Accenture has patented a new cryptography technique that would allow financial institutions to edit information stored using blockchain.
The fundamentals of blockchain – whereby a foolproof ledger of financial transaction is easily trackable and transparent – is now attracting the attention of established financial institutions, rather than just cryptocurrency users.
For example, last April, Bank of Ireland revealed it was beginning to experiment in the technology, while Ornua earlier this month claimed to have conducted the world’s first trade using the technology.
Does not cater for edits of bitcoin transactions
Before the technology can be adopted en masse by financial institutions, some issues will need to be overcome. According to the Financial Times, the main sticking point is the lack of ability to amend for errors and “fat finger” trading errors.
Accenture is looking to change the fundamentals of blockchain by allowing such an editing process.
Professor Giuseppe Ateniese, of the Stevens Institute of Technology, and Accenture have jointly filed a patent for a blockchain editing technique they are calling ‘chameleon hash’, which would add a digital lock between each transaction. A designated administrator would then be able to edit the details of a transaction.
Accenture has said that this would only relate to ‘permissioned’ blockchain transactions that banks are looking into, not ‘permissionless’ ones used with cryptocurrencies like bitcoin.
“What we are talking about is adapting the blockchain to the corporate world, and how do we make it pragmatic and useful for the financial services sector,” said Richard Lumb, Accenture’s global head of financial services.
“This prototype allows you expunge a record completely, and we think that will be needed by corporates and regulators.”
Blockchain editing is a ‘survival attempt’ by banks
“It’s somewhat ironic that they’re spending millions of dollars researching how to use technology that was meant to put them out of business,” he said. “Perhaps their interest in blockchain technology is a survival attempt to slowly change the narrative and co-opt the movement.”
From a technological perspective, however, blockchain specialist and former JPMorgan banker, Blythe Masters, has said that Accenture’s prototype holds up to scrutiny.
“Accenture’s approach is one of several options in the toolbox,” said Masters. “But we think it is innovative and can strike the right balance between preserving blockchain’s key features and adapting it for real-world requirements within some permissioned systems.”
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Updated, 2.41pm, 20 September 2016: This article was amended to reflect that it is a new cryptography technique, not cryptocurrency technique.