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Blockchain Technology and Data: Identity, Storage, Exchange

Last Updated March 4, 2021 5:05 PM
Gregory Rocco
Last Updated March 4, 2021 5:05 PM

The age of big data isn’t a “new” period per se, but rather an ongoing game of fire first, aim second. Data has proven to be quite the valuable commodity, with major blue-chip business models being built on its exportation and processing.

But what are the associated risks with relinquishing and storing so much data with centralized providers?

Every day as users in a connected ecosystem, we constantly give out personally identifiable information whether it be a name, address, credit card information, or even the answers to recovery questions.

We all had a taste of the downside of centralized, trusted big-data breaches when Equifax announced back on September 7th  that their system had been breached, exposing the information of approximately 143 million consumers. The affected data included sensitive materials such as Social Security numbers, driver’s license numbers, and even credit card numbers.

This posed a huge blow to consumers, but it kickstarted a very important conversation about data integrity, and personal ownership over data that should’ve started years ago. Individuals began to realize the value in both having complete control over their data, and not trusting it to multi-billion-dollar corporations that protect it simply with a password that has less character restrictions than the ones they impose on consumer accounts.

This is exactly where blockchain technology comes in; not to save the day necessarily with buzzwords and rapid complete adoption of the latest token, but rather to help build the infrastructure needed to prevent these types of breaches. In truth, blockchains aren’t currently equipped to handle massive datasets, but there are ways in which they can be utilized to protect data on multiple levels.

Blockchain Based Identity Verification

One of the first steps that can be taken with blockchain technology in regard to the protection of data is through the use of a self-sovereign identity. How could one possibly recreate the interaction of presenting a physical form of ID on a person-to-person level on the web? Phillip Windley breaks this down  in a recent write-up, using an example featuring an individual showing their own ID at a bar.

He explains how the DMV can issue an individual a digital representation of their driver’s license which can be validated both from the DMV’s keys linked to their identifier, and the individual’s keys linked to their own identifier. The bar in question can then verify both the integrity of the ID, and the issuer in a system of proofs through associated keys.

uPort , one of many projects looking to tackle this allows users to selectively permission data to any service they’re utilizing, and keep their data stored with them at all times. Verification comes through the ledger, and no data is kept with the verifying parties that require proof of identification. The issuer of the form of identification simply needs to verify credentials, but the actual user granting the data retains the personal information when utilizing it for verification with services.

Bloom , another project focused on credit issuance in particular, looks to mitigate the risks posed by centralized authorities handling sensitive data in the credit-issuance world by implementing secure ID’s using blockchain technology.

In that case, companies can verify the individual utilizing their services without having to store data on their end in centralized servers.

The Future of Distributed Storage

Issues of data storage and security can also benefit from blockchain technology by introducing both data splitting and encryption for protection. Decentralized data providers are looking to rise to combat the currently centralized cloud-option providers to mitigate pricing and ensure the protection of data.

Filecoin for example  deploys a form of security that provides end-to-end encryption with files in order to protect contents, all while not allowing providers to have decryption keys. Also, by distributing information across an entire network, you lose the risk of being compromised due to a single point of failure. Although massive amounts of data can’t be effectively handled using blockchain technology for distribution and accessibility, it’s still a goal that could potentially be within reach as the technology evolves as rapidly as it currently is.

Data Exchanges – a New Form of Marketplace

Besides data storage, a “data marketplace” presents an interesting concept that can be administered by leveraging blockchain technology to ensure both safety and security with processing.

The Enigma project’s  spin on data is creating a data-marketplace encompassing every potential vertical. Considering the desirability of large data-sets, they sought out to question how such a marketplace could operate in a trustless matter, all while maintaining data security as well.

A major problem that the Enigma project is trying to solve with their data-marketplace vision is protecting private data on the blockchain by using what they call “secret contracts. ” Their secret contract system’s purpose is to ensure data privacy even while computations are being run on the particular data in question through a second-layer solution.

With their data marketplace idea came the problem of what they call “data escape,” or rather, participants in the marketplace selling acquired data to other parties. Instead of disclosure, Enigma’s secret contracts allow data to be processed by nodes in their network while allowing that data to remain private.

The age of big data isn’t ending anytime soon, but the ways in which blockchain technology can be used could help mitigate the risk posed by the poor security practices of central entities, and allow individuals to take back the ownership of their own data.

Featured image from Shutterstock.