Posted by LLOYD J CAZES CPA

Can Blockchain Really Protect Our Identity?

Can Blockchain Really Protect Our Identity?

A leaked data on up to 143 million Americans in 2017 happened to Equifax due to a data breach. Important information such as social security numbers, home addresses, and more was leaked and since then, more than a billion people world-wide also had to experience increasing cases of breaches. How come these hackers collectively have more data on us that credit agencies have? A myriad of arcane laws, complex technology, and even attitude problems are being faced by Companies that are tasked with safeguarding personal data. Now the question is - how exactly can blockchain technology be used to prevent data leaks?

Companies are held legally responsible for any data breaches through the laws around the safeguarding of data. The gathering and storing of data are permitted through data protection laws such as FCRA in the US or ECHR Article 8 in Europe. To cover a breach, most companies would take out insurance and go ahead with the “business as usual” principle for the day.

Here’s the truth - today’s ability to detect data breaches is generally because of the accessibility of the internet and the dark web. The end goal for most hackers is to publish the data for sale on the dark web. There have been many breaches that we actually don’t know about as we take into consideration the data treasure trove that companies such as Marriott and others hold.

The growth of a cottage industry of identity breach services is simply being encouraged by this in “freakonomics” terms. Reporting on data breaches and offering credit protection services are done by these companies. For the rest of the consumers' natural lives, they likely have “free credit protection”. 

Understanding Blockchain Technology

What makes blockchain as an amazing piece of technology is its structure. It is designed to maintain a high ground against hackers. To wit - any hacker who can break the blockchain has a bounty of 91-billion dollar. It hasn’t been broken in ten years since it is secured by default in a presently unbreakable layer of encryption. It can be developed to have increasingly stronger layers of protection added as a technology.

For better data protection, there are approaches by blockchain companies that have been designed and implemented. The encryption of the personal information into the blockchain and requiring the users’ permission for others to access data by Solve.care is just an example. At any time, the permission can be revoked at any time. 

Many blockchain start-ups are presently required to collect personal information including driver’s licenses, passports, and copies of bank account statement, home addresses and a lot more. The investor can will then verify this information before purchasing an ICO. This collection of information on all investors including the ones that are doing business with banks and financial institutions are mandated in the US, the SEC, FINRA and other government agencies. There was a security researcher who earlier discovered 10GB of personal information on an insecure Wordpress site despite saying that information is safeguarded from hackers. Individuals seeking to buy into an INCO uploaded all the driver's licenses, passports and more.

A standards compliant system called “IBM Blockchain Trusted Identity” is being worked on right now by IBM which a standard compliant system. The KYC/AML process that companies like Coinbase and others use wants is being improved by it as a service. Users will be able to authenticate without giving up control over the information through this service and since blockchain technology is securing it, this data in a highly secure location and hackers are likely not able to access it. Instead of uploading a PDF to an insure website, this methodology sure sounds a lot better. What’s even better is that this technology is available right now.

Due to the price action, bitcoin and blockchain are being attacked by pundits. A treasure trove of improved security and reliability around personal and to reduce the threat of attacks is being revealed when enterprising professionals took a closer look. Taking the proper action to secure the data could result in companies of all types saving billions including insurance companies.

Those who can benefit most from this technology are the consumers. They should be able to insist that companies utilize a blockchain enabled identity system to protect their data instead of giving away their data away freely to every stranger.

LLOYD J CAZES CPA
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