Blockchain security in online banking

Introduction and Project Context

This report will be academically discussing on the use of Blockchain in online banking.

Due to the rapid growth of the online banking request caused by the pandemic, and
although customers have a wide range of choice, the security it’s still the primary concern around
the E-Banking and customers are still frightened in using the product. In the digital world are
present multiple types of threats and multiple types of securities, but yet there are threats which
are making their way to the end customer such as Man-in-the-Middle attack. The blockchain
technology is the new mechanism which is aiming on solving the security issue. Blockchain is
made by blocks (public ledgers) linked together which are recording the data in hash functions
including timestamps and stores it anonymously in conjunction with other participants within the
chain. By using the Blockchain the third party required for traditional banking is not needed
anymore which decreases the probability of vulnerability due to the central point not existing.
Data exploitation will be unworkable as there will be used of the one-way hash function. Design
distribution trust model is not required due to the data being verified with the relevant
participants. On the other hand, the banks had to offer a trustworthy part in guaranteeing all
financial transactions which were performed digitally to be sufficiently secured for any type of
threats. Until now, only the safeguarding of the banks is the reason customers were enabled to
carry out E-banking operations effectively, but this comes at a cost; customers’ accounts are
thoroughly monitored. Banks are facing a few issues with E-banking such as entity
authentication, cost, transaction authentication, and certification of a secured channel. The banks
have not managed yet to find a powerful technical solution in order to solve all the security
challenges. (Nath and Bhattasali, 2019)

As a result, to keep all the sensitive information from falling into dangerous hands, the
financial sector and some non-financial sectors are opting to use blockchain technology. The
blockchain technology is a chain of blocks which stores digital data, the data inside those blocks
can never be altered as is chained to the existing blocks. The information from the blocks will be
available publicly in the exact form as it was put in on the Blockchain. For the individual user
will be very easy to keep track of all records, also with the peace of mind that no one will be able
to tamper with the data. A transaction record effectuated on the Blockchain by the customer, it
will be there forever, so he can at any time in the future prove that the owner of that transaction
is him. Blockchain can also reduce the interval of the transaction, as the duration of each
transaction is the duration of adding a block on the Blockchain. Banks will be able to process a
larger amount of transactions and also have a trusted channel where exchange founds securely.
In the actual environment, banks have to safeguard, validate and preserve all the financial and
also non-financial acts taking place via the transfer channel, doing so will expose vulnerability to
attacks such as Man-in-the-Middle attacks. E-banking is also vulnerable to brute-force as one of
the usability of the product comes from sort username and passwords which are linked to the
customer private details such as date of birth or name. Blockchain technology can be used to
solve those vulnerabilities, as there will be no third party involved and also increase the level of
security as the is information recorded on the Blockchain is it cannot be modified. Blockchain
technology is formed by blocks as the name suggests, which are linked together and contain
information that will be stored on those blocks forever. Each block contains a hash of its own
and the hash of the previous block. The trusted hash code is more like a fingerprint, this code is
generated by the SHA-256 algorithm which identifies the content of a block and produces a
unique hash for every new block.

Although the blockchain technology is making an exponential entry in the financial

sector, gaming sector, and the art sector, there is still a long way ahead for the financial system to
fully accept the use of the technology in day-to-day operations. Some of the issues which are still
to be resolved in order for the technology and the new way of doing banking are contractual
issues, jurisdictional issues, financial fraud, many laundering, and tax implication. (Freeman,
2021)

A social issue blockchain technology is facing at the moment is that is lacking in

regulation which makes the environment a bit risky. With thousands of crypto assets built with
the technology, is impossible to understand which have malicious intention until they are
reveling the Ponzi scheme. Also, the technology is not fully understood by the users which find it
challenging to realize the benefits. (Marr, 2021)

Aims and Objectives

The goal of the project is to raise awareness on the blockchain technology, demonstrate
how Blockchain can improve E-banking security, analyze the impact of the Blockchain on E-
banking, and analyze the impact of Blockchain on society.

HOW BLOCKCHAIN TECHNOLOGY WORKS

Blockchain is a hybrid of three cutting-edge technologies:

1. Keys used in cryptography

2. A mentoring network with a distributed ledger.

3. A computer system for storing data exchange and records.

Two keys being used in a cryptosystem for secure activity are a private key and a public

key. These keys aid in the implementation of two-party transactions in practice. These two keys

are unique to each person and are used to maintain a stable digital certificate reference

(Bhardwaj, 2018). Blockchain technology relies heavily on protected identification. This

identification is known as a 'digital signature' in the bitcoin market, and it is used to authorize

and manage transactions (Saberi, 2019).

