away with payment processors, custodians, and reconciliation bodies.
It is becoming increasingly clear that any financial organization that is truly committed to both transparency and data security should be in the process of implementing blockchain into their transaction processes.
The industry leaders are already using blockchain to keep the data of their customers and investors safe and to make transactions more transparent and less expensive.