The Luxembourg Stock Exchange (LuxSE) is using Ethereum to provide a digital signature on all of their publically disclosed documents. LuxSE allows issuers, and their representatives, to file official documents through their Officially Appointed Mechanism (OAM). The OAM centrally archives documents containing “regulated information,” and makes them available to the general public via the LuxSE website.
For no extra fee, the Stock Exchange has allowed issuers to utilize Ethereum’s blockchain technology to provide digital signatures for documents, ensuring authenticity and proof of existence for documents filed in the OAM.
Even though the actual document is stored on the centralized Luxembourg Stock Exchange OAM, which is more vulnerable to attack, or fraud, than a blockchain-stored document, the original state of the document is still preserved in the blockchain.
Instead of uploading the whole document to Ethereum, the official document itself is used to generate a SHA-256 signature. This is a cryptographic hash function where the actual content of the document is converted into a string of hexadecimal numbers and letters, through a tough-to-crack algorithm.
Then that SHA-256 signature is stored on Ethereum’s blockchain, along with a link to the document. So even if someone forged a document and successfully replaced the legitimate document with the fake one, the fraud would be detectable. Changing one letter, or number, in a document would create a wildly different SHA-256 signature. Even uppercase and lowercase letters change the hash output. So when comparing the signature on the blockchain to the signature on the document, it’d be easy to see they don’t match up.
Bernard Simon, Chief Information Officer at LuxSE, said:
“Blockchain certification is an effective way to record the proof of existence of a document. Its continuous revalidation process makes it virtually impossible to spoof.
By combining the security benefits of the blockchain with the electronic signature of the certification authority, LuxSE is able to create a highly secure and reliable [decentralized] infrastructure to store information relating to the “proof of existence” of such documents indefinitely.”
In practice, an issuer would keep the original electronic file of their document, along with the digital signature certificate. That digital signature would act as proof of filing by referencing the specific block in which the document’s signature and URL are stored on Ethereum’s public blockchain. Ethereum adds another layer of security to this potentially vulnerable centralized system, which is especially beneficial when dealing with anything finance related.
The immutability of the blockchain, along with the transparency of its public ledger, is perfectly suited for the financial sector. The Luxembourg Stock Exchange isn’t the first major financial player to adopt Ethereum. Several weeks ago, banking giant JPMorgan Chase announced plans to build a private blockchain on Ethereum. There are as many as 75 global financial institutions already using blockchain technology, according to Jacob Farber, general counsel at R3CEV. These companies are creating their own private blockchains, and permissioned ledgers, as well as working with existing platforms like Ethereum. The more transparent the financial industry, the better.