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Blockchain Could Make You—Not Equifax—the Owner of Your Data

Blockchain technology has been coaxed through the muck in recent months by scammers, charlatans and comedians. A wordplay cryptocurrency attracted piles of real cash, a kleptocratic regime told an ICO, and an ice tea company pivoted to bitcoin mining. (For about a minute.) In the wake of all this hype, descent cryptocurrency prices have hardly helped matters. It’s time for a memory that, while no panacea, blockchain technology is extremely good at doing one, absolutely useful thing: removing intermediaries. 

Take bitcoin, the original surface on the original blockchain, which gave people an unprecedented third alternative for transferring money. Prior to bitcoin’s invention, one of two things was possible: handing wampum over in person, or trusting a middleman such as a bank to do it on your behalf. With bitcoin, you can carry money remotely without a middleman. This is a first in human the past.

The economy harbors plenty of middlemen besides banks, but projects forged on bitcoin’s core innovation, the blockchain, have the potential to challenge them as swell. Take data brokers. These are mostly obscure, with trivial, x-heavy names like Acxiom, DataLogix, Experian, Ameridex, and the now-famous Equifax. These positives scrape consumer data – financial transfers, social media endeavour, browsing history, e-commerce purchases, location data – from infamous Public sources, or buy it from digital services. (Here’s everywhere PayPal chaps’ data ends up, for example.) 

The brokers analyze this data to fix on everything from hobbies to credit worthiness to addictions to sexual bearings. They sell it on to advertisers, card issuers, prospective employers and whoever else force be interested. In this way, each individual consumer generates a nice run of rent for an industry that gives them nothing in return. Equifax Inc. (EFX) earned $488.8 million in profit in 2016, $3.36 for each of the 145.5 million chumps of the data breach it announced in September.

Accounting for the number of players in the assiduity and the rapid growth in the amount of data users produce, Datawallet – multifarious on them in a bit – estimates that in the year 2022, roughly $7,600 significance of personal information will be bought and sold per person, a quantity the outfit’s founder and CEO Serafin Lion Engel likens to a universal basic gains.

There is a possibility, though, that this money will go not to middlemen, but to the in the flesh who actually generate the value. User data, often called the “new oil,” numberless closely resembles the new guano. These nitrogen-rich seabird feces were the most sought-after fertilizer in the times a deliver for most of the 19th century. Like data, guano was procured through stock, rather than transaction. And as with data, the seabirds that displayed the stuff were never compensated.

Users of digital services are premium a bit like oblivious gulls who happen to excrete an immensely productive resource, sort of than owners of an asset they create. Blockchain technology and associated cryptographic techniques could change that, giving us control floor our personal data and enabling us to sell it to whomever we please.

“You have the monopoly”

Datawallet is one of the visitors trying to bring this change about. The app has mostly gained intermediation attention as a way to earn $5 or $10 a month selling Facebook matches, Amazon purchases, Uber rides and Airbnb trips. Engel expects ahead of time adopters to be college students “who are in it for beer money.” 

But the idea behind Datawallet restrains a more fundamental appeal, the ability to control what Engel rouses a “self-sovereign wallet,” which makes the user the sole owner of their statistics and the only one with the ability to grant access to it. Engel says, “you include the monopoly over that data about you.”

Datawallet is just one expanse a slew of blockchain-based apps aiming to do away with data middlemen wherever they can be create. 

Medicalchain is tackling medical records, giving patients full device over some of their most sensitive information and bypassing the healthcare approach’s decrepit infrastructure (think fax machines) in the process. Loomia is going after poignant textiles, an industry in which other players are eager to harvest and supply heart rates, geographical movements and even more intimate metrics (muse on smart mattresses). 

Most of these projects are in their very at stages, but if they come to fruition, something unprecedented and rather extraordinary may emerge: empty platforms, places that facilitate commerce in figures, but where no one party is doing the facilitating. Henri Pihkala, founder and CEO of Streamr, a blockchain-based programme for live data streams, captures the paradox: “we make a central abode which is decentralized.”

The tech: Keys, hashes, smart contracts

How does that engender? The details vary, but Datawallet’s solution is generally representative of the technology that enables these decentralized stages. 

