Banks worried over blockchain transaction security

Transaction confidentiality is one of the key issues banks have with blockchain technology, a new report by Greenwich Associates shows.

The relevance of blockchain in financial services continues to grow but with the increasing investments and adoption of the technology also come the concerns over its applicability.

One of the main impediments market participants see to the wider use of blockchain in the financial services sector is security.

Over half (55%) of the 134 companies polled by Greenwich said they are worried over transaction confidentiality and almost two-thirds (63%) of all polled banks and brokers named this as their main concern.

The recent hack of bitcoin exchange Bitfinex, which resulted in users losing a collective $70m worth of the cryptocurrency, has fueled those concerns as well.

Another aspect of transaction confidentiality, namely the private keys used to decrypt data by recipients in a transaction, has also been identified as an issue, according to the report.

Based on the findings, Richard Johnson, vice president of market structure and technology at Greenwich Associates, stressed the need of a new approach to digital currency trading.

He said the hack at Bitfinex was not caused by a fault in the technology but rather by shortcuts the exchange operate has made.

Copyright © 2016 FINTECH GLOBAL

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