 The mentorship network is linked with the digital certificate; many authorities utilize the

unique code to agree on transactions and other issues. It is mathematically validated when they

authorize a payment, leading to a successful protected transaction between the two networked

organizations. To summarise, Blockchain users employ cryptographic keys to carry out a variety

of digital transactions across a network of participants (Treleaven, 2017).

The technique Blockchain technology validates and approves operations is one of its

most essential aspects. For example, if two people want to execute a transaction using their

private and public keys, the first user would attach the payment details to the other user's public

key. This entire set of data is compiled into a block.

A digital signature, a timestamp, and other vital, relevant information are all included in

the block. It's worth noting that the block doesn't contain the private details of the

respondents engaged in the transaction. This block is then sent through all of the program's

nodes, and when the correct person uses his private key, the block is completed. The Blockchain
may store relevant data of homes, health care centers, corporations, automobiles, and many more

organizations in addition to money transactions (Bhardwaj, 2018).

To secure data, blockchain technology employs hash encryption, notably the SHA256

algorithm. The SHA256 technique conveys the user's address (public key), the receiver's

location, the payout, and essential sensitive data. The metadata, known as hash encryption, is

transmitted around the globe and verified before being published on the Blockchain. Hash

encryption is nearly hard to break because of the SHA256 technique, making origin and

consumer verification much more manageable (Biswas, 2016). Each chain in a Blockchain has

four key elements:

i. Previous Hash: This hash address refers to the block before this one.

ii. Transaction Details: Information on all of the events that must take place.

iii. Nonce: An arbitrary number used in cryptography to distinguish the personal

data of every single block.

iv. A hashing mechanism is used in the processing of the above components.

This yields a 256-bit, 64-character-long number known as the 'hash address.'

As a result, it's known as the hash of the block.

In Blockchain technology, mining refers to the process of allocating accounting

records to the digitized ledger. Though the term is most commonly associated

with Bitcoin, it also describes other Blockchain innovations. Mining is the process

of producing a tricky address of a block activity to keep the whole Blockchain

secure without needing a master regulator (Abdullah, 2017).

 UTILITY OF BLOCKCHAIN TECHNOLOGY:

The influence of blockchain technology on society has been significant, including:

 • Bitcoin has supported many people through banking and finance,

including digital wallets, which is why the technology held its top position. It has

resurrected the global economy by offering loan facilities and prompt payments to

those in economic need.

 • In the area of global commerce, the ethical notion has a considerable impact.

Previously, lawyers were involved in bridging the trust gap between two firms,

but it was time-consuming and costly. The advent of cryptocurrencies, on the

other hand, has drastically altered the problem of trust. Many firms are situated in

regions with few assets and high levels of corruption. Blockchain provides

considerable benefits to the parties involved in many situations, allowing them to

avoid the risks of unreliable third-party intermediaries (Agustin, 2020).

 The use of digital technology has brought a wave of smart devices to market that

can send information over the web, eliminating any human intervention

Because Blockchain employs a public blockchain, digital wallet, or any other distributed

network, the clients may receive quick responses to exchange-related inquiries. All consumers

may also use a Blockchain platform in the distribution network to trace transactions or

information from place to place in search of completion. This technology will be beneficial in the

future and will last a long time (Andrian, 2018).

 REMOVAL OF THIRD PARTY ENTITY FROM E-BANKING:

Blockchain technology is global, irreversible, and always up to date. The fact that it is a

decentralized platform with a long cyber system is the most valuable feature. The significant

advantage of Blockchain technology is that it enables widespread trust: (1) It eliminates the

requirement for a trusted third party to automate tasks, (2) it decreases the cost of marketing, and

(3) it speeds up the commercial transactions. As a result, the business and

commercial revolutions are expected to be sparked and worldwide economic transformation.

Blockchain uses encryption to produce a digital security code. Users may then verify the

transaction without disclosing any confidential info. The transaction will be completed

automatically and disseminated since the Blockchain record is unchangeable (Ali, 2021).

