"We are a pioneer in the world". Blockchain from Alior is a step in the right direction

- According to our knowledge, no Polish bank has yet implemented a solution based on a public blockchain, and globally we are one of the first financial entities - says Tomasz Sienicki from Alior Bank.

The Polish bank showed the giants how to use technology that the whole world is thinking about. Blockchain is something much bigger than cryptocurrencies.

Alior Bank publishes documents with the help of Ethereum, which gives customers the assurance that they have not been manipulated. A transparent communication method is the fulfillment of the requirements set by the regulators with respect to the permanent carrier. It is from this subject that I started my conversation with the experts of Alior Bank.

Karol Kopańko, Spider's Web: A sustainable medium is one of the "hottest topics" of the banking sector. Why is it so important?

Magdalena Łagożna, manager of processes and implementations, Alior Bank: A durable medium for electronic documents gives the customer a guarantee of invariability of information provided by the bank, which is particularly important in the case of documents regulating the terms of contracts, such as tables of fees and commissions or regulations. It enables unambiguous confirmation of the authenticity of documents and the assurance that no one has interfered in their content. On this basis, the client may at any time check the terms and conditions and may also analyze the correctness of the provision of services by the Bank in the past, assuring that once shared documents could not be manipulated or modified by anyone.

Let's get into practice then. Let's start with the point where we have documents that we want to share with customers. How does your system work?

Piotr Adamczyk, blockchain technology expert, Alior Bank: Documents go to the WORM matrix, which is a special object memory located in the bank's infrastructure. There is also automatically calculated SHA-256 hash for each document, which is called an irreversible cryptographic shortcut. We are not able to obtain the data from which he was made. However, we know that the same document always generates the same hash, and any change in the content of the document changes the generated hash. Later this ish is published in the Ethereum network.

And this is exactly the same network where people trade cryptocurrent Ether?

Piotr Adamczyk: Exactly the same. Our solution is essentially based on the so-called smart-contract, a program that works in the Ethereum network. The creators of this blockchain assumed that there is no need to maintain dedicated networks for various applications. It is better to build a "blockchain computer" that would be able to support different solutions. This is how Ethereum was created.

I understand, do you have to pay this computer for starting your contract?

Piotr Adamczyk: More precisely, the fee is charged by participants who maintain the network. The currency, that is ether, valid in Ethereum, in addition to having the payment function itself, is used to pay for transactions, data storage and the launch of smart-contracts and their functions.

Returning to the process - when the document's hash goes to the Ethereum network, the document is also published on our servers and clients are notified about its update.

But customers do not have to connect to the blockchain network on their own?

Piotr Adamczyk: They do not have to, they just have to visit our website, where a clear interface will allow them to download and verify all documents. On the other hand, advanced users can check the correctness of the information presented by us, due to the open nature of the public blockchain network.

That's why the documents are not stored directly on the blockchain?

Tomasz Sienicki, manager of blockchain technology strategy, Alior Bank: First - it is not necessary to confirm compliance with the original. Second - saving large data packages on a public blockchain is very expensive. He simply was not created for it. Publication over the year by Alior Bank of the public document hashes will be a marginal cost, certainly much less than one ether.

So the cost of publication will be less than a thousand zlotys.

Tomasz Sienicki: According to the current course, definitely yes. Even if the ether rate increases several times, the cost will still be relatively small.

How does the document's authentication work?

Piotr Adamczyk: Checking the authenticity consists in calculating the hash of the document and finding it within the appropriate smart contract in the Ethereum network. In the event that a given hash is found and the date of its publication is correct, it means that the document has not changed since the publication and its verification has been carried out correctly. Even omitting one comma, let alone changing digits or removing or adding any records, would immediately detect anomalies. The verification process can be safely carried out via the specially prepared Alior Bank website or it can be done by yourself, for example via the Etherscan service - a public block explorer.

So, although the documents are stored on your server, you have no possibility of their unnoticed modification?

Piotr Adamczyk: Exactly. To modify the document without leaving a trace on the network, we would need more than half the computing power of the Ethereum network, so the costs would be astronomical. It would be completely unprofitable.

Tomasz Sienicki: Our data is stored by thousands of computers - unlike private blockchain networks, where there are usually much less.

