Running head: THE USE OF CRYPTOGRAPHY IN FINANCIAL SECURITY

The use of cryptography in financial security

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The use of cryptography in financial security

Cryptography refers to acts and study of methods of securing communication from access

by third parties (Hussein, Khalid, and Khanfar, 2016). It is a method of developing protocols that

prevent third parties and the public from reading certain messages. Various elements in the

security of information like data integrity, confidentiality and authentication are key in

cryptography (Hussein, Khalid, and Khanfar, 2016). Cryptography is applied in various fields to

secure information and prevent harm, particularly in financial transactions. Financial

cryptography is the application of cryptography where interception of the message can lead to

financial losses. The use of cryptography in financial transactions is a new advancement.

Previously cryptography was exclusively applied for diplomatic and military purposes.

Financial cryptography refers to the algorithms and methods required to protect financial

transfers. It is believed to have originated from Dr. David Chaum who created the blind signature

(Zacharakis, Grontas, and Pagourtzis, 2017). It was a kind of cryptographic signature that

enables virtual coins to be signed without the signer seeing the coin. It enable a kind of digital

money that could not be traced. This method is sometimes referred to as digital currency. The

idea is currently been applied in blockchain advancement (Zacharakis, Grontas, and Pagourtzis,

2017). The system was greatly applied in the 1970s to 1990s. The cryptographic methods that

were developed previously were standard methods of encrypting data that were applied mostly to

protect electronic transfers of money.

The work of DR. Davide Chaum made the cryptography community think about the

application of encrypted messages in financial instruments (Schröder and Unruh, 2017). In the

initial stages of its development, it applied the guide of cryptography and only simple ideas were
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used (Schröder and Unruh, 2017). Methods of account money by SSL like e-gold and PayPal

were moderately successful but more innovative methods like blind token money were applied.

Financial cryptography is also applied in the creation of new types of money. Various

auction protocols and proof of work are applied in financial cryptography (Taylor and

Martinovic, 2017). Hash cash is a proof of work system applied to prevent email spam and denial

of service attacks, it is also a kind of financial cryptography that is applied in the limitation of

spam. In recent time Hash cash have been applied in bit coin and other types of cryptocurrencies.

It has been observed that financial cryptography has a huge application.

According to Ian Grigg, financial cryptography has seven layers and is a correction of

seven fields that include rights, governance, accounting, cryptography, values, software

engineering and financial applications (Taylor and Martinovic, 2017). The failure of enterprises

in most cases is attributed to a lack of one or more of those disciples or their poor application

(Taylor and Martinovic, 2017). Financial cryptography can be viewed as a cross-field subject.

Indeed it is so because cryptography and finance are developed from various disciplines. Due to

the huge application of financial cryptography, it is commonly referred to as the new gold. The

role of gold in a financial transaction is to standard prices across borders and currencies.

Currently, financial cartography plays a similar role that was played by gold by enabling

international transaction of services and products. In simple terms, the inter-connection of the

current economy is dependent on a common technological denominator.

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References

Hussein, N. H., Khalid, A., & Khanfar, K. (2016). A survey of cryptography cloud storage

techniques. Int J Comput Sci Mobile Comput, 5(2), 186-191.

Schröder, D., & Unruh, D. (2017). Security of blind signatures revisited. Journal of

Cryptology, 30(2), 470-494.

Taylor, V. F., & Martinovic, I. (2017, April). Short Paper: A Longitudinal Study of Financial

Apps in the Google Play Store. In International Conference on Financial Cryptography

and Data Security (pp. 302-309). Springer, Cham.

Verma, G. K., & Singh, B. (2018). Efficient ID-Based Blind Message Recovery Signature

Scheme from Pairings. IET Information Security, DOI, 10.

Zacharakis, A., Grontas, P., & Pagourtzis, A. (2017). Conditional Blind Signatures. IACR

Cryptology ePrint Archive, 2017, 682.