Keys

Say you want to sell some of your personal data – for exemplar, your Facebook activity or Amazon purchases – using Datawallet. You and the purchaser each be undergoing a public key and a private key. Public keys are used to encrypt a message, to contention it so that it looks like gibberish to everyone except the holder of the identical private key, who can use it to decrypt (unscramble) the message.

In order to exchange your surreptitiously data securely, you encrypt it with the purchaser’s public key and send the encrypted figures to them. They take the data and decrypt it with their grunt key. If someone in the middle intercepts the data, all they obtain is an unreadable fix.

Hashes

In Datawallet’s design, the data exchange itself happens off-chain, since the satisfies are both too large and too sensitive to broadcast to the central ledger (for Datawallet and myriad other projects, this ledger is the ethereum blockchain). What does go on the blockchain are butchers of the data. You hash the data you’re selling and post the result to the chain, and the customer hashes the data they receive and posts that result to the train. If the hashes match, a payment held in escrow is released. (See also, Bitcoin vs. Ethereum: Approached by Different Purposes.)

What are hashes and what do they accomplish? They are cryptographic act the part ofs that enable quick verification that two sets of data are equivalent. 

They do this by distilling data down to a manageable chunk. No of importance how short or long the text you run through SHA256, the hash function acclimated to by bitcoin, you will get 64 characters back. Here’s the hash of the maiden scene of Hamlet, for example:

91BBAB0B8C574E4071B6AB0458CB891BD01392D58CB7A6D43918DA95E30DC04D

Now if you secure the text of Hamlet, you can instantly check that what you’ve received has not been tampered with – no dearth to pore over every jot and tittle. Simply hash your exercise book and compare it to the hash of the sender’s ostensibly identical text. (This pressures just as well for web browser data or Amazon purchase histories.) 

The transform is instant because hash functions are so finicky. Delete the exclamation heart in the scene’s first line, and that one change yields an unrecognizably personal hash: 

80DA6F89DDB7BD67BE5D30AE5EA6D74949C55719354D38D97C64DE5FE914029C

This sensitivity to tampering sees hashing central to bitcoin, ethereum and their peers. Thousands of corresponding copies of a blockchain can be efficiently maintained because they’re compared exhausting hashes, rather than through meticulous scans of every prevent a rough out. (See also, How Bitcoin Works.)

Hashes are also useful because observations cannot be unhashed. No one using any known technology can take 91BBAB0… and wring Shakespeare go out of it. That makes it relatively safe to broadcast a hash of sensitive message to the blockchain, as Datawallet does. 

Blockchain and smart contracts

Even granted the data exchange itself does not happen on-chain, the ledger is momentous to decentralized data transfer. Blockchains are immutable public records that discharge all doubt about what was traded, at what price, and when. The butchers broadcast to the blockchain either match or they don’t, so buyers can’t claim they didn’t inherit data that in fact they did. Nor does anybody need to meditate whether a hacker or spy tampered with the data en route. 

Without the lack for someone to mediate the exchange, brokers lose their raison d’être. They are restored by a large number of (ideally) dispersed, competing and mutually distrustful “miners” who advertise exchanges to the ledger. (See also, How Does Bitcoin Mining Work?)

Miners also obviate the call for a bank: blockchain technology’s main application has always been as a ordered money transfer platform. Finally, ethereum offers the ability to impose upon complex contracts via this same distributed network of miners. You may cause paused at the reference to a “payment held in escrow” above. Who’s holding the legal tender while it straddles buyer and seller? 

No one, it turns out. Ethereum took bitcoin’s decentralized monied and made it programmable via smart contracts: self-executing bits of code that contemporary on the blockchain. If all the hashes match and all other pre-agreed conditions are met, the money automatically proceeds from the buyer’s account to the seller’s. No need for a trusted custodian in the midriff. 

Blockchain has problems aplenty

As promising as this technology sounds, not all the complications have been worked out. Some may never be. Start with scalability.

Up-market and slow

Blockchains are fat, lumbering beasts. Distributed consensus is slow and costly weighed to the centralized networks that are currently in operation, so how can blockchain technology contend in a user data market that – for all its shadiness – at least works at clamber up?

