Mar 7, 2018 2:11 PM
PT For regulators to understand blockchain’s cybersecurity benefits and risks, they must first have a deeper understanding of the technology – and businesses hold the key to that, according to new research. Governments around the world are beginning to increase regulatory oversight of cryptocurrencies, such as bitcoin, which are underpinned by blockchain’s distributed ledger technology.
In turn, businesses that use private or “permissioned” blockchain networks are likely to also see more oversight, according to experts. With that in mind, heavily regulated industries such as FinTech, healthcare, transportation and manufacturing can help develop a government’s understanding of blockchain through better dialogue and the creation of joint regulatory sandboxes.
Permissioned blockchains – which, like a relational database, are centrally managed – can combat cybersecurity risks and protect “consumers’ financial information and the integrity of the global financial system,” the researchers said in a white paper highlighted in a Microsoft blog. The distributed ledger technology, the paper argues, offers significant cybersecurity capabilities, as well as some of the same cyber risks that affect other IT systems, “all of which merit further evaluation by regulators and industry.
“If properly structured, these sandboxes can align incentives between regulators and [industries] by giving regulators insights into blockchain technologies and [industries] the ability to test new technologies in a limited live environment without doing a full-scale roll-out subject to the litany of regulatory requirements,” the researchers said. The research paper, written by Erin English, Microsoft’s senior security strategist; Amy Davine Kim, general counsel at the Chamber of Digital Commerce; and Michael Nonaka, co-chair of the financial institutions group at the law firm of Covington and Burling, noted that regulators need insight into the cybersecurity benefits of blockchain – both for businesses and federal and state agencies.
Records added to a blockchain ledger generally are immutable, meaning they leave behind a tamperproof and auditable record of transactions. At the same time, ensuring that blockchain records are immutable may require a special programming adjustment to restore a blockchain’s integrity if fraudulent or malicious transactions are introduced. Read more from computerworld.com…
thumbnail courtesy of computerworld.com