From Smart Contracts To Limited Access: How Blockchain Technology Can Help Support Data Privacy

Blockchain is a revolutionary technology allowing decentralised and distributed data storage.

In some blockchain networks, access to data is restricted to authorised parties only.

Source : Getty

In the age of digital information, data privacy has become a critical issue for individuals and organisations alike. With the rise of cyber attacks, data breaches, and unauthorised access to personal information, it is essential to have effective measures in place to protect sensitive data. Blockchain technology offers a promising solution to enhance data privacy by providing a secure and decentralised way of storing, sharing, and managing data.

What Is Blockchain Technology? 

Blockchain technology is a distributed ledger that uses cryptographic algorithms to secure and validate transactions. A network of computers maintains the ledger, and each transaction is recorded in a block linked to the previous one, forming a chain of blocks or a blockchain.

How Can Blockchain Ensure Data Privacy? 

Decentralised control: Blockchain is a revolutionary technology allowing decentralised and distributed data storage. Unlike traditional centralised and decentralised databases controlled by a single entity, blockchain technology provides a network of users with a copy of the same ledger. This eliminates the need for intermediaries and ensures that a single entity does not control data, reducing the risk of data breaches and unauthorised access.

For example, consider a supply chain management system that uses blockchain technology. All parties involved in the supply chain, such as manufacturers, distributors, and retailers, can access the same ledger and view the entire history of the product from its origin to its final destination. This provides transparency and accountability and reduces the risk of fraud or tampering with the product. Additionally, the network records and verifies any changes or updates to the ledger, ensuring that the data is tamper-proof and secure.

Immutable record-keeping: Once a transaction is recorded in a block, it cannot be altered or deleted. This ensures the integrity of the data and makes it almost impossible for unauthorised parties to access, modify, or delete data.

For instance, let's consider a real-life example of how blockchain's immutable record-keeping feature could be applied in healthcare. Suppose a patient's medical records are stored on a blockchain. Each time a new record is added, it is encrypted and added to the blockchain as a new block. This ensures that the patient's medical history is secure and unalterable, preventing unauthorised access or modification of the data. It can also facilitate better sharing of medical records between different healthcare providers, reducing the risk of errors and improving the quality of care.

Smart contracts: Blockchain technology allows for the creation of smart contracts, which are self-executing contracts with the terms of the agreement directly written into code. These contracts can automate processes and ensure that data is only shared or accessed under specific conditions.

For example, a smart contract can automate claims processing in the insurance industry. The insurance policy terms can be written into the code, and when a claim is filed, the smart contract will automatically execute the claims process based on the predefined terms. This can eliminate the need for intermediaries and reduce the time and cost of traditional claims processing.

Permissioned access: In some blockchain networks, access to data is restricted to authorised parties only. This means that participants in the network must be granted permission before they can access or modify the data. This ensures that data is only accessible to those authorised to view it.

For instance, manufacturers, distributors, and retailers in a blockchain-based supply chain network may have permissioned access to certain data, such as product origin and delivery details. The network may grant access to these entities based on their role in the supply chain, ensuring that the sensitive data is only available to authorised parties and enhancing data privacy and security.

Overall, blockchain technology provides a powerful tool for enhancing data privacy. By leveraging its decentralised, secure, and consensus-based architecture, blockchain can help protect sensitive data in various sectors, including healthcare, finance, and government. As blockchain technology continues to mature and gain wider adoption, it will likely become an essential tool for safeguarding data privacy in the digital age.

(The author is the CTO and co-founder of Mudrex, a global crypto investing platform)

Disclaimer: The opinions, beliefs, and views expressed by the various authors and forum participants on this website are personal and do not reflect the opinions, beliefs, and views of ABP Network Pvt. Ltd. Crypto products and NFTs are unregulated and can be highly risky. There may be no regulatory recourse for any loss from such transactions. Cryptocurrency is not a legal tender and is subject to market risks. Readers are advised to seek expert advice and read offer document(s) along with related important literature on the subject carefully before making any kind of investment whatsoever. Cryptocurrency market predictions are speculative and any investment made shall be at the sole cost and risk of the readers.