Datawallet sidesteps the problem by transferring data off-chain. On-chain conveyances of data troves that might include videos and other jumbo files “would immediately crash the ethereum blockchain,” says Engel. And in any lawsuit, no one would want that kind of data broadcast to a public ledger.

Medicalchain beetle offs health records where they are, on regulatory-compliant servers in the patient’s about jurisdiction. It simply provides a platform for patients to grant doctors access to their tell ofs. (See also, Blockchain Technology Could Revolutionize Health Care.)

Some work ups are trying to scale by tweaking the way distributed networks are structured. Streamr synthesizes a “reputation mechanism” called karma with its blockchain-based token, DATAcoin, to divvy up the form. “We need to assign asymmetric responsibilities to different nodes,” says Pihkala, “differently we end up with a situation that is typical with current-day blockchains, which is all the details goes to all the nodes, leading to no scalability.” The nodes put down a DATAcoin circumscribe, which they lose if they break the rules. Karma, in the meanwhile, assigns greater responsibility to the most reliable nodes, increasing effectiveness without sacrificing too much in the way of decentralization.

Kochava is taking similar guesses and applying them to a blockchain it is building in-house to reduce opacity and trick in digital advertising. XCHNG, as the platform is called, uses a reputation way and a brutal form of pruning – in which most nodes only control onto a day’s worth of ledger history – to process the huge volume of actions digital ad delivery demands. Kochava founder and CEO Charles Manning believes the stage could deliver millions of transactions per second. Ethereum can manage wide 15 or so, bitcoin far fewer. (See also, What’s the Bitcoin Scalability Wrangle?)

Where do you store it?

Every blockchain application faces problems with storage. Cash transactions and smart contracts might be utterly decentralized, but the data itself either resides in centralized servers, à la Medicalchain (this is mainly for regulatory reasons, to be fair), or on users’ own storage-constrained devices, à la Datawallet. 

A company of projects are trying to enable decentralized storage, including IPFS, BigchainDB and Storj. Engel, Pihkala, and Janett Liriano, the CEO of Loomia, each name plans to integrate their platforms with one or the other of these partnerships.

You still give up your data

At some point, the quest to determine ownership over your personal data hits a wall. You can encrypt it. You can along it directly, shunning intermediaries and keeping it encrypted en route. You can ensure that the purchaser pays the agreed amount upon receipt. 

But no technological legerdemain can subdue the fact that once the buyer has your data, as Guy Zyskind (co-founder and CEO of Puzzle) puts it, “You’re done. They can take your data, they can imitation it, they can go off-chain and then that’s it.” Rogue employees, incompetent defenses against lackey, reselling – the unpleasant possibilities abound.

Yet rather incredibly, Zyskind indicates you can make your data available to use without actually revealing it. On account of a technique called secure multiparty computation, his company is building a tenets that enables data not only to be stored in an encrypted, distributed be composed of, but to be computed over while still in that encrypted, distributed manner. 

With an IPFS, a Storj or a BigchainDB, it’s possible to keep your materials secure and to decentralize it across multiple devices. But if you want to do anything with that details – run it through an algorithm or edit it – you have to decrypt and re-centralize it. In order for a recognition rating agency to calculate your creditworthiness, say, they need intense access and visibility.

With Enigma, these calculations can be performed without any Equifaxes constantly being able to see your decrypted financial data. They desire not even have access to the full set of encrypted data: it would be split across multiple nodes in the network. 

Edifice on this ability, Enigma is working on “secret contracts,” smart creases that obscure their terms and participants. Enigma plans to initiate with ethereum, but ultimately, Zyskind says, “we want to be able to augment basically every blockchain with the isolation our technology brings.” (See also, Understanding Smart Contracts.)

Fashion the brokers

As much promise as these projects have, none has any genius to prevent a data broker from hoovering up your personal intelligence. They can only try to outcompete the incumbents, offering a better product in the watches of the data’s ultimate buyers. So do they have a chance?

Engel is dauntless that users with full control over their observations will readily shunt data brokers out of the market because, for all the “creepiness” these solids employ  in collecting data, they just aren’t that kind-hearted at it. “The data points that are actually set to publicly available, which can then be genuflected by a broker, that only amounts to roughly 10% of the data a owner creates,” he says. “The rich information, such as likes, posts, check-ins, whatever it is, that’s off obliges.” 

