Blockchain is a game-changer for professionals in financial services. Ignoring it would be like clinging tenaciously to your abacus in the face of computers armed with electronic spreadsheets in the early ’80s.
This smart, decentralized, trusted and highly-encrypted network is already changing the face of business for financial professionals. Now is the time to embrace and study blockchain.
Blockchain is the underlying base for cryptocurrencies like Bitcoin, Dash, Ethereum and many others. Each transaction (e.g., Betty agrees to buy 10 widgets from Mary for X Bitcoins) is stored in a block. The completed transaction block of information is put into the chain of all other transactions. It must be in complete alignment with all other transactions. Hence the term blockchain.
Blockchain and cybersecurity
Blockchain also involves cybersecurity, which is big and getting bigger. As we become more concerned about threats, blockchain networks are a great tool for security professionals. Technologies built around a blockchain provide much greater security than legacy systems because their structure is immutable. It can’t be changed. Another advantage is that there is no single point of failure in a decentralized system.
When we see the attacks that have happened at well-regarded and carefully watched corporations like Home Depot, Target, and even the Pentagon and other U.S. government databases, we should be concerned. When you have centralized control, it creates what cybersecurity experts call a honeypot — a target enriched with a lot of accounts. If you break into one computer system, you get the information on that one system. If they break into a computer system that contains thousands, even millions, of records, the bad guys have hit the jackpot, or the honeypot.
It would not be a stretch to think that if the bad guys can attack institutions that:
- Have very smart people working for them in the area of cybersecurity
- Take extra steps to protect the financial records and assets of their customers
…then perhaps just blindly trusting these legacy institutions to take care of our data might not be enough.