The Benefits of Blockchain—Privacy & Security

It doesn’t take a particularly keen observer to realize that our collective digital-first ethos has significant ramifications for our privacy and security expectations.

The social internet has been going strong for nearly two decades, and the web now serves as a quasi-second life that closely parallels our real-world experiences. We connect with friends and family on social media, we shop at Amazon, we bank online, we go to the movies by watching YouTube, and we access Google to know anything about everything.

Meanwhile, we are so busy participating in these compelling digital platforms that it’s easy for most people to forget about the incredible amount of personal data that we are providing to these companies and intrinsically trusting them to protect. Every click, view, like, share, and transaction was being meticulously recorded and the information recycled to create things like targeted advertising, centralized databases, and personalized experiences.

In many ways, the internet knows more about us than we know about ourselves. This is valuable information, and it needs to be secured. Unfortunately, as we now know, many companies are doing a very poor job of protecting it.

In reality, devastating hacks that compromise user data and violate their privacy have become a “when” not “if” proposition. As customers, we tend to assume that these things will happen, and it requires more significant and more destructive events even to make headlines.

However, in the past year, those headlines have indeed been made. Whether it’s Yahoo finally revealing that all three billion of their accounts were compromised or the 145 million accounts at credit monitoring firm, Equifax, no industry seems to be immune from these practices. Even the U.S. Department of Homeland Security was breached, and it took them years to discover the damage.

Of course, the most recent and most grievous example of data misuse is the result not of theft but corporate malfeasance. The Cambridge Analytica scandal that erupted last month revealed that millions of Facebook users unknowingly had their data distributed to a third-party marketing firm that repurposed that data back to users in the form of manipulative and misleading advertising that preyed upon their fears and biases.

It’s not an understatement to assume that personal data privacy and security is in a state of crisis, which is, in a way, great news because we can do some much better than the current climate might indicate. The emergence of blockchain technology as a viable, enterprise-ready solution means that users don’t have to compromise their security and privacy to participate in the benefits of technology.

As US Congress recently concluded in its 2018 Join Economic Report: “Blockchain technology essentially stores and transmits data securely, in large volumes, and at high speeds…so far, the technology has proven largely resistant to hacking.” The blockchain and the platforms that build upon its technology provide significance security and privacy enhancements over the current internet infrastructure. While this is a nuanced topic, these features generally expressed in three ways.

#1 Decentralization Thwarts Hackers

The blockchain is predicated on its decentralized network. Rather than relying on elaborate server farms to power their services, the blockchain spreads out the computing power among hundreds or thousands of computers located around the world. Therefore, the blockchain is ideal for fighting common attacks that thwart digital defenses. For example, DDoS attacks that strive to overwhelm a server with high traffic volumes are effectively rendered useless.

At Digitex Futures, we deploy smart contracts on the Ethereum blockchain so that account balances can be decentralized. Users account balances are stored in these smart contracts, and Digitex Futures does not have access to your balance. In this way, users maintain control of their money while simultaneously enjoying the safety of decentralization.

#2 Tokenization Protects Privacy

There are several ways that the blockchain can protect users’ privacy, but the primary method is through tokenization. For users, this means that their personal information doesn’t have to be directly connected to their transactions. Instead, a token identity can stand in for the person’s information without compromising functionality,  

For example, Digitex Futures only accepts the native DGTX token, so we don’t collect payment information to participate in the platform. After all, it’s easy to protect information that’s never collected.

#3 Distributed Ledgers Ensure Legitimacy

Blockchain technology has always been renowned for its ability to create unchangeable and unquestionable records. It may guarantee users’ security and protect their privacy, but it continues to be an immensely accountable technology. Whether it’s being applied as an enterprise solution or it’s powering a decentralized platform, the distributed ledger arrived just when we needed it most. It operates out in the open, and it exudes confidence.

In our current technological landscape, clear records and answerability are a progressively compelling commodity. Our lives will continue to become more digital as new devices and better services make it easier to do so. Fortunately, we can traverse that future knowing that the benefits of the blockchain work to protect our privacy and security.

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