Privacy in the Blockchain

//Privacy in the Blockchain

Privacy in the Blockchain

How Personal Privacy Protection With Blockchain Works?

Blockchain has the potential to replace credentials, such as passwords and usernames, by providing individuals with digital identities that are encrypted and personalized. We can manage and access everything we need through them, from our medical records to online information. Our data will get tracked and stored by blockchain, and it, being immutable in nature, will keep it secure and safe. But this is all still in theory as of yet, and the real question to ask is that can we trust it to maintain the safety of our personal and sensitive information?

Privacy Vs. Protection

Blockchain can protect our personal data and information in a foolproof way. However, it is privacy that remains a concern even with blockchain. There is a difference between privacy and protection. Privacy is the ability to allow the type of information that is collected about you and managing or controlling it, while protection is the security of how that information gets used after getting collected. The immutable feature of blockchain does not allow even the user to go back and erase the history or a part of it from the blockchain once it is gathered.


However, currently, there is no technology or system in the digital world that allows for complete privacy, and there is none that beats blockchain for protection. So it is only wise to explore blockchain more and optimize it further. While you cannot completely remove or modify the gathered data in a blockchain, you can control when, where, and by whom it is utilized and for what purpose or opt-out of it. Blockchain has the ability to better data experiences by handling on and off-ramps. Here is how it works:


Consider there are three entities using the blockchain system, nodes, services, and users. Nodes are the entities that, in return for incentives, are entrusted with managing a distributed private key-value data store and maintaining the blockchain. Services are the application providers who require processing and analyzing users’ personal data to enhance their business offerings. And users are individuals with mobile phones who are interested in using the applications the services provided.


Now, the blockchain receives transactions of two different types. One is Tdata, and the other is Taccess. Tdata is used for retrieval and storage, while Taccess is utilized for managing access control. Services can easily integrate these network operations into a mobile SDK (Software Development Kit) during their development process. After the user installs an application and signs up on it, a shared user service identity gets developed and, along with certain permissions, sent to the blockchain using a Taccess transaction. As a Tdata transaction, the blockchain receives the data collected on the phone, such as sensor data, e.g., location, after getting encrypted through a shared encryption key. The blockchain retains only a pointer (SHA-256 hash) to the data on the public ledger and directs it to an off-blockchain key-value store.


The key or the pointer associated with the data can now be utilized by both the user and the service to access the information using a Tdata transaction and a digital signature. Before allowing access to any of the two, the blockchain verifies to who the signature belongs. Now, finally, the user can issue a Taccess transaction at any time revoking accessing to previously stored data or granting full or selected permissions to the service. In short, the user can issue a new set of permissions whenever they want using a Taccess transaction.


Data is valuable in today’s marketplace. Whenever we use our valued customer ID to buy a product or avail a service or perform a search on Google, the pertaining information gets tracked as it is of value for someone. This phenomenon is only going to increase now with the network that connects billions of devices and the Internet of Things on the rise. We will be sharing and providing personal information to anyone and everyone who is willing to gather it. All this makes blockchain a saving grace as it equips users with the power to decide who has access to their data and what data they can access.


It is true that you cannot completely remove or edit the data that has been collected, but you can turn off the access to a node of the blockchain to limit anyone or everyone from being able to access that piece of information.


But, it is important to keep an eye out for the reasons blockchain remains problematic for personal privacy protection.

Blockchain Data Privacy Concerns

There are data privacy features, like a self-sovereign identity that blockchain holds that can be leveraged for customer protection. However, there are certain risks associated with the technology as well that pose some serious security issues. They include:

Blockchain Data Privacy and Public Ledgers

Bitcoin thrived with the use of a public ledger that allowed everyone to access and verify transaction records. But, the feature poses problems to its users as well by serving as a tracking tool for criminals that use it to track people and their spending routines. This allowed for easy breaches of consumer data.

Centralized Blockchains

A centralized blockchain can offer the owner complete control over the data of the users and can be a nightmare. Most of the blockchains are decentralized and controlled by the whole community, but the mere potential of a blockchain being centralized is a problem. Another area of concern with the privacy of data revolves around digital currency wallets. The users generally lack awareness about it.


The world of fintech has seen revolutionary technology built on top of the blockchain, redefining privacy. Bitcoin being used as a peer-to-peer (P2P) system to send cash allows transactions of illicit goods to be performed easily and privately. Stealth addresses is another feature that generates one-time encrypted addresses for interactions on the ledger between its users as the real wallet addresses that are visible to outside onlookers, users, or the network. This allows the interactions to be made under complete consumer privacy.


To implement complete security and privacy, the most important blockchain feature is control and knowledge over personal data. With big tech companies trying to monopolize the internet users’ private data, innovations and inventions are taking place that tends to provide protection to user data. Blockchain technology writes on immutable data and has the potential to provide absolute security to transactions within a network. The creation of a completely private and complex network requires a well-executed and intelligently designed blockchain.


There are still reasons why personal privacy protection on the blockchain is not ideal, but it can be turned into a reality with strong and unprecedented coordination between regulatory bodies, people, businesses, and governments. It will take time and effort, but the results will be fruitful for everyone. It is high time businesses began to experiment by offering to their customers’ nodes of blockchain protection. With more and more realization, awareness, knowledge, and a sense of need at all levels, we will soon see a united blockchain encrypted identity service that will slowly but steadily gain trust and increase in popularity and usage.


The best way sensitive and personal data can be protected is by enabling the users to control and own it. Entrusting it to third parties will always render it susceptible to misuse and attacks. The authorities and companies’ ability to offer personalized services for optimized benefits should also not be limited. Combining an off-blockchain solution for storage with a repurposed blockchain serving as an access-control moderator is the current peak of blockchain potential that we have currently reached. It offers a complete awareness to users about how their personal data is used and what data is being collected. Companies do not have to compartmentalize or properly secure the data and can utilize and analyze it for their purposes while the users are recognized by the blockchain as the owners of their personal data.


The distributed e-ledgers, centralization, and incapacity to “forget” data are a few problems and issues of blockchain that are yet to be resolved. Further investigations and analysis are required to look more closely at the impact of the blockchain on security and privacy aspects which can discover its seemingly adequate potential to be the ideal solution more. It can also support the interdisciplinary study pertaining to the economic impact of different blockchain infrastructures in terms of business models and value.

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By | 2021-10-08T23:05:32+00:00 October 8th, 2021|Technology|Comments Off on Privacy in the Blockchain