In my first blog post, I promised to write about ‘Blockchain & Banking’ in this second installment. However, the recent Facebook data breach of over 50 million users was too big of a security scandal to ignore. And now retail giants Saks Fifth Avenue and Lord & Taylor are reporting data breaches.
By the time this blog is published, there will likely be another data hack. And so, even though the applications in today’s post have changed, blockchain remains a central character. Had it been in play at Facebook or Saks, these breaches could could have been avoided. That’s high praise for a leading edge technology, but blockchain is robust and therefore easy to praise. It is also misunderstood. And so I am here to educate. Without further ado, let’s begin today’s lesson. What are the relevant features of blockchain technology that could protect us against recent data breaches and hacks? — It is decentralized — as of today, our data is centrally stored, maintained by social media channels, plus Internet and retail giants who act as a central authority. In a blockchain, the database is managed by its network, which operates on a peer-to-peer basis, and not any one central authority. — The ledger of immutable transactions — all the transactions and subsequent edits are also stored as transactions. However, these transactions are spread across the network to many nodes such that every node has a complete history of the transactions, hence preventing a single point of failure. — Cryptographic — a decentralized blockchain is hack-proof. No centralized version of this information exists for a hacker to corrupt. — Durability and robustness — blockchain technology is like the Internet in that it has built-in robustness. By storing blocks of information that are across its network, the blockchain cannot be controlled by any single entity and has no single point of failure. — Transparent and incorruptible — the blockchain network lives in a state of consensus, one that automatically checks in with itself at frequent intervals which varies according to network configuration. It is a self-auditing ecosystem. It cannot be corrupted by altering any unit of information on the blockchain. — Fault-Tolerant — and finally, it offers fault tolerance, i.e., there would be NO single point of failure, unlike existing central servers which have a single point of failure like these infamous data breach culprits. Now, let’s discuss how these features of blockchain can be leveraged to not only protect us from the next data breach, but also to create more opportunities for everyone. This includes the data owners and the businesses in a shared/decentralized economy. We would start by creating digital signatures, which give consumers control over their data and private information. These are not the digital signatures you are used to, however, where you drag and drop and image. Rather, this is more about the process of getting access to and actually having a digital signature that the consumer owns and which houses key data about that consumer. In a decentralized blockchain model, personal data usage, storage and dissemination rights would at all times reside with the person who the data belongs to, making the creator and the possessor of data the only true owner which can be achieved with the help of digital signatures. It will also help create transparency (optional when data is sensitive or confidential for that we can have private and permission-based blockchain) and accurate audit trail regarding data transfer and tracking respectively. You can read my complete article on Using blockchain technology to protect ourselves against data breaches & hacks, part 1