Traditional banking systems and decentralized finance (DeFi) platforms differ fundamentally in their architectures, leading to distinct security vulnerabilities. Traditional banks operate on a centralized model, with a core banking system as the central authority. This typically involves a complex infrastructure of databases, application servers, and network devices, often interconnected through private networks. Customer data and transaction records are stored in these centralized databases, controlled by the bank. The security model relies heavily on perimeter defense, such as firewalls and intrusion detection systems, along with access controls and encryption within the bank's infrastructure. Key vulnerabilities here include single points of failure, where a breach of the core system can expose large amounts of sensitive data or disrupt services. Insider threats are also a significant concern, as employees with privileged access could misuse their authority for fraudulent activities. Soft....
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