Security of Financial Technologies

Running head: SECURITY OF FINANCIAL TECHNOLOGIES 1
Security of Financial Technologies
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SECURITY OF FINANCIAL TECHNOLOGIES 2
Over the last few years, Blockchain technology has been gaining popularity as an
alternative mode of the systematic transactions to traditional financial systems. Blockchain
technology can be described as a decentralized form of cryptographic digital currency that allows
parties to complete transactions that are permanent using a peer to peer network within a
predefined protocol (Singh & Singh, 2016). Since its invention by Satoshi Nakamoto in 2009
through the implementation of the popular cryptocurrency; Bitcoin, the main discussion of
Blockchain technology has centered on security (Singh & Singh, 2016). The question as to
whether Blockchain technology provides a better security to a financial transaction is one that is
unavoidable.
Although it is the decentralization of Blockchain cryptocurrencies such as Bitcoin that
have made them popular, the security of the Blockchain technology has also been a big factor in
the motivation of the adoption of the technology. In fact, the technology has been adopted by
some traditional banking institutions to foster security in their transaction. For instance, the
Standard Chartered Bank implemented a Blockchain technology system within its banking
system as retaliation for a fraud that cost it 200 million dollars in 2013 (Singh & Singh, 2016).
This is an indication that Blockchain technology provides better security than traditional banks.
The superior security of Blockchain technology lies within the way it is structured and
the way it functions. One of the strength that Blockchain based currencies such as Bitcoin have
over the traditional ones is the usage of a combination of the private and public keys. In
blockchain technology, a transaction is initiated using a public key then a private key is used to
ascertain the validity of the transaction (Chatterjee & Chatterjee, 2017). This combination
ensures every transaction can only be authorized by the owner of both keys. Not only does this