Without blockchain, consumer data is owned by too many infrastructures that may not have the best security options.
Identity theft is one of the biggest problems that retail and service companies, financial institutions, government agencies and the customers they serve face on a daily basis. No one wants to be responsible for a major — or even a minor — identity theft issue, especially when someone has entrusted you with their personally identifiable information.
Just how pervasive is identity theft?
According to a 2018 online survey conducted by The Harris Poll, nearly 60 million people in the United States alone have been affected by identity theft. In 2017, almost 15 million people experienced identity theft. Javelin Strategy & Research notes that in 2017 alone, $16.8 billion dollars was stolen from individuals who were victims of identity theft. The Identity Theft Resource Center suggests that in 2017, a record high number of 1579 data breaches occurred and exposed over 178 million records.
You have likely heard of some of these major data breaches and theft of personal information. One of the biggest ones was Equifax in which millions of customers’ names, addresses, contact information, driver’s license numbers, and Social Security numbers were stolen. Other companies including Delta, Orbitz, and Saks Fifth Avenue also know what it is like to feel this type of data breach pain.
The Problem With Centralized Systems
Almost all systems you will ever encounter are either centralized or decentralized.
Up until now, centralized systems have seemed to work for many companies. All data and activities involving the use of that data were under the control of one single point of contact or organization. In such a system, there is only one point in which all the work — activities, changes, and actions — get done or changed. A centralized platform insists all data come through one single point, which is often a digital hub or server.
In a centralized system, however, when that one point of control gets attacked by an internal or external force, it creates a pathway for masses of data to be stolen. Let’s use Facebook as a most recent example. Cambridge Analytica reportedly got access to Facebook’s centralized system and exposed the data of millions of people. If Facebook were a decentralized system, it is unlikely that would have happened.
What Makes Centralized Systems Attractive?
Within centralized systems or platforms, it is easier to track information and data as it comes in and as it goes out through one command place. This is the primary reason such a system is easier to implement and more attractive to most people.
Google, for example, collects massive amounts of data because all of the data goes to a single point of collection. Google’s Gmail has a spam service that can literally see into every Gmail user’s email account, hence helping to prevent unnecessary spam from entering the inboxes.
The opposite of a centralized system is a decentralized system that allows for users to have more privacy. Information doesn’t go through just one point; instead, it passes through several points and is much more difficult to keep track of across the network. With the advent of new data privacy and data protection laws, it is more comforting to consumers that their information is safe and less trackable.
Blockchain Could Be an Answer
What could help to prevent fraud and identity theft?
Some seem to believe the answer could be found in blockchain technology. Recent calls for consumers to be able to take control of their personal data and identity is making blockchain’s decentralized system more attractive. Blockchain’s bent toward straightforward accountability and transparency could also help to ensure the development of stronger systems that grant users more control.
Blockchain could act as the source for answering the question of authentic identity as opposed to the question of suggestive identity. Such systems can ensure information is secure through cryptographic keys. Cryptographic keys act more like long and complex passcodes to help ensure information is fully secure. When the keys are placed on a blockchain, users can verify their information on the ledger instead of at the point of contact with a retailer or organization.
Further, mobile access will ensure these blockchain ledgers push information where it is needed and when it is needed, such as to a doctor. While some organizations will have complete profiles of customers, it will diminish the current, always-available model of information. Data storage can now be customized to set custom permissions ensuring only suitable data is provided when it is needed.
Blockchain technology will continue to challenge traditional formats of data by giving control of personal data back to the individual. Trust is far too important for companies to lose on consumers. Technology continues to advance and identity fraud will soon be met with a permanent solution.