The internet has morphed from a unidirectional portal allowing users access to platforms, into a world where we knowingly – and sometimes unknowingly – create online profiles rife with our personal information, habits and preferences.
The current design and use of the internet results in the daily generation of terabytes of personal data. As such, it is essential that a potential user consider whether a platform’s design is intended to benefit or exploit consumers. Companies have focused on acquiring vast amounts of such data, and as such, recent privacy-focused legislation, like the European Union’s General Data Protection Regulation (GDPR), have attempted to protect and empower individual users and reshape the way organizations approach data privacy. Unfortunately, recent events such as the Equifax hack and the unsolicited harvesting of personal data via Facebook have proven that it is a matter of when, not if, centrally stored data will be compromised.
Blockchain technology represents the opportunity for a paradigm shift regarding the storage and use of your personal data, one that is able to remove central points of failure and empower individuals to control and monetize on their own data. A network drastically improves security over the underlying data. In addition, by preventing any single entity from controlling the information, blockchain removes the ability for these entities to sell or monetize your personal data. Instead, transaction data could be encrypted using a unique digital signature of the user (a private key), opening up the potential for users to monetize by decrypting parts of their own transaction history and personal data for advertisers or brands.
There are a number of reasons for businesses to incorporate blockchain technology into their offerings, including lower costs, added security, and its unique ability to leverage crypto economics to incentivize customer behaviour. The design of new blockchain platforms and their accompanying ecosystems will likely govern the interpretation of property rights on a blockchain. The use of blockchain can allow for a user to decide how and when their data is utilized and to be compensated for such use. While such compensation likely will not be life changing, Facebook was earning on average $20.21 per user in 2017, ownership of our own data and the ability to police its use is no small matter. The tokenization of ecosystems created atop a public blockchain allows for incentivization mechanisms to be built in, allowing for compensated and permissioned release of personal data. In such ecosystems, individuals would have ownership of their personal data until they grant a third party access, at a price.
However, blockchain-based applications could potentially face jurisdictional issues if care is not taken in the design of said applications. The computers, or nodes, validating transactions on a blockchain can conceivably be (and arguably should be) in a variety of jurisdictions, many of which have differing legislation governing title and rights. As each node is playing a role in validating a transaction, it is conceivable that every transaction could be governed by each jurisdiction which hosts a node. Regulatory authorities have, for the most part, not yet ruled on these jurisdictional issues, but it is easy to envision a contentious or highly litigious scenario. It may be wise for the creators of blockchain-based applications to consider the inclusion of a governing law and jurisdiction clause in smart contracts and public-facing documents to provide certainty as to the legislation to apply when governing the rights of the parties to an agreement.
This blog can also be viewed on the Techopedia website.