Blockchain and Privacy: Restoring Freedom

Privacy is a fundamental element of freedom. Only with freedom do humans flourish. Only with freedom do creativity, innovation and dissent exist. We should fight for our freedom and we believe blockchain will provide the technology we need to win the fight. People argue that the coming of the internet means privacy is a thing of the past. Those people will be proven wrong.

There are several issues blockchain developers are attempting to tackle. These include: returning the value of personal data to its owner, protection of personal data, and the security of personal identification. The protection of our privacy has never been more important than it is in the age of the internet.

This article will explore security and identity management, and the applications of blockchain technology for information security and privacy.

The value of personal data

Historically, civilization benefited from central parties having access to personal information. Centralization provided critical organization and protection for key data. Members of society engaged in an explicit or implicit social contract with those parties: privacy is essential and when I give you my information, you will protect it.

This all changed when we went online. The promise and excitement of the internet was so noisy as to drown out privacy concerns.

As a result, we handed over detailed personal information that was mishandled and misused. Vulnerable third parties collected data and violated our privacy when their security measures did not stand-up to hackers, and internet giants knowingly sold our data for economic gain.

When data leaks

Privacy exists in tension with our efficient nature. That nature, with innovation, propelled the move from the telegraph, to telephones and radios, and to the internet. With each technological advancement, the ability to track and identify communication dramatically increased.

Our desire for speed and convenience led us to voluntarily sign-up for online services to make our lives easier. In so doing, we gave critical identifiers to third parties who have not necessarily intended to misuse our data, but have nonetheless failed to provide adequate privacy protection. In the age of the internet we have sacrificed privacy for speed and efficiency.

Identity fraud is becoming an increasingly problematic issue as our society transitions to operating online. The Equifax data breach in the summer of 2017 resulted in the release of 145.5 million US Social Security Numbers, the names and dates of birth of 146.6 million people in the US, UK and Canada, as well as 38,000 images of drivers licenses and 3,200 images of passports. Information of this calibre can be used to directly imitate someone online, as a typical online verification may ask for a birth date, name, and address.

Reuters reported this event as the most costly data breach in history costing more than $600 million to the company including costs to resolve government investigations into the incident and civil lawsuits against the firm. Identity theft impacts its victims even more so.

CNBC reports that US consumers lost $12B in 2017 due to identity theft and according to the aftermath study performed by the Identity Theft Resource Centre (ITRC), 66% of respondents experienced fear regarding their personal financial security, 53% felt a sense of powerlessness or helplessness, and 7% reported feeling suicidal.

The breach in protection of our data is clearly damaging to society.

Protecting privacy and data

Just as blockchains have allowed the transmission of massive sums of money without an intermediary, so too can these immutable, cryptographically-protected transmissions be used to send personal data. With blockchain innovation comes the realization of methods of identity protection and personal data transmission that can avoid the catastrophe of third-party data leaks.

Major data leaks could be prevented if third parties have key identifiers verified and never store information on their servers, but rather rely on a secure platform to verify identity without providing data to the company requesting the identification validation.

Decentralization and data security

A first-mover in the the blockchain space of identity verification services is Civic. Civic is developing a platform to facilitate the secure identity ecosystem that connects a blockchain-based identity profile to business and organizations. Civic markets its platform to individuals, to protect and control their identities, and Civic markets its platform to business to help them validate complex identities.

Take for example travelling: You need to verify your identity with Air Canada. They now store it and have to protect it. Checking into your hotel means another entity will collect, store, and try to secure your personal information. The uber you take to your cocktail bar. The scan of your ID by the doorman. The restaurant you give your credit card. It becomes increasingly clear how simple it is for one of these entities to slip up and let your personal data slip through the cracks.

With blockchain technology powered by smart contracts, rather than entering your passport number, credit card number, and personal information into the Air Canada website, instead you are sent a QR code to your phone as a request for the information from Air Canada. The information they need is already validated, encrypted and stored in the Civic app, and thus you can easily send it off knowing that it is a direct, encrypted transmission between only you and Air Canada. Air Canada will receive confirmation of your identity and all other requisite information for travel, without actually gathering the data.

