For several decades, blockchain has taken the world economy to a different level through smoother transactions than the use of physical currency. With the rapid advancement in digital technology over many years, this system has encouraged data privacy and security concerns to the forefront. As hacking, identity theft, and other digital privacy breaches spread rapidly, blockchain has ensured that the user’s information is highly secured. This advanced technology has created a new data protection system to curb hacking. Since cryptocurrency is slowly becoming the new payment method, most investors end up with questions like, how does blockchain support data privacy? Can it be used for any functions that require a database?
The rapid advancement in digital technology has become one of the most trustworthy data security systems on the market. Moreover, it prevents your stored data from being corrupted by another person. Even network administrators have no access to user credentials; hence they lack a gateway to fake your data. Security is provided by recording the information permanently in the blockchain and making it visible. Even the network despite the data protection is stored permanently for future reference. The data cannot be modified or faked, and this guarantees transparency. While most people have discovered the benefits of using blockchain, some have no idea about it; thus, lose lots of money while banking them. Therefore, this article discusses what is blockchain and how it supports data privacy.
What Is Blockchain?
A blockchain is a digital technology that stores dynamic transaction data without central coordination. The technology uses a consensus-based mechanism to check the validity of any transaction. It underpins the success of bitcoin and other digital currencies, creating a distributed and scalable digital ledger of transactions. A blockchain enables a secure transfer of assets without an intermediary. Thus, it protects the transaction records by eliminating the need for a central authority.
When transacting money, each computer connected to a Bitcoin network, called a node, automatically downloads a copy of the blockchain used to validate, relay, and record the transaction by generating a block. Each block has a record of the previous block that verifies data authenticity. The system restructures the digital infrastructure, resulting in comprehensive security, privacy, and authentication. It can be used in functions that require a database, thus bringing capabilities to bear on data management concerns. Furthermore, it has influenced applications in financial services, healthcare, and manufacturing regardless of the hype. This invention has established ethical data standards to ensure users’ data privacy and protection.
The Evolution of Blockchain
Blockchain technology is in its early stages, with millions of people adopting it. Several leading organizations have embraced it along with its use for Bitcoin. The technology is hailed as the powerful internet and software that is immutable and independent. It has been a hot money topic for more than a decade. This system has undergone a rapid transformation offering data management and storing solutions to business people. According to economic experts, the blockchain technology market is expected to grow from US$ 210.2 million in 2016 to US$ 2,312.5 million by 2021, at a Compound Annual Growth Rate (CAGR) of 61.5 percent. All transactions that require data immutability and the need to preserve the integrity of original data, can take the advantage of blockchain.
Private And Public Blockchains: What Is the Difference?
Blockchain networks are labeled as public or private based on how users gain access to the network. Public blockchain networks allow any person to the system and enable participants to remain anonymous. It uses internet-connected computers to ensure that consensus is achieved and transactions validated. Bitcoin is an example of a public blockchain that achieves consensus through “bitcoin mining.” Computers on the bitcoin network validate the transaction by solving the cryptographic problem to create a proof of work.
Private blockchains, on the other hand, allow only recognized organizations to join. The technology uses identity to recognize its members. A private blockchain network achieves consensus through selective endorsement, where known users verify the transactions. The transaction ledger is maintained by members with special access and permissions. Unlike public blockchains, private blockchains guarantee notable security since they are restricted and limited to business networks.
How Cryptocurrency Compares to Fiat Money
Crypto has been defined as a digital ledger that keeps a record of all transactions without an intermediary; hence leads to transparency and security compared to bank services. While dealing with fiat or physical money has led to theft cases, crypto services have increased transaction security through blockchain technology. Furthermore, it has the following beneficial characteristics:
- Decentralized distribution networks. It has no central authority that regulates it, and its wide network allows easy money transactions.
- Immutable Ledger. No modification or changes can be made to any developed block in the network, which ensures security and transparency.
- Better Data Quality. Data quality eliminates any error while verifying the transactions; thus, it ensures integrity.
- Consensus-Based Mechanism. This is an agreement reached by network participants that the data is correct.
- Increased Trust. There is increased verifiability because of its immutable nature.
How Does Blockchain Support Data Privacy?
It Addresses Vulnerabilities
Any business that includes exchanges of services between two or more parties requires record keeping and transparency. Thus, the high level of security provided by blockchain technology is essential for constructing a strong data network to maintain track of client information. When blockchain technology is used in businesses to supply consumer products and services, all records are kept securely to enhance trustworthiness between the entrepreneurs.
