How Can Blockchains Help Us Regain Our Privacy Part 3

Blockchains with different protocols allow varying degrees of anonymity, confidentiality, and privacy. They can enable the protection of healthcare, financial, and other personal data while still allowing this data to be used in all the essential applications, including Artificial Intelligence applications. For example, a user could have a blockchain with personal health information and only release particular parts of this information (such as heart prescriptions) briefly to product or service providers (such as heart bypass manufacturers) for particular purposes.

Although a blockchain is a public ledger, stored across the network, it can enable anonymity and trust, as demonstrated by multiple blockchain-based applications and high-privacy cryptocurrencies already in use.

Currently, the personal data collected by third-parties is usually stored on centralized databases with a single point of failure. Leaks of this data often go unnoticed and unreported. Once our data is in the hands of an untrusted party, we have no control over the ways it is used.

The Blockchain Solution

As cryptocurrencies have shown, cryptography and well-thought-through economic incentives can create a secure way of storing and managing information, including personal data.

Private data on the blockchain is protected by cryptography. Below are some ways in which blockchain technology can be utilized to protect personal data, even while making pieces of that data available for processing by algorithms.

Homomorphic Encryption

A new sort of encryption called ‘Homomorphic Encryption’ allows for computations to be performed on encrypted data without first having to decrypt the data. This means the privacy and security of the data can be preserved while calculations are performed on it. Only users with the fitting decryption keys can access the private details of the data or transaction.

Cryptographic techniques such as Zero Knowledge Proofs (ZKPs) and zk-SNARKs already use homomorphic encryption. Coins such as Zcash and QURAS Coin use zk‑SNARKs to encrypt the data and only gives decryption keys to authorized parties for them to see that data.

State Channels

The blockchain could present models for non-blockchain solutions, or be part of a hybrid solution to protect privacy.

State channels are blockchain interactions which could occur on the blockchain but are instead conducted off the blockchain. State channels work through three different processes.

1. Locking: the transaction is locked using a smart contract on the chain.

2. Interaction: interactions happen off the chain or on a side chain.

3. Publishing: after the interactions are finished and the state channel is closed, the smart contract is unlocked, and a reference to the transaction is published on the blockchain.

State channels could enable service providers to keep user data private and secure. Transactions could happen off the blockchain with a reference hash of the transaction (revealing no confidential details about the transaction) being saved on the blockchain.

Conclusion

Our private information is currently centralized on the internet and in different databases controlled by a few players. Exponential rates of growth in the creation and collection of data can be expected to continue to erode our privacy further. Blockchain-based or blockchain-inspired solutions could help reduce this erosion of privacy while allowing us to benefit from faster transactions, better service, and more capable algorithms.

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