A new report released by Greenwich Associates has found that a high percentage of respondents are concerned with blockchain security when it comes to transaction confidentiality.
Blockchain technology is taking the financial institution by storm. As more financial companies continue investing into the technology to bring it to the market it seems hopeful that it could have a major impact in a few years.
However, there are significant hurdles in place that need to be tackled first, namely blockchain security.
The Bitfinex hack earlier this month, which saw hackers steal $70 million worth of users’ bitcoins and the attempted hack of $50 million worth of Ether on the DAO have brought the security of blockchain to the forefront of discussion.
In the new report from Greenwich Associates, Securing the Blockchain, they found from the 134 market participants questioned, 56 percent said that transaction confidentiality was a significant security concern with blockchain technology. When it came to banks and brokers that number was slightly higher with 63 percent concerned.
Even though transaction confidentiality tops the list of concerns for the respondents questioned, the security of private keys is also an issue with 52 percent of respondents citing it as a major concern. Given the recent Bitfinex hack, the issue of private keys is a particularly pertinent topic right now.
While the details of the hack are yet to be revealed it seems that the hackers were savvy enough to gain access to the private keys that secured customers’ accounts and subsequently steal their bitcoins.
According to Richard Johnson, vice-president of market structure and technology at Greenwich Associates, technology companies developing permissioned blockchains for financial services will need to rethink the multi-sig/cold storage approach that is currently employed by digital currency exchanges.
Although these solutions can be highly secure, this security comes at the cost of lower efficiency and higher administrative overhead. Indeed, it was shortcuts taken by the Bitfinex exchange that led to the theft and not the technology itself.
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Last modified: May 21, 2020 10:18 AM UTC