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Blockchain technology brings a new era of data security, but it also raises concerns when it comes to data privacy.
Blockchain is the ideal solution for traditional storage systems because it is confidentiality-oriented. It removes the need for third-parties ensuring a high degree of safety. However, data privacy doesn’t support blockchain, Cointelegraph reported.
“They're very secure. They're one-way vaults — i.e., you can put precious things in them but not take it out. The contents can be seen by the world,” Vijay Rathour, a partner at the digital forensics and investigations group of Grant Thornton who compared the technology to bank vaults made of glass.
However, according to Rathour, even bank vaults can be used to hold blood money or stolen assets. He also noted that the effectiveness of the vault doesn’t mean that what’s inside them is also good.
“Is it [data stored on blockchain] suitably anonymised? Would I want my passport visible to the world in a glass bank vault for the world to see? No. But I would probably enjoy the benefits of an encrypted version of my passport being held on the 'cloud' securely in this blockchain,” he added.
Blockchain offers immutability which is good for data privacy. However, there are two challenges because immutability conflicts with informational storage laws and inaccuracies on a blockchain can never be corrected.
“Indeed, the key feature of a blockchain is protecting the integrity of data by rendering it immutable. However, exactly that feature can become a problem if the data is not required, wanted or correct anymore. It is virtually impossible to remove it. This creates a new sort of privacy problem,” said Thomas Stubbings, chairman of the Cybersecurity Platform of the Austrian Government.
Jonathan Levin, co-founder and chief strategy officer of cryptanalytics firm Chainalysis stressed that “total anonymity and complete transparency are bad.” He also added that “complete anonymity opens the door to illicit activity” and “complete transparency means no privacy at all.”
In related news, Chainalysis has partnered with cryptocurrency exchange CoinField to prevent money laundering. CoinField will use the Chainalysis KYT software to catch money laundering and illegal activities in real-time.
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