Blockchain Solutions For Secure Financial Transactions

The company Long Island Iced Tea changed its name to Long Blockchain on December 20. Shares of the stock soared overnight, more than tripling in price during the December 21 premarket trading session. All this because the company simply added the word “blockchain” to their name.

Though this may turn out to be nothing more than a PR stunt, blockchain technology actually provides tangible value to a variety of industries. In finance and banking, for example, blockchain technology can be used to reduce fraudulent behavior and discourage cyberattacks. By decentralizing databases and exchanges, financial companies can reduce their risk of DDoS attacks and other breaches.

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Blockchain technology can also be used to meet Know Your Customer (KYC) regulations and enable low cost, high security payments between banks and clients. Trading platforms could also see blockchain implementation relatively soon; Nasdaq itself has been working on blockchain integration for almost three years. Some estimates suggest that investment banks can save up to $12 billion per year by implementing blockchain solutions and smart contracts.

Already, banks are spending hundreds of millions of dollars on blockchain research and integration. The expectation is that by 2019, spend will increase to $400 million, almost double its 2017 estimate of $200 million.

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Unfortunately, the biggest hurdle to widespread implementation of blockchain technology in the financial sector is scalability. This is because banks and financial firms have to sift through and analyze tremendous amounts of data. This doesn’t bode well for traditional blockchains, which can easily become bloated, making it difficult for users to run a full node. As the blockchain is used more and more, it grows in size, making it increasingly resource-dependent over time.

Both the Bitcoin and Ethereum blockchains have been growing at astronomical rates—145% and 5992%, respectively.

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Even though many firms have the capital to pay for such resources, it goes against the cost-cutting nature of blockchain technology. In other words, existing blockchain solutions are worthless.

One company that specializes in creating open source blockchain solutions, Jelurida, is working on a new platform that will reduce blockchain bloat and other scalability issues. This platform, called Ardor, operates as a Blockchain-as-a-Service (BaaS) system that can be implemented by anyone–including firms and companies in the financial sector.

How the Ardor Platform Removes Blockchain Bloat While Maintaining Network Security

The Ardor platform is a multi blockchain network with a proprietary architecture that separates network processing and security from network transactions. The Ardor “parent” chain is tasked with running network operations and maintaining security, while individual “child” chains are responsible for handling specific transactions.

The child chains can operate using their own coins, which means that child chain users don’t need to hold Ardor tokens. The platform utilizes a bundling system that allows accounts to collect fees in child chain coins, then subsequently pay to the parent chain using its coin.

The result of this setup is that child chains can send and receive assets freely without any interference. This allows for an enormous amount of overlap between child chains, creating the potential for streamlined systems and network exchanges.

Most importantly, Ardor’s architecture greatly minimizes the blockchain bloat problem by allowing the parent chain to maintain processes and security while giving the child chains the ability to focus solely on transactions. Because each chain has a dedicated function, it will be kept “pure”, dramatically reducing blockchain buildup.

The Ardor platform also deploys full node pruning, whereby transaction data on child chains is regularly removed from the nodes on the parent chain, after a snapshot is taken of the blockchain’s most recent state. This pruning process reduces blockchain size without affecting any balances or ongoing transactions.

What Jelurida and Ardor Mean for the Finance Industry

Jelurida’s Ardor platform will be an incredible asset for entities in the financial sector because data can be stored in a decentralized manner without the threat of blockchain bloat. This will decrease the likelihood of centralized attacks in addition to providing network security.

Furthermore, the platform architecture allows for seamless child chain interaction, giving different financial firms the ability to create their own chains without cutting off important links to other firms and databases. Because the Ardor parent chain is dedicated to maintaining security for the whole network, companies don’t have to worry about providing their own measures for their child chain(s). Additionally, child chains are freed up to transact, creating a streamlined and efficient operating procedure.

For financial firms and companies, this means that blockchain technology can be integrated with existing systems to lower costs, increase security, and maximize operational efficiency. Because of Jelurida’s Ardor platform, the finance industry can continue exploring the use of blockchain technology to their own advantage, as well as the advantage of their clients.