Blockchain making Digital Exchanges more secured
Over the years, a technological transformation has diversified almost all major sectors, which has further lead us to more secured, proficient, and sound infrastructure. One such technology that revolutionized all major industries is the Blockchain technology. The features involved encryption, distributed database that records data, or in other words, and it is a digital ledger of any transactions, contracts — that requires to be independently recorded.
This chain of digital “blocks” contains records of transactions, which are interconnected to those before and behind it, making it difficult to tamper with because a hacker would need to change the block containing that record and all those linked to it to avoid detection. The records on a blockchain are further encrypted through cryptography, and network participants have their own private keys that are assigned to the transactions they make and act as personal digital signatures. Any alteration in the attached signature is marked as invalid and alerts others in the network immediately about the changes made. One of the notable features of Blockchain that distinguishes it from all other technologies is that this digital ledger is accessible across several hundreds and thousands of computers and is not bound to be kept in a single place.
Its inception into the finance sector has already started disrupting the financial services sector, and it is this technology which is underpinning the digital currency, one of them being the Bitcoin transaction. With Blockchain technology in the financial sector, the participants are allowed to directly make transactions across the internet without the need of a third party. Such transaction done through Blockchain are secured; the personal information available regarding the participants and creates a transaction record by encrypting the identifying information. Another exciting feature of Blockchain is that it greatly mitigates the possibilities of a data breach, which makes it more compelling in comparison with traditional processes, in Blockchain there are a number of shared copies of the same database which makes it challenging to wage a data breach attack or cyber-attack. With all the fraud-resistant features, the blockchain technology holds the potential to revolutionize various business sectors and make processes much smarter, secure, transparent, and more efficient compared to the traditional business processes.
What makes Blockchain Technology so appealing?
• Increased time effectiveness due to the real-time transactions
• Accomplishing direct Transactions mitigates the overheads and intermediary costs.
• Reduced risks related to cybercrimes, frauds, and tampering
• More transparent processes with better record creation and activity tracking
• More secure due to cryptographic and decentralized Blockchain protocols
How is Blockchain Technology transforming various Industries?
Blockchain technology can be used in different businesses, including Financial Services, Healthcare, Government, Travel and Hospitality, Retail and CPG. Money related Services: In the budgetary administrations’ division, Blockchain innovation has just been executed in numerous imaginative ways. Blockchain innovation improves and streamlines the whole procedure related to the resource the board and installments by giving a computerized exchange lifecycle where all members would approach precisely the same information about an exchange. This evaluates the requirement for agents or middle people and guarantees straightforwardness and viable administration of value-based information.
Healthcare: Blockchain can assume a key job in the medicinal services part by expanding the protection, security, and interoperability of the human services information. It holds the possibility to address numerous interoperability challenges in the area and empower secure sharing of social insurance information among the different elements and individuals associated with the procedure. It takes out the obstruction of an outsider and furthermore maintains a strategic distance from the overhead expenses. With Blockchain, the social insurance records can be put away in dispersed information bases by encoding it and actualizing advanced marks to guarantee security and genuineness.
Government: Blockchain innovation holds the ability to change the Government’s tasks and administrations. It can assume a crucial job in enhancing the information value-based difficulties in the Government division, which works in silos right now. The best possible connecting and sharing of information with Blockchain empower better administration of information between various offices. It enhances the straightforwardness and gives a superior method to screen and review the exchanges.
CPG and Retail: There is a large open door for Blockchain innovation to be connected in the retail area. This incorporates everything from guaranteeing the realness of high esteem products, counteracting and deceitful exchanges, finding stolen things, empowering virtual guarantees, overseeing dependability focuses, and streamlining store network activities.
Travel and Hospitality: The use of Blockchain can fundamentally change the movement and friendliness industry. It very well may be connected in cash exchanges, putting away essential records like visas/other distinguishing proof cards, reservations and overseeing travel protection, steadfastness, and prizes.
Blockchain in the Digital Exchanges
Among the above-discussed sectors, Blockchain holds great potential in making the digital exchanges more profound by making transactions more safe and secure, provided that the digital exchanges adopt to the technical aspects of the technology more wisely. For instance, if this technology is not used wisely, it may lead to major losses, that can be in millions! Consider the following unfortunate event from history,
Some time back, the Tokyo-based Coincheck exchange reported a 58 billion yen ($530 million) loss of digital currency due to hacking. After that, the Coincheck exchange was compelled to halt the trading of the stolen currency, NEM and restrict dealings in most other digital currencies. It was the second major hacking assault on a Japanese digital exchange that happened after Mt. Gox debacle in the year 2014.
The present situation of the Digital Exchanges
Though Blockchain can be very promising in terms of enhancing the security of the whole transaction process, the exchanges that play a vital role in enhancing the amount of digital trading, enabling Bitcoin and other such currencies do not use the blockchain technology wisely, which puts the security on the exchanges on risk.
Exchanges being fintech first rather than cybersecurity suffers from a systemic risk by having to secure billions of dollars in the deposit valve that makes it more prone to the hacking in comparison to the bank vault. Hacks are further becoming more sophisticated as digital currency becomes more popular so do its hackers have dedicated their time to stealing from these exchanges by deploying state-of-the-art attacks, such as social engineering, where they stole identities.
If we look over the figures, every day about $2.7 million or $1,860 each minute is stolen from exchanges. The amount of stolen digital currency from exchanges in 2018 was almost 13 times compared to the previous year. Henceforth, to deal with the problem, Exchanges are required to centralize the risk and keep part of their private keys online to allow real-time withdrawals.
How to make the transaction process more streamlined?
The above issues associated with the Exchanges can be streamlined by making the best use of the Blockchain. Let’s have a look over the same!
Use hardware wallets
Hardware wallets empower the ownership and control of digital assets that protect users against social engineering, physical threats, or human error.
Using digital currency exchange for short term storage
Having a two-factor authentication makes the process more secured if the key that is not limited to devices connected to the internet is preferred amongst the two available keys.
Self Awareness
Self-awareness is too crucial while using digital exchange platform. One must choose a PIN code that is secure and not easy to guess. Further, the 24-word recovery sheet should be kept well secured and never be entered on any device that is connected to the internet.
Besides the above discussed major sectors, Blockchain holds enormous potential in improvising the Digital Exchanges. But, the lack of awareness and knowledge of the Blockchain concept and how it works are the key challenges of using Blockchain in the financial services sector. The challenges associated with existing legacy infrastructure in organizations and the lack of proper technical understanding is a significant obstacle to the adoption of Blockchain in the mainstream. Further, embracing Blockchain also requires a cultural shift from the traditional ways of doing things, as it requires a whole turn-out of the processes by bringing decentralization into the entire process.
Thus, the global business world is yet to explore the details of the Blockchain concept to its fullest. However, the ongoing researches and explorations happening in this space is quite encouraging and further indicates that the business world will soon realize the massive potential of this technology. In addition to more money being invested in a security, 2019 will see individual investors become more aware of the need to protect their critical digital assets. Further, with the increased digitalization and intrusion of the Blockchain, individual data and security will improve, thereby, if users stay aware and alert about their proceedings over the digital exchanges, digital hackers would find it nearly impossible to hack the interface.
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