BLOCKCHAIN: SECURITY CONSIDERATIONS AND REGULATORY CHALLENGES
Blockchain – the infrastructure underlying cryptocurrencies like bitcoin – has attracted significant interest from both private businesses and governments for its many other possible applications. Specifically, blockchain has the potential to provide a more efficient way to facilitate and verify transactions and could also be an effective countermeasure against fraud. However, like the widespread adoption of any new, potentially disruptive technology, blockchain raises a variety of pressing regulatory questions and security considerations.
Blockchain is essentially a decentralised ledger or database maintained across a network of computers. Anyone with access to the network can view the entire contents of the database, which is current and identical across all connected computers, rather than being maintained at a central location. Information is stored in the shared database in files called blocks. Each block includes a reference back to the previous block, creating a chain that functions as a timeline of every transaction that has taken place in the network.
The bitcoin network uses blockchain technology to prevent individuals from double-spending the cryptocurrency. Because the blockchain records all bitcoin transactions and is distributed among all users, it effectively prevents the same bitcoins from being used multiple times. Imagine the realtor who sells the same property to two different buyers in quick succession. If both buyers had easy access to a universal ledger that updated automatically with each transaction, this type of fraud would be nearly impossible to pull off successfully.
Jul-Sep 2017 Issue
Association of Certified Fraud Examiners (ACFE)