Industry worried about confidentiality of blockchain

Market participants are concerned that transaction confidentiality may be breached with blockchain implementation.

 A majority of surveyed banks view transaction confidentiality as a major concern when implementing blockchain technology, according to a new report.

A Greenwich Associates report entitled “Securing the Blockchain” revealed that 63% of participating banks viewed confidentiality of transactions as a major concern for blockchain development. 

The report points to the recent $81 million hacking of the Bangladesh Central Bank via the SWIFT network and an attempted attack on an investment fund built using smart contracts as reasons for increased caution. 

Blockchain technology has been hailed by custodians as being the future of the industry, with potential to streamline processes such as settlement, clearing and corporate actions.

Its position as a comprehensive record of digital asset ownership and transaction history had been considered widely beneficial in providing increased transparency. 

According to the paper, many market participants do not feel that such an increased level of transparency is appropriate for all markets.

Other results from the report also suggest concern over access to ‘private keys’ with participants viewing this as the second most critical issue. 

The report concludes that the market is concerned about security implications of blockchain technology and that a greater understanding of these issues is required before it replaces existing systems. 

This marks the latest development in an ongoing debate on the potential of blockchain and distributed ledger technology. 

Earlier this week, research from the World Economic Forum suggests that fundamental areas of the financial industry would have to reconsider various processes as a result of DLT implementation.

Back in June, US regulators warned that distributed ledger technology could pose "risks and uncertainties" to the stability of capital markets.