‘Everyone can profit from a bad example,’ they say. In this sense, the big Cambridge Analytica scandal involving Facebook has done more for the topic of online privacy than any blog article or YouTube video. One huge controversy was enough to shake people up and got them thinking about the security of their online data. The incident prompted other companies – such as Steam – to implement long-requested privacy changes, which is clear proof that netizens have become cautious about third parties accessing their data. However, this mentality has raised some sensitive questions about blockchain technology; even though it was heralded as a trustworthy and authenticated solution, it turns out that there is still room for improvement.
What’s This Blockchain All About?
In brief, blockchain is an ever-growing list of records linked together by cryptography. The primary benefits of the system is that the data is distributed evenly, therefore no one can ever have a monopoly over other people’s information, in the way that banks, businesses, or government agencies currently do. Cryptocurrencies are using this technology to verify the transactions and offer transparency. However, blockchain can be applied to other parts of our life, for instance there is a movement that aims to implement the technology into healthcare in order to provide patients with full access and complete control over their medical data.
Why Does Blockchain Need Stronger Privacy?
Because the public nature of blockchain has an ugly side as well. After a transaction is recorded nothing can be done to delete or hide it, as the proof is documented on an infinite number of systems spread all across the world. Let’s assume you made a payment in Bitcoin, the system obviously doesn’t mention your name in plain text and instead attaches the wallet ID to the amount.
And here comes the issue: if someone arranges a payment with you then they will get hold of your wallet ID, which can then be used to retroactively scan public ledgers to identify other instances of transactions linked to the wallet. The person doing the digging can use this data to learn about your spending habits, liquidity and so on. While credit card companies might charge a transaction fee, the business log won’t be available to the public unless their system is hacked.
Blockchain eliminates the extra costs but in exchange anyone is able to snoop on any public financial transactions. Marketing companies might use this insight to match offer prices with spending habits, or a spouse could secretly monitor the husband’s secret affairs. The only way to divert this threat is to use a new digital wallet for each and every transaction, which heavily undermines the whole convenience of the concept.
There Is No Absolute Privacy
Supporters of blockchain are aware of the problem, but there are ongoing debates about how to solve it. In theory it’s possible to prevent the technology from sharing your data, but the main question is whether or not this should be the default option. The popular cryptocurrency Monero believes that secrecy serves the privacy of their users.
On the other hand, its competitor Zcash believes that customer agency is the way to go, which is why they offer the choice between transparent or shielded transactions. Although this seems like a noble idea, most people aren’t aware of the ins and outs of blockchain, meaning that they could carelessly leave a digital footprint of their private purchases without even knowing it.
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