How does Blockchain Support Data Privacy?

Blockchain Privacy Protection

Since the internet spread to every part of the world in the early 2000s, data has become the new oil.

Today, everything, from your online activities to the Internet of Things, creates huge amounts of data (IoT). This information is very useful for many different things, such as research, marketing, and business.

Users, on the other hand, have no say over how their data and personal information will be used, because centralized data storage and data management methods are what they are. Without your permission, anyone could see or buy these personal records.

Data is also vulnerable to online breaches and hacks because it can be used in so many ways today. And because effective data management and security services are getting more expensive, businesses often don't take the necessary steps to protect data.

Blockchain technology, on the other hand, offers a creative and inexpensive way to solve all of these problems. Most blockchains and DLTs (decentralized ledger technologies) organize data so that it follows security rules and gives users full control over their data.

By putting data on blocks and linking them in order, blockchains can't be changed. This makes it impossible for hackers to mess with them.

In this article, we'll look at some of the ways that blockchain technology helps protect the privacy and integrity of data.


Data Privacy Concerns

One of the biggest concerns about data protection these days is the privacy of information that can be used to identify a person (PII). Its name tells you that it has information that can be used to find and identify a person.

PII includes things like biometric data, social security numbers, dates of birth and death, geolocation data, phone numbers, addresses, postal codes, etc. It is thought to be the most sensitive type of information.

Still, most organizations store the PII of their users without encrypting it. Hackers can easily take this information, use it to pretend to be someone else, and ruin their reputation.

Even though there have been a lot of new developments in cybersecurity and data privacy, privacy breaches are at their highest level. Flash's end-of-year report says that in 2021, there were 4,145 breaches that were made public, and more than 22 billion records were stolen.

Based on these facts, 2021 is the second-worst year for data privacy. But at the rate things are going, 2022 is expected to have 5% more data breaches than last year.

Even though the organizations that collect and store data are responsible for keeping it safe, they can use information about users for their own purposes, such as to improve their services and promote themselves.

Also, the amount and type of information being collected grows every day, and most users aren't even aware of it.


How does Blockchain Support Data Privacy?

Decentralized Identity

As we use different platforms, our digital identities are created naturally. Over time, new data, like personal information and records of online activity, keeps getting linked to this identity.

The identity could be anything, like your device's IP address, and the linked data could include usernames, passwords, online search history, online shopping history, medical history, and more. Since this digital identity is not kept in a personal database, the user has no control over what companies and organizations can or cannot see.

This problem can be easily solved by putting a self-sovereign identity on the blockchain. This is called a "decentralized identity" (DID). It is one of the biggest backers of this technology, which aims to make privacy and security of data much better.

DID let’s people store their information separately from the databases of the websites they use. Instead, it is kept on personal devices like PCs, cell phones, cloud storage, and hard disks that are not connected to the internet.

Then, they can put the links to this information on the blockchain, which organizations can use to verify what users say about their personal records.

A person can make more than one DID for different reasons. Each DID is protected by a private key. The person who has the private key is the only one who can prove that the data stored is correct. It works almost the same way as verifying an email address.

When you use an email address to create an account on a gaming platform, the site may ask you to verify your digital identity by sending security keys to the email address you provided.

The only difference is that the user, not the email server, will own the DID, and the user will decide what information to share.

Blockchain-federated Identity

DIDs and decentralized databases can help users protect the privacy of their personal information and also make it harder for hackers to get in.

Most of the time, the data collected by different platforms are kept on a single central server or database. Users of the system are given what is called a "federated identity," which is a digital name.

This identity makes it easy for users to move quickly between different platforms. It can also be used to access the information on the server and use the services that the platforms offer.

Using a single sign-on (SSO) authentication protocol makes it possible to set up a federated identity framework. SSO lets people use just one set of login credentials for all websites and apps that are linked.

Even though this method makes the whole process easier for users because they don't have to remember different passwords for each application, it does a poor job of protecting data.

For example, think about a health care system, which might include hospitals, pharmacies, urgent care clinics, and insurance companies, among other places. If the system follows traditional user data management practices, records from each entity are kept on one central SSO-protected database that is managed by a third-party provider.

Such a system will be easier to hack because the hacker only needs to get through one layer of security to get to all the stored information.

The fact that blockchain ledgers are not centralized makes it possible to use federated identity and SSO protocols in a much more efficient way. In a blockchain network, the people who use it can figure out and verify each other's identities without a third party.

And because the blockchain can't be changed, the information and identities will be much safer than in a central database.

In addition, participants in the blockchain-based federated identity framework will be able to use smart contract audits to control how much of their data is shown to each entity. It also helps businesses and organizations keep an eye on how the whole network is doing.

Zero-knowledge Proof

Zero-knowledge proof is a type of cryptography that verifies the accuracy of information without giving up the user's privacy or control. If you are unfamiliar with cryptography, you should first learn what is cryptography. In this method, the user (the prover) tries to show the validator (the verifier) that a piece of information is real without exchanging or revealing any data.

Take the case of a store that sells cigarettes. A person who wants to buy cigarettes must show that he or she is at least 18 years old, which is the legal age for smoking. One way is to show your driver's license to the person who checks. But the license has more information than is needed, like the person's name, height, gender, home address, etc. If this information gets out, it could be used wrongly or stolen.

The prover could also use zero-knowledge proofs to check the person's age with a mathematical code. The state can do this by putting the license numbers of all people who are 18 or older and have a driver's license on the blockchain at the time the licenses are given out. Then, the fingerprints of these people will be hashed to their license numbers.

In the earlier example, when a person wants to buy cigarettes, all they have to do is give their fingerprint to the hash generator. The verifier can then check the blockchain to see if the fingerprint is linked to a license for someone 18 or older.

So, the prover's legal age will be checked without them having to give away any private information.

In most decentralized ledger technologies, there are two main types of zero-knowledge proof: interactive and non-interactive.


Most zero-knowledge protocols are used in an interactive way. The prover has to solve a series of algorithmic puzzles that the verifier gives them. These codes are made so that the prover can only solve them if it has the information it says it has.


These zero-knowledge proof protocols don't need the prover and the verifier to talk to each other. Instead, both sides can check a shared source of data pointers to see if the claim is true.



Since the World Wide Web was created, businesses and enterprises have been slowly moving their business models to online platforms and digital databases.

Because of this, the 5 billion people who use the internet every day make 2.5 quintillion bytes of data every day. This trend can be seen almost everywhere and in nearly every field.

Even 60% of the global GDP is expected to be digitalized by the end of 2022. This will make it harder to tell the difference between the digital economy and the real economy.

In the meantime, blockchain technology is changing quickly and offering new ways to manage and store data that have never been thought of before.

With the help of this idea, we can set up ethical data standards that protect the privacy and security of users' data at all times.

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