Building A Decentralized Bank

by Emie-Claude Lamoureux

Emie-Claude Lamoureux is the PR Director of MLG Blockchain Consulting

It often seems as though every company, at some point or another, has faced a scandal involving a data breach. Companies ranging from Apple to TJ Maxx, to JP Morgan, even to the U.S. Military, have at some point fallen prey to data breaches.

These events have become so common, and the term ‘data breaches’ has become so ubiquitous that we almost ignore it. Often, when we hear about a new breach, we don’t think twice. For example, of the 143 million that were affected by the Equifax breach in 2017, less than 25% took action to check their credit reports, and an even less froze their accounts during the two weeks following the breach.

This doesn’t reflect well on our online security culture and what we are willing to accept. The truth is, all companies storing personal information should be held to a higher standard, especially when it comes to financial institutions. Banks and credit agencies hold enough information for comprehensive identity theft, which can have huge repercussions on the personal lives of users.

While individuals are the greatest victims of breaches, financial institutions are also significantly affected. A recent survey showed that the average cost of a security breach is $1.75 million, without mentioning the cost of rebuilding the company’s reputation. It’s time for a new era to emerge, one in which individuals no longer rely on centralized institutions to maintain and deliver our financial services. It’s time to turn to companies, such as Decentralized Credit Chain (DCC), who are using blockchain technology to create a safer online financial environment.

Why do data breaches of our financial services occur?

Most often, breaches occur because of malware and hacking. But the key reason for their success is the centralization of data. On the internet, data is kept on servers which store our information in one centralized location. As a result, if there is a point of vulnerability,  all of the information can be obtained at once.

This is what happened with Equifax: a weakness in the online enterprise web-application software platform allowed for attackers to exploit and obtain access to personal information that was stored in the database.

Another problem is that companies’ whose security has been breached are unaware of the breach for as long as a few months to over a year. A lack of transparency and auditing on the internet contributes to the magnitude of certain data breaches.

Photo by Clint Adair on Unsplash.

How can blockchains help?

Blockchain can help in a few simple ways: it can store data in a decentralized manner and it can increase transparency.

Information stored on blockchain is not stored in centralized servers, It’s stored across a wide range of participating parties, called nodes. Therefore, in order to hack into a blockchain-based company’s information, an attacker would have to disable or target all of these nodes simultaneously. Rather than having to find one point of weakness, an attacker would have to find a multitude, rendering the process much more difficult and expensive.

Transparency has been built into blockchain through blocks of data that are generated every ten minutes with a coordinated and verified history of all transactions that have occurred. These blocks are then added to a chain, which means that every action is traceable. This would facilitate the uncovering of breaches through routine audits, for example, of transactions.

The Decentralized Credit Chain (DCC) has already begun applying these principles in order to create a decentralized bank. By relying on decentralization and transparency, DCC will increase the security of information online while facilitating individual access to personal information.

While security is a significant advantage of decentralization, the use of multiple stores of information can also simplify the process by which we access our information. For example, rather than having to request your credit score from a company such as Equifax, you would have access to your own credit score at all times. Each person using DCC has a DCCID which stores all of their credit information in a decentralized system and that can be accessed globally.

With blockchain technology available and with companies such as DCC building safer financial institutions, there is no reason to accept what has become the status quo when it comes to security. Let us usher in a new era, where we are the keepers of our own identity through the decentralization of data.