Transaction confidentiality tops blockchain security concern for banks

Transaction confidentiality tops blockchain security concern for banks

Financial services firms are still concerned about distributed ledger technology security, with transaction confidentiality a particular worry, according to a new report from Greenwich Associates.

The recent Bitfinex hack and the attempted attack on the DAO - an investment fund built using smart contracts on the Ethereum network - have put distributed ledger technology security at the front and centre.

Of 134 market participants questioned by Greenwich Associates, 56% cite transaction confidentiality as a major security concern with distributed ledger technology. Of the banks and brokers quizzed 63% are concerned

Confidentiality is compromised by one of blockchain's most lauded features - that it can essentially represent a consolidated audit trail. This level of transparency worries some, says Greenwich, because "banks would be able to see what trades their competitors were doing at what price; in some markets, this could be putting them at a disadvantage."

This explains the keenness of Digital Asset Holdings, Chain and R3 CEV to introduce functionality that allows for distributed ledger consensus while preserving data confidentiality.

While transaction confidentiality tops the list of concerns, the security of private keys is also seen as a major issue by a majority of respondents.

"Private keys can be thought of as secret codes or passwords that prove ownership of digital assets. The recent hacking of the Bitfinex exchange has been attributed to lax security of these private keys,” says Richard Johnson, VP, market structure and technology, Greenwich Associates.

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