Ensure Data Privacy with Blockchain
Also known as distributed ledger technology, blockchain is a shared database that keeps a record of all transactions that take place between two parties. It allows the entry of data in chronological order, which means once the data is recorded, it cannot be changed. This is both good news and bad news at the same time, especially when viewed through the lens of data privacy.
Advancements in technology have led to a massive rise in the amount of data collected, stored, and used by businesses, which has led to the erosion of privacy protections. While blockchain can be incredibly useful in tackling some privacy concerns, it also creates new risks that need to be considered.
Businesses today are tasked with the responsibility of safeguarding data at their disposal. It’s crucial that businesses protect personal and client data flows within their business as well as their own sensitive data. Businesses use blockchain as a tool to maintain privacy for a couple of reasons.
Private and Public Keys
The provision of private and public keys is a major way blockchain helps to ensure privacy. Every user has a public and private key. These keys encrypt and decrypt data that moves or resides on the blockchain network. They are essentially random strings of numbers that are, which means it is mathematically impossible to guess the keys of another user.
Anonymity and Permissions
Data stored on a blockchain isn’t just secure but also anonymous. Data on a blockchain network appears mostly as hashed values and cryptic wallet IDs, which makes it difficult to link back to users directly.
Public blockchains such as Bitcoin and Ethereum operate on a peer-to-peer basis, which eliminates the need for a central authority to store data and regulate the network. By removing the reliance on a third party, users can lower their risk of data exposure.
Although private blockchains such as Enterprise Ethereum and R3 still maintain a centralized authority over data, they do offer an additional layer of data protection by limiting who has access to sensitive data through sophisticated permissions mechanisms.
Risks to Privacy
Blockchain has tremendous potential for solving privacy concerns however, due to its design it offers some challenges.
Impossible to Delete Data
The European Union’s General Data Protection Regulation (GDPR) empowers individuals with the right to request the deletion of their personal data from a controller. This presents a challenge to businesses using blockchain technology as it is impossible to erase data from an immutable ledger designed to store data permanently. There’s no way users can go back to delete data once entered into the ledger.
Possibility of Data Exposure
Both private and public blockchains present risks of data exposure. In public blockchains, there have been instances where users have been traced and identified. It only takes knowing the public address of a user to trace every interaction on-chain. Once one element is exposed, all data is vulnerable to exposure.
In private blockchains, data exposure is vulnerable to user error or intentional attack. If a trusted user’s credentials were exposed, a nefarious actor could gain access to sensitive data on the private blockchain.
Privacy with a Hybrid Blockchain
Dragonchain addresses privacy with a hybrid blockchain architecture and data segregation. The hybrid architecture includes a private business blockchain with a network of distributed blockchains. Businesses can secure the sensitive data of their customers as well as their business on their own private blockchain. This allows them to selectively choose what data to expose and to whom while maintaining complete control over their data.
Businesses can then leverage a network of public blockchains by sending only transactional proof for verification. Transparency and accountability without the risk of data exposure is possible with a hybrid blockchain.
Additionally, by segregation sensitive data businesses can use blockchain while adhering to privacy regulations such as GDPR and the right to be forgotten.
Advanced Identity System
The inclusion of an advanced identity system can limit the amount of sensitive data a business holds. Currently, most personal data is stored by a central entity. An advanced identity system allows individuals to hold their own data and control who has access to their data instead of tasking the central entity with that responsibility. By changing who holds the data, businesses can mitigate their risks of data breaches.
Contact us today to learn more about how our hybrid architecture and an advanced identity system can limit data exposure for your business.