Ripple,
the blockchain based fintech services platform, has announced new
developments that can protect banks from hacking incidents.
The development comes amidst growing thefts against multiple banks across the world.
Among
the banks that lost funds due to the vulnerability in SWIFT Network
includes the Central Bank of Bangladesh, as well as banks in Vietnam,
Ecuador and Ukraine.
“The
bank heists in Bangladesh and around the world have demonstrated that
the weaknesses that exist today at the periphery of payment networks are
partly due to outdated single signature methods,” Ripple stated.
Ripple’s solution for secure transactions involves the introduction of multi-sign feature to the Ripple Consensus Ledger.
The
thefts were conducted by hackers who gained unauthorized access to the
banks computers and used these compromised systems to transfer funds
from the banks to offshore accounts. The funds were transmitted over the
inter-bank transaction network – SWIFT.
By
implementing the Ripple Consensus Ledger with a multi-sign feature, the
banks will be able to have more control over cross-border fund
transfers.
The
multi-sign feature will make it compulsory for those initiating bank
transfers to gain authorization from multiple parties before it can be
executed.
Apart
from maintaining accountability, the multi-sign feature will also add
additional burden on the hackers as they would have to break into
multiple systems in order to authorize fund transfer from the bank to
their accounts.
“The
new features found in distributed fintech solutions, such as
multi-signing, are not available in traditional systems like Swift’s.
Blockchain technology delivers a more robust and distributed security architecture for banks.”
While
multi-signing is already in place in few aspects of conventional
banking, but with the Ripple Consensus Protocol, these multi-sign rules
will be enforced by a third party (the protocol) instead of the bank
itself. This may well be a game changer for both the banks and Ripple,
as the partnerships between both parties will allow banks to have
additional security, while ensuring further expansion for Ripple.-Asfar
Source: The Financial Express
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