A Cybersecurity Case for the Adoption of Blockchain in the Financial Industry

Abstract

The financial industry is faced with attractive business opportunities to adopt blockchain. To make such an investment, decision makers need answers to a number of questions including: what existing business problems will be solved, will blockchain solve them, and what long term benefits and new business opportunities blockchain can create. In this paper we analyze security aspects of these questions, focusing on the protection of integrity of data and financial transactions. We start from the analysis of an essential security architecture of financial systems which is based on the perimeter protection and traditional business process safeguards such as maker-checker. Subsequently, we look at the options on how to improve such an architecture to provide protection against malicious internal users and malware implanted inside the system; the vulnerabilities that have been exploited by organized criminal teams of attackers in the attacks seen lately. We show that the improvements based on the preventive safeguards, inherent to blockchain security architecture, provide strong protection against those attacks. Finally, we argue that in comparison with typically used detective measures (e.g. monitoring), security architecture based on the blockchain model provides superior protection against attacks using attack scenarios never seen before.