Rating agency Moody's has warned about the risks of private and centralized blockchains in a report for its clients in which it analyzes the advantages and disadvantages that this new technology represents for financial companies.
The report, which was published on April 25 under the title "Blockchain Improves Operational Efficiency for Securitizations, Amid New Risks," talks about the basic features and promises of distributed ledger technology, explaining how different types of companies, such as banks, could profit from it in their businesses.
The rating agency has paid special attention to highlight the significant difference between public and private blockchains in terms of security, stating that the consensus mechanisms of the latter are either not sufficiently secure, or simply inexistent.
The report also says:
"Private/centralized blockchains are more exposed to fraud risk because system design and administration remains concentrated with one or few parties."
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