12 November, 2020 
 19

Smart Contracts and Security in Banking

The security of data and operations is a very important part of the banking system. It requires much attention because data chains are mutually connected and a single successful hack may be enough to overtake the objects that are crucial for the entire system
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Smart Contracts and Security in Banking

In the process of developing software for security purposes, there are many challenges. It's not enough to make it work while people use databases, computer networks, or ATMs. Any place where a client uses a bank card to pay for stuff may become a potential weak point to access the system with the help of malicious code. This is why POS-terminals should be protected with special software.

The safety systems undergo endless improvements but hackers do the same with their malware, and this controversy seems to have no end. Smart contracts are among the innovations that can become a revolution in the banking system's security and not only because of the safety of the information they provide.

How Smart Contracts Can Completely Change the Banking System

A smart contract is a system that supports itself. The information about any transaction made is locked inside the smart contract. Only a person that has a digital key is able to access it.

What does it mean for banking in general? First, it will make the banking processes simpler, and no third party is needed to maintain it. So there is no more need to pay intermediaries and share the client's data with anyone. A smart contract is a fully self-supporting system. Here are examples of processes that can be automated with their help, and there are many more.

— Money transfers

— Loans

— Insurance

— Testamentary execution

— Valuable papers' emission

Sounds promising, doesn't it? Just imagine how many processes it can simplify. What a lot of bureaucracy will become unnecessary and how much time, money and effort can be saved with smart contracts. As you can see, blockchain can give a lot to the banking system. It means financial freedom for the users in having full control over their money without the need to share their personal data. Blockchain is a revolution in finance, and it's already here.

What Holds Us Back from Using It Today

There is no doubt that the future of the banking system is in blockchain but making it real is challenging at the moment. The first difficulty lies in aligning the technical part with the legal norms that are constantly changing, and keeping up with them takes time and effort.

Decentralized blockchain takes digital money to a whole new level. Not only does it make them something you can pay with but crypto becomes the key to new financial management. It will change the existing banking system and make us rethink our interaction with money and financial services forever.

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