By allowing the storage of all of your information on one secure cryptographically protected platform that provides verification of key trust identifiers (but not the information itself), you can dramatically reduce the number of times data is shared, thus reducing the risk of data breaches.

Improving digital identities

Blockchain technology offers the opportunity for individuals to safeguard their privacy. And providing proof of identity is critical to trust in business and everyday life.

Often, we offer a lot of information when only a little information is required. Take for example getting into a bar: Generally, you provide your driver’s license or passport to gain entry. This document verifies you are of age to enter the bar. But by providing that ID, you are also sharing your home address, height, weight, eye color, and information about disabilities that no bar needs to collect. We do this because there hasn’t been any reasonable alternative to allow mutual ‘trust’ between you and the doorman or any other third party requiring trust. Until now.

With apps like Civic and Insights Network, individuals have the power to build a unique digital identity with a variety of attributes to be shared with institutions and the public on as as-needed basis.

Blockchain provides a way to answer specific questions while protecting aspects of our identity that we do not need to share. With blockchain, we will achieve greater privacy on the internet. Imagine a digital gatekeeper, who you control, who shares only necessary information: answers to yes or no questions, for example: Are you 19 or older? Are you Canadian Citizen? Do you have a criminal record? Do you like Tide detergent? When an individual only has to provide essential identifiers, opportunities for discrimination decrease.

This represents a big step forward for privacy on the internet and promotes the uprising of marginalized individuals.

Once we have privacy, we can be free thinkers.

Blockchain promises to restore freedom of thought for our digital selves and provides promises of digital self-actualization. Psychologist Abraham Maslow theorized that self-actualization represents growth of an individual toward fulfillment of the highest needs. It is only in this higher state,when all basic needs – like privacy – are met, that we are free to explore creativity, innovation and dissent. Futurists take this even further to postulate the existence of an evolved digital self or meta-self that exists only in the digital space.

Profiteering of personal information

We may find our privacy is at odds with our profoundly social nature. Our desire for social connection leads us to voluntarily publish bits of our identity online. In so doing, we have given parts of our identity to hundreds of different platforms, and rather than protecting our data, those companies flagrantly commoditized it, filled their pockets, and left individuals exposed. Internet giants gobbled up the opportunity to monitor and monetize their users.

Facebook was recently in the spotlight for the sale of personal information of hundreds of millions of its users. While an argument can be made the you’re providing access to your information by way of usage of the platform, users should be able to decide what information about them is sold to third parties. Any other environment promotes violation of privacy. While the obfuscation of breaches of privacy in usage contracts will be left to the courts to decide, companies declaring that they own parts of our identity feels inherently violating because it violates privacy in essence, if not in law.

By creating security and privacy at the individual level, solutions from different blockchain projects hope to improve digital identity and give the power back to the people.

Taking back ownership of personal data

The idea of ownership of information by its creator is a major tenet of blockchain startups.They aim to reduce the centralization of the sale of data to third parties and put power back in the hands of the individual.

One such startup is They provide the ability to sell your personal data in exchange for cryptocurrency. You have the ability to answer questions, surveys, and provide information about yourself directly to the party who is paying for it, instead of through a service like Facebook. The reason an idea like this is so important is that it puts an end to the sale of data by-products created by a user without their consent. It also distributes profit to individuals rather than companies, helping to decentralize money and power.

The Revolution

Blockchain promises a revolution in many different ways: it provides decentralization and security to move value and information over the internet in a more civilized manner. It provides the tool for increased privacy, security, and freedom. This tool correctly applied has the power to re-distribute wealth, power, and ownership of personal data back to the people. Blockchain has the power to liberate the people. Blockchain has the power to change the world.

Disclaimer: This commentary is provided for general informational purposes only and does not constitute financial, investment, tax, legal or accounting advice, nor does it constitute solicitation to buy or sell any securities referred to. Any tax information published on this blog is based on the facts provided to us and on current tax law (including judicial and administrative interpretation) during the time of publication. Tax law can change (at times on a retroactive basis) and these changes may result in additional taxes, interest, or penalties. Practice due diligence and if in doubt, speak with a member of our team.

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