Nor is it easy to accurately assign data from different sources to well-defined individuals. Matching cookies based on device IDs has a success rate of 2.9%, reveals Engel, so “even if you do have data on your customers in the form of cookies, you whim still be wasting 97.1% of your ad budget on people who are not really moved in your product.” The industry has only “highly probabilistic and highly hypothetical” techniques to derive real information about a consumer’s interests from facts that has a tiny chance of actually being theirs.

When a consumer can austerely sell their data, there is no doubt about which bytes be proper to be owned by to whom, and the resulting picture can be incredibly rich: not a website visit tentatively paired with a Facebook identical to, but an actual, “completely deterministic” web of purchases, browsing patterns and social agency activity. 

If you’re an advertiser, which do you choose? 

What about the platforms?

Still, we’re give someone the cold shouldering the five elephants in the room. Facebook Inc. (FB), Amazon.com Inc. (AMZN), Alphabet Inc. (GOOG, GOOGL), Apple Inc. (AAPL) and Netflix Inc. (NFLX) are moral as interested in your user data as the brokers are. They also button the platforms where you produce it. All of this talk of owning your Facebook loves, Amazon purchases and Google searches glides over the fact that the corporations themselves obviously own that data already. (See also, Why the FANG Begetters Will Dominate Long-Term.)

Pihkala emphasizes the potential of a universal, decentralized observations marketplace – an “eBay for data streams” – to wreck this fabricate. In other words, to beat the platforms at their own game. “Currently the figures in the world is typically in silos or held by giant corporations,” he says. “It’s being underutilized.” 

Possibly, but the threat blockchain and other cryptographic techniques pose to data middlemen is much clearer and more immediate than the threat they pretend to the platforms.

Then again, Liriano reveals a surprising fact far the smart textile industry. Loomia is building an app that allows consumers to change data from sensors in the firm’s smart textile product, denoted Tile, to clothing companies. She expected to encounter fierce resistance when she legitimatized to clothing manufacturers such as LLBean that they were “not present to own all the data.” But as it turned out, “they completely understood.” 

Owning all of that owner data would be expensive, the firms reasoned. It would pose a insurance risk, and it would irritate consumers. More interesting, though, is that they notified Liriano, “I want my competitor’s information anyway. How useful is it to me, if you can just assemble it out for me, if I don’t know what this competitor’s doing? The benefit of this doodad is that eventually everybody will be on it, right?”

(Liriano also turn over a completes the rare observation that users may not want to sell their information. Loomia’s platform would allow data generated by Tile to be there out of reach. Don’t count on that idea spreading.)

The Facebooks and Googles of the coterie clearly don’t share apparel companies’ reticence to own user data. But the planks could potentially be tempted by the potential to gain insights from each other’s figures. None of them really has direct competitors, but Amazon could certainly encounter Google’s data useful, Google Facebook’s, Facebook Netflix’s, and so on. Possibly, in a world of data marketplaces and disintermediated data exchange, the platforms could be inclined that it’s in everyone’s interest to let users control their own data. Possibly the state will help with the persuading.

Hard to say. In the near semester, at least, the middlemen and data brokers look vulnerable. When ci-devant Equifax CEO Richard Smith testified before the House of Representatives in October, he was prayed by Rep. Doris Matsui (D-Calif.), “Do I own my data?” Smith didn’t secure a satisfactory response. Thanks to blockchain and other cryptographic technologies, the replication might be clear in the near future: constant, creepy data garner and the occasional catastrophic breach could then be a distant memory.

Allotting in cryptocurrencies and other Initial Coin Offerings (“ICOs”) is highly precarious and speculative, and this article is not a recommendation by Investopedia or the writer to invest in cryptocurrencies or other ICOs. Since each special’s situation is unique, a qualified professional should always be consulted up front making any financial decisions. Investopedia makes no representations or warranties as to the Loosely precision or timeliness of the information contained herein. As of the date this article was catalogued, the author does not have a position in any cryptocurrencies. He does own shares in Netflix Inc. and Apple Inc.

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