To protect consumers such as enabling self-sovereign identity, blockchain technology poses massive security issues to users who are unaware of the technology’s risks blockchain data privacy features leverages. Around the world, blockchain can create a complete and complex private network of computers, if executed and designed well. However, Blockchain currently faces problems with consumer safety and privacy that work out before it can become the computational norm. Some of these issues include:
Public Ledgers and Blockchain Data Privacy
A core aspect of Bitcoin’s success was the public ledger through the self-perpetuating blockchain anyone could verify transaction records. Similarly, the feature continues to pose problems for Bitcoin (BTC) and posed for all coins that use this method. At every transaction on the blockchain, the ability for any user to look was good for verification. It quickly became a tool for their spending habits and tracking people. After that, through the use of their digital assets, criminals and police can use the blockchain to find people. Consumer data can breach.
However, consumer data is not only used by outside individuals and accessed. To control over the users’ data, a fully centralized blockchain would award the owner/creator full. Cardano (ADA) are fully decentralized Blockchains, meaning no one individual or group controls the blockchain and the community controls the project. On the other hand, a dystopian nightmare for any citizens living under it is a nationally centralized blockchain.
In addition, to implement something like this the first country will most likely be China. Considering a highly monitored and Chinese-exclusive internet the Chinese Communist Party has already implemented. It would not be unlikely now the national digital currency. In conclusion, to use the blockchain If Chinese citizens force, the self-sovereign identity that other blockchains could offer threatens.
However, in the field of economics, blockchain and technology built on top of it have revolutionized what privacy means. When the coin uses as a P2P (peer-to-peer) cash-sending system like Venmo or PayPal as well as online marketplaces, Bitcoin proved its concept. For its decentralization, the Silk Road quickly took up BTC and privacy from authority figures. On dark web marketplaces sellers of illicit goods taking place.
With the use of stealth addresses, Monero (XMR) takes the technology even further. By creating encrypted, on the ledger one-time addresses use to denote interactions between users instead of their real wallet addresses, complete consumer privacy achieves. This level of security reaches between the network and the user, other users, and any outside onlookers.
The risks of blockchain
There are two types of Blockchain: Permissionless and permissioned chains.
In the network, without any vetting to participate Permissionless blockchains allow any party. On the blockchain framework, by an administrator or consortium’s evaluation permissioned blockchain forms of the participation of an entity. Therefore, the business logic encodes using smart contracts, regardless of the type of blockchain. On the blockchain framework, smart contracts are self-executing code. Moreover, it allows for straight-through processing, to execute transactions means that no manual intervention requires.
On the blockchain, outside entities refer to as “oracles,” with any public address they rely on data from and can act on data associated or with another smart contract. To drive reduce costs or efficiency blockchain technology promises, it has certain inherent risks. To reap the benefits of this technology firms must understand these risks and the appropriate safeguards. Additionally, the evolution