Since this technology is one of the most advanced network technologies that has digitalized means of transaction, several developed companies have remained competitive without depending on the third party’s trust when transacting money. Moreover, blockchain technology has enabled customers to find a better method to distribute corporate services resulting in a robust partnership that increases income sources. Furthermore, its technological advancement has provided permanent solutions to money hacking and identity theft. Thus, it is predicted that it will emerge as the frontrunner while global services across the world expand.
Validation and Encryption
Since blockchain stores and protects your data, nobody can tamper with it. Even network administrators cannot modify or change your transactions. Blockchain can also store your document or files’ cryptographic signature. For this reason, you are provided with a mechanism to ensure that the file is not updated without submitting the complete content to the blockchain.
Its decentralized characteristic allows you to cross-check file signatures across all ledgers on any network to ensure that they are not modified. It is important to examine your file to be certain that it is the same document that existed previously even though blockchain enables clear and independent data authenticity.
Data Security May Be Secured in A Decentralized Manner
Most people have engaged in blockchain business, but a few still fear taking risks in this field. According to research by Surf Shake survey, over 85% of the remaining people want to learn how data is used in business. However, as this technology collects engagement and behavioral data, they are always left in dark without being paid.
Blockchain does not depend on a single central control point; hence it is a decentralized system where each machine contains a copy of the findings. Decentralization also makes the plan more equitable and secure. It does not depend on a single authority to interact with other users but initiates innovative consensus methods to authenticate and store all data securely.
All the recorded information needs to be true and accurate because blockchain technology is an information ledger. Even if any computer fails, still you can access your data because it is kept on several computers. You can choose between anonymity and sharing your data inside the ecosystem in exchange for compensation easily because DTSocialize Holding has created a better ecosystem for all users. If you want to donate your data, you can be rewarded the money in the form of tokens inside this ecosystem; thus, there is no direct connection to the users. This technology only operates by anonymizing data before it is stored in big data stakes for market research.
Blockchains Are Not Easily Exploited
Since blockchain is a digital network that stores transaction data in a central place, they have no single point of failure. No person can change or modify it, or be updated by a single device. The system is a decentralized and distributed ledger that is often updated and synchronized through peer-to-peer networks to ensure security and validation. Blockchain prevents hackers from discovering the data to exfiltrate or destroy it. Even though other people can view your data, blockchain has made exfiltration and damage impossible by controlling membership through a single entity or consortium.
It’s All About Access
Blockchain systems have introduced sophisticated permissions mechanisms to allow the entrepreneur to access the network. The permissions are programmed accurately and controlled by atomic actions. These are indivisible sequences of operations to be executed without fail.
Interaction with EOSIO-based software has led to varying degrees of access. For instance, in logistic management, one key can be used for data input, another for data entry monitoring, and a third one for controlling token transfers between accounts. As a result, numerous duties and data access are segregated. Even though this layered permissions model did not exist in the first blockchain platforms, they allow organizations to reduce the risk of hackers by managing all operations.
Safe Data Storage
Personal identification information (PII) is one of the main data protection concerns. It is also the most delicate type of data. For instance, postal addresses and codes, phone numbers, geo-location data, and birth dates are counted as PII. Most government and non-governmental organizations store this information in unencrypted form; thus, allowing hackers to steal the data easily and impersonate someone else. However, if you wish to encrypt the data of a shared community, blockchain technology is the best option to choose. The technology denies everyone an opportunity to interpret or alter data saved utilizing its capabilities. It can be used in government offices to decentralize and secure public documents.
Zero-knowledge proof is a cryptographic method that approves personal information without compromising the user’s privacy and control during validation. Here the prover proves to the verifier that a piece of information is authentic without revealing the data. This prevents hackers from accessing your data to help them steal from you. For instance, if you want to buy a car, you must prove to the seller that has legal documents by showing your driving license which contains all the details that can be used by hackers to access your account. However, you can use zero-knowledge proofs to verify your validity through a mathematical code without sharing sensitive personal information.
Things to Consider When Establishing a Blockchain Solution for Your Enterprise
When you want to choose a compliant and secure blockchain to help you achieve business goals, you must consider security and how to manage governance and permissions networks. Establish a comprehensive security strategy for enterprise blockchain solutions by using traditional security controls, such as data privacy, key management, secure communication, smart contract security, and transaction endorsement.
There are infrastructure providers that adopt innovative cryptographic protocols such as MPC to ensure an extra layer of security. MPC (Multiparty Computation) is a cryptographic technology that allows for secure collaboration between multiple parties. This is done by having each party submit a portion of the computation, and then combining all of the results to get the final answer. This makes it difficult for any one party to gain control of the system, as they would need to control all of the individual parts. This makes MPC a great choice for security-sensitive applications,such as asset management.
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