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Blockchain can make money transfers more secure

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Although we are in 2019, both banks and banking applications lack the appropriate means of protection against viruses and attacks. Often their systems are perforated, leaving room for malicious players to take advantage of these security gaps. And the hackers they seem to be constantly evolving their attacks.

Undoubtedly, hackers are a continuing problem for financial institutions. But it is not the only one. For example, SWIFT, which holds the leading position in global messaging transactions, can cause problems for a bank. SWIFT has an urgent need for automation, as the volumes of transactions it processes are enormous. This will require a major revision and inevitably, great investment. SWIFT customers, of course, will bear the cost of this change and are likely to look for less costly alternatives. Another problem is that SWIFT is slow and can not process transactions in real time. In addition, cyber attacks on the SWIFT network are not uncommon.

The solution to these problems, therefore, seems to be the new technologies, such as the blockchain. According to Hu Yoshida, CTO of Hitachi Data Systems, blockchain technology can save billions for banks if they stop using slow and costly centralized payment systems.

How the blockchain addresses current security challenges

Initially the blockchain eliminates the need for intermediaries. In addition, transaction speeds are increasing significantly. As things stand now, this process takes several days, while the blockchain can handle it in real time.

Also important is the fact that blockchain encryption methods such as "digital signature" and "hashing" significantly reduce the risk of being compromised.

The digital signature method guarantees the authenticity of an electronic document or transaction in digital communication. It uses cryptographic techniques to prove authenticity and unaltered documentation. It is impossible to be falsified.

The hashing method on the other produces a value or values ​​from a string of text using a mathematical function. A formula creates the hash, which helps protect against tampering. When a user sends a secure message (or transaction), a hash is created that is encrypted and sent together. The receiver decrypts the hash and message. Then another hash is generated from the message. If the two hashes are identical, then a secure transmission has been made. This procedure therefore ensures that a transaction has not been altered by an unauthorized person.

As for other security technologies such as SSL (Secure Sockets Layer) and 2FA (Two Factor Authentication), although widely used, they have their vulnerabilities, making them slow and obsolete.

SSL cryptographic protocol may be one of the most established and used, but in recent years, serious vulnerabilities have been identified. As a result, confidence in SSL has decreased.

2FA also requires users to exchange sensitive information (telephone number, card details, billing address, etc.) with banks / retailers / trading companies, which can expose their data.

Blockchain also offers tangible upgrades for AML (anti-money laundering) and KYC (know-your-client). The process of verifying each new client from financial institutions is difficult and time-consuming. But blockchain offers the following advantage: all changes to the data are immediately distributed to all network participants. It also provides the compliance records of individual client actions with regulatory requirements. Another option to use the blockchain is to develop a system for managing your personal data. This will reduce KYC and AML in a simple automated verification. SWIFT has already taken the first step in this direction. It was announced that its own KYC registry, which includes data from 1.000 + banks, will be available to trusted partners and customers in the future.

In conclusion, blockchain technology will not replace SWIFT, AML / KYC or SSL, as many say, but will offer very significant upgrades and offer unique opportunities for the evolution of existing systems.

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Absent Mia
Absent Miahttps://www.secnews.gr
Being your self, in a world that constantly tries to change you, is your greatest achievement

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