Financial services firms rushing to adopt blockchain need to make sure that they address the security challenges associated with the technology, the European Union Agency for Network and Information Security (Enisa) has warned.
Banks around the world are busily testing distributed ledger technology, lured by the promise of efficiency and cost savings in everything from remittances to securities settlements. And a recent World Economic Forum report revealed that over one billion euros has been invested in startups in the area.
In its own report, Enisa says that the technology has some obvious security benefits, including enhanced transaction privacy and the ability to follow an audit trail for agreements. Meanwhile, some principles used in the security of traditional systems and in blockchain, such as key management and encryption, are still largely the same.
However, there are new challenges that the technology brings, like consensus hijacking and smart contract management.
To tackle this, the report offers best practice advice, urging firms to monitor internal activity, automate regulatory compliance, disclose information only to relevant counterparts and authorities, and adopt industry level governance procedures for the updating of ledger implementations over time.
Udo Helmbrecht, executive director, Enisa, says: "Cyber security should be considered as a key element in the Blockchain implementation by financial institutions."
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