How Blockchain Can Redefine Data Privacy

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Blockchain’s prolonged sentiment as a panacea to the world’s problems throughout 2017 was unambiguously representative of what the Gartner Hype Cycle details. However, out of the extended bear markets, which pruned many altcoins from the markets and helped participants in the broader ecosystem become more discerning, emerged several trends that still can drive important change in crucial areas.

One of those areas is data privacy, and the future role that decentralizing network and systems architecture can have in mitigating the endemic problems of data security, unethical data sharing and Orwellian-grade mass surveillance.

Surveying the cryptocurrency and blockchain landscape reveals that privacy has been continually emphasized among core proponents of the underlying technology, and is beginning to garner more widespread support following consistent revelations of data hacks and the extent to which governments seek to reduce financial privacy.

Privacy is a fundamental principle that has been overlooked for years as social media companies and internet tech giants rose to oligopoly status with enormously popular platforms. The platforms were free and groundbreaking, but behind the scenes, it is the users’ data that drives the business model and is doled out to third-parties without reprehension.  

The centralization of these models is inextricably linked to the problems that have increased data privacy concerns, and are gathering momentum.

While blockchains and cryptocurrencies do not singularly pose the solution to data privacy, they have reignited the debate about digital privacy and accelerated growth in novel technologies that help to secure better privacy. From a tangential development like zero-knowledge proofs (ZKPs) to distributed storage architecture, the narrative of decentralization provided the foundation for much-needed change.


Now, it is just a matter of creating that change.

Building a private and decentralized internet

Despite its original conception as an open and decentralized digital realm, the internet has not really lived up to its promises in this regard. Tech and financial companies employ siloed data models that contain massive amounts of sensitive, personal information and are subject to influence by governments and attack by hackers as central points of failure.

According to a Javelin Strategy & Research study from 2017, roughly $16.7 million was stolen through identity fraud in the U.S. Fraud stems directly from the poor security that centralized data models confer. Voluntary credit freezes following mass data scandals have become commonplace.

Privacy is the power to selectively reveal oneself to the world, not have your information sold to the highest bidder.

Decentralizing data storage and transfer, as well as integrating decentralization with innovations such as multi-party computation, encryption and trusted execution environments has the potential to reshape data privacy. Looking past the hype of blockchain, you will find myriad solutions on the horizon that demonstrate the evolving nature of privacy and the unrelenting efforts by people to preserve it.

Technical developments such as IPFS alters how the modern web works by creating a distributed, P2P hypermedia protocol, with no central point of failure. With the potential to replace HTTP, IPFS reenvisions the original conception of an open and flat web, removing data duplication and employing cryptography for fingerprinting data without revealing sensitive details within the data.

More of an indirect consequence of the proliferation of cryptocurrencies, ZKPs have emerged as a dynamic new technology with wide-ranging potential. The concept, used in public cryptocurrency networks such as ZCash and Monero, is designed to verify the authenticity and integrity of a data transfer (i.e., a financial transaction) across a public medium without revealing any information about the transfer itself. Think verification of identity without needing to disclose the identity or completely private financial transactions without revealing the origin, recipient or amount transferred.

While both ZKPs and IPFS represent major steps forward in enhancing data privacy, they are complicated and require significant technical knowledge to implement. Platforms such as Promether are working to change this by providing the modular framework that integrates an “Adaptive Symbiotic Network” for anyone to create secure, decentralized and anonymous networks. An open-source technology, Promether abstracts the details of a secure and anonymous network from mainstream users, making accessing tools that safeguard privacy much more available to non-technical users.

This protection of data can be used in specific industries as well. For example, take the sensitive issue of storing health data. MedRec provides a way of storing health records using fully decentralized access rights via an Ethereum blockchain. According to the developers at MIT (where the project originated), MedRec uses the World Wide Web as a model and provides patients all over the world control over record distribution.

As 2019 begins, looking back at the innumerable violations of privacy over the last several years should encourage people to once again emphasize a principle that most would admit they strongly believe in but is often ignored out of the lure and familiarity of centralized platforms.

Blockchain has not redefined data privacy, but it has refueled a growing generation of ideas that have the potential to shift the control from centralization to decentralization, once again allowing individuals the ability to take back privacy of their data.


Andrew Medal

Andrew is the founder of Action & Ambition. He's a tech entrepreneur and angel investor.

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