What about the situation when you issue an update of a document? Regulations can change after all?

Magdalena Łagożna: We are also transparent here. The client will find all versions of a given document on the bank's website and from the level of the browser and a convenient search filter will be able to identify the one that interests him.

For now, however, these are public documents, so regulations, which everyone has access to, not only your client. Will we also see private documents in the future on the blockchain?

Tomasz Sienicki: We are analyzing this option. As far as it is possible, the actual implementation depends on the position of the regulator. UODO, or the Office for Personal Data Protection, has doubts about the security of the hash in the long horizon of time. There are opinions that due to the fact that quantum computers will be able to solve mathematical problems much faster, the current cryptographic technology may not be 100% safe. This can be problematic from the point of view of the RODO regulation.

And now? How secure is your solution?

Piotr Adamczyk: Here you can ask a question about the safety of the entire Ethereum. Many people have tried to find a way to bypass the principles of this network. Most of the attacks that have taken place so far resulted not so much from errors in technology, but from poorly written smart-contracts that were launched in the blockchain network.

Tomasz Sienicki: Our smart-contracts have also undergone security audits, which is a standard procedure for introducing new solutions in the bank.

Have you modeled yourself on an industry?

Tomasz Sienicki: We were looking at another solution, but as a result of the analysis, our own concept based on a public blockchain ultimately won.

Are you the first?

Tomasz Sienicki: According to our knowledge, no Polish bank has yet implemented a solution based on public blockchain, and at the world scale, we are one of the first financial entities. It is worth emphasizing that this is no longer a test, but a production implementation. On a global scale, we are certainly a pioneer.

You are using a public blockchain. Why are other banks opting for a private blockchain that is less transparent?

Piotr Adamczyk: I would not like to express myself in this context for other entities. I will say this: if we had such a dilemma, it would probably involve caution with the use of technology that is beyond control.

Tomasz Sienicki: Our decision was related to the choice of the solution that we considered the most transparent for the client. The use of public blockchain gives everyone the opportunity to see how our system works.

If your project is public, then theoretically someone could come and copy it to yourself.

Tomasz Sienicki: Our solution is generally available and everyone can apply it. After all, it would prove to us that it works well and gains interest.

Magdalena Łagożna: If there was interest from other entities regarding the use of such a solution, we could consider its commercialization.

My guess is that implementing such a solution in a bank is not a simple project at all.

Tomasz Sienicki: It is not easy in relation to the fact that it concerns technology that has not been used in the bank so far, which is why its application required educating the staff about the blockchain's operation and the benefits it brings, as well as adapting a number of processes.

How does the whole process of implementing new technology look from your point of view?

Tomasz Sienicki: The Blockchain Competence Center was established, which is a dedicated cell in the structures of Alior Bank, dealing with the implementation of blockchain technology in the bank. Our task is to find solutions that add value to the company, and at the same time are not an innovation for strength, which looks good only in a press release. We are looking for processes that are difficult or even impossible to improve using a different technology.

Then we build a prototype, and if it meets the business requirements, we move on to implementation.

Is it enough for innovations to be introduced in one bank or is a change in the entire banking system necessary?

Piotr Adamczyk: Banks in Poland have an ambivalent approach to blockchain. On the one hand, they consider it revolutionary and useful, but on the other hand as potentially dangerous.

Tomasz Sienicki: We are trying to participate in the market education about the benefits of using blockchain. We do it, among others as part of a blockchain club operating in a bank where we invite guests from the environment and talk about technology.

Magdalena Łagożna: We are aware that we will not develop the blockchain technology in Poland. If we are to create interbank products, then we must find a place to exchange ideas and discussions.

Tomasz Sienicki: We need to create an ecosystem that would create opportunities for technology development.

And what is missing in Poland?

Tomasz Sienicki: We have a lot of good developers, but unfortunately legal changes are very slow, so specialists work for foreign companies. Only a few years ago Poland compared to many other countries was much more advanced in the implementation of blockchain technology, which unfortunately is not current at the moment. We want to change this, which is why we believe that our activities contribute to the adoption and development of technology in the country.

* Technical issues of speech have been simplified for the sake of clarity.

** The material was created in cooperation with Alior Bank.

"We are a pioneer in the world". Blockchain from Alior is a step in the right direction


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