Different sectors have made extensive use of computer networks in the modern era due to

the extraordinary growth of digital technology. Customers can make use of a range of internet

services provided by banks. Fund transfers, loan application processing, bill payments, and

payout over the internet are several transactional operations. Requesting a checkbook, creating

monthly or quarterly statements, and changing contact information are examples of non-

transactional tasks. The corporate and non-financial industries have chosen a Blockchain to

prevent top-secret information from being abused in a dispersed network and leakage of private

information to the third-party entity. Because this block is linked to the others, the content inside

it can never be changed. It will be made available to the general public in the same format as

when uploaded to Blockchain (Bhardwaj, 2018). It is pretty simple for us to maintain accurate

records without being concerned about the possibility of them being tampered with. If a

company's legitimate bank transaction record via E-banking is uploaded to Blockchain, he may

show that he is the holder of that transaction at any point in the future. Because no one can alter
the data that has already been collected, Blockchain is considered the most secure and trusted

means of transaction.

Retrieved from: https://www.slideshare.net/mdtanvirhossain/block-chain-in-pcs

The users in the decentralized ledger prove each digitized activity in the record

affirmatively. The Blockchain maintains a unique and verifiable record of every operation ever

made. In most cases, blockchain technology may be applied to any electronic event between two

people online. The initial step in the blockchain process is to recognize and authenticate entries

(Agustin, 2020). Second, it must ensure that the inputs are legitimate, and finally, it must store

the data. As a result, Blockchain removes the need for a third-party trusted advisor to participate

in the entire digital transaction. Any economic and non-economic event over the communication

channel is entrusted to the trusted third party with authentication, protection, and preservation

power. Although some business information theft is unavoidable in traditional methods,

Blockchain eliminates the need for a third party to complete a business over the internet. Several

institutions have chosen Blockchain as a new technology since the security characteristics are

adequately preserved from multiple assaults and middle man Attacks.

 The present e-services are founded on facts and trustworthy authority. Both groups

believe that their private information must be protected via an unsecured route. Financial events

have been communicated with parties involved, or any financial institution or bank may inform

us that our money has been sent successfully and reliably to the correct destination. The third

party is entirely responsible for all confidentiality standards. These third-party sources, on the

other hand, can be exploited, altered, or corrupted. Here's when blockchain technology works

great. It has the mental ability to change the digital world by allowing a decentralized agreement

to be formed that allows any virtual occurrence, past or present, to be confirmed at any point in

the future (Garg, 2021). It accomplishes so without jeopardizing the anonymity of the virtual

money or the parties involved. As a result, it possesses two essential features that are: distributed

cooperation and secrecy. The benefits of this advanced technology outweigh the legal and

technological obstacles that previous e-banking models encountered.

REFERENCES:

Abdullah, N., Hakansson, A. and Moradian, E., 2017, July. Blockchain based approach to

enhance big data authentication in distributed environment. In 2017 Ninth International

Conference on Ubiquitous and Future Networks (ICUFN) (pp. 887-892). IEEE.

Ali, O., Jaradat, A., Kulakli, A. and Abuhalimeh, A., 2021. A comparative study:

blockchain technology utilization benefits, challenges and functionalities. IEEE Access, 9,

pp.12730-12749.

Andrian, H.R. and Kurniawan, N.B., 2018, October. Blockchain Technology and

Implementation: A Systematic Literature Review. In 2018 International Conference on

Information Technology Systems and Innovation (ICITSI) (pp. 370-374). IEEE.

 Agustin, F., Aini, Q., Khoirunisa, A. and Nabila, E.A., 2020. Utilization of Blockchain

Technology for Management E-Certificate Open Journal System. Aptisi Transactions on

Management (ATM), 4(2), pp.133-138.

Bhardwaj, S. and Kaushik, M., 2018. Blockchain—technology to drive the future.

In Smart Computing and Informatics (pp. 263-271). Springer, Singapore.

Biswas, K. and Muthukkumarasamy, V., 2016, December. Securing smart cities using

blockchain technology. In 2016 IEEE 18th international conference on high performance

computing and communications; IEEE 14th international conference on smart city; IEEE 2nd

international conference on data science and systems (HPCC/SmartCity/DSS) (pp. 1392-1393).

IEEE.

Garg, P., Gupta, B., Chauhan, A.K., Sivarajah, U., Gupta, S. and Modgil, S., 2021.

Measuring the perceived benefits of implementing blockchain technology in the banking

sector. Technological Forecasting and Social Change, 163, p.120407.

Saberi, S., Kouhizadeh, M., Sarkis, J. and Shen, L., 2019. Blockchain technology and its

relationships to sustainable supply chain management. International Journal of Production

Research, 57(7), pp.2117-2135.

Treleaven, P., Brown, R.G. and Yang, D., 2017. Blockchain technology in

finance. Computer, 50(9), pp.14-17.