Originally developed in 2008 by Satoshi Nakamoto to underpin the cryptocurrency, Bitcoin, blockchain is a technology that has been bubbling away quietly in the background for years. Whilst it isn’t a new technology it has grown in popularity due to the rise in the price of cryptocurrency bitcoin, but more recently for the potential solutions it may hold to revolutionise cybersecurity.
The rate of cybersecurity breaches has seen no sign of slowing down in 2017. With news of another breach occurring on a weekly basis businesses are desperate for a solution. Blockchain technology may hold the key. David Schatsky, Managing Director at Deloitte U.S.,“the technology provides a way of recording transactions or any digital interaction in a way that is secure, transparent, highly resistant to outages, auditable, and efficient”.
What is blockchain technology and how does it work?
Blockchain technology stores information in blocks, these blocks are secured using cryptography. A blockchain is an encrypted distributed database (or distributed ledger) that maintains a continuously growing list of ordered records called blocks. The nature of blockchain keeps information extremely secure without the need for a central authority. Blockchain encryption cannot be removed, altered or omitted. Blockchains create trust between multiple untrusted parties by providing real-time processing of transactions by multiple parties.
How can blockchain technology reduce the risk of a cyber-attack?
As more and more businesses rely on digital technology for everyday functions, the risk of a cyber-attack increases. The amount of information that is available to cybercriminals has increased and is often not as secure as people may think. Malware such as ransomware and DDoS (Distributed Denial of Service) attacks are never far from the news, with cybercriminals aiming to steal valuable data such as health records, financial information and personal identifiable information (PII). With cyber-attacks becoming increasingly more sophisticated, the chances of business not falling victim to an attack are getting smaller and smaller.
The majority of cyber-attacks that occur are after valuable data, often held in a central database. The fact that it is stored centrally makes it an easy target for attackers to penetrate. Using blockchains, however, can minimise this risk as the databases, that information is stored upon, are duplicated and stored across a network of computers. The other benefit of blockchain technology is that the information stored on blocks is continually reconciled, there is no central location which makes it difficult for the information to be corrupted or hacked. Cybercriminals would have to obtain access to every copy of a database simultaneously for a breach to be successful.
Which sectors are using blockchain in this way?
Blockchain is the latest buzzword amongst the banking industry. Many believe that there are numerous departments within banking and finance that will benefit using a blockchain model including; clearing and settlement, payments, trade finance, identity and syndicated loans. The Financial Times have put together an interesting article explaining in detail the benefits blockchain may have on the banking industry.
IBM also report that government organisations will also be embracing blockchain technology. The report states that nine in ten government organisations plan to invest in blockchain for use in financial transaction management, asset management, contract management and regulatory compliance by 2018.
Blockchain technology is predicted to grow within the banking industry but also we expect to see a wider adoption of blockchain technology across all sectors in 2018. If you would like to find out more about blockchain technology and see how it may help your business then please get in touch with us today.