Blockchain links are created in such a manner as to be irrefutable, allowing the financial institution to establish and maintain trust instantly, and can be linked all the way back to the original block (or transaction). Rajesh Maurya, Regional Vice President, India & SAARC Fortinet share insights on Blockchain Technology and its impact for the Financial Sector.
Rajesh Maurya, Regional Vice President, India & SAARC Fortinet
Why is Blockchain Technology gaining more importance?
The use of Blockchain technology are fairly broad in nature. More open and commercial uses for blockchain include contract management, title and deed management, and other transactional operations that demand a high degree of certainty as far as what happened, when, and who was involved. Think of a simple service contract where two parties enter into an agreement. The original terms are noted within a block. As services are delivered, a block is added. As services are received, blocks are added. Payments for services rendered are recorded or even automatically managed. This documentation of the end-to-end process of contract management and associated events provides evidence of an irrefutable series of delivery validation points.
What about the cost of implementing Blockchain Technology compared to other applications?
The cost per blockchain transaction is extremely low for financial institutions. The annual maintenance on thousands of applications working together to create and manage all credit card and bank account transactions is a huge burden on financial institutions. In addition, there is also problem management. Think of things like fraud, mischarges, disputed transactions, money laundering management, and a host of other things that have a high impact on bank resources (money, time, and people.) Managing credit cards and bank account transactions comes with a high level of cost and ongoing operational expense burdens.
Not so with blockchain, the entry fee from an IT perspective can be quite low. From a transactional cost perspective, the publically managed system incurs little to no cost whatsoever – transaction management is outsourced and the cost is a fraction of what it would be in a similar financial institution’s back end system.
Blockchain Technologies are here to stay. So, what are the security issues?
Blockchain technology does not include the built-in functionality of user roles or access controls. Because everyone has the ledger, everyone can read it. Roles and access controls are something that can always be added at the application layer.
When used by a consortium or private entity, most enterprise blockchains will be permissioned. In such blockchains, a governance structure has to be defined. This structure ensures which users can view or update the blockchain, and how they can do it. This establishes a consensus process that is controlled by a pre-selected set of nodes and predefined rules of governance. For example, if you have a financial organization of 25 institutions, you may want to establish a rule requiring that at least 15 of them must sign a block in order for the block to be valid. So, in a permissioned blockchain, outsiders should not be able to tamper with the ledger. Therefore, the administrator of the permissioned blockchain must minimize its attack surface. In practical terms, this means that every participant is a target, and that traffic to and from participating entities must be protected using policies.
Blockchain transactions can be easily denied if participating entities are prevented from sending transactions. A DDoS attack on an entity or set of entities, for example, can totally cripple the blockchain organization and the attendant infrastructure. Such attacks can introduce integrity risks to blockchain by affecting such things as consensus. Therefore, blockchain architects must work with their security counterparts to ensure the availability of the infrastructure via such methods as building strong DDoS attack mitigation directly into the network.
Fortinet adopts a forward-thinking view of cybersecurity, and stands ready to protect private blockchain processes and implementations today. Fortinet’s security fabric provides the powerful tools needed to integrate security capabilities and communicate threat information across that secure fabric in order to rapidly identify and negate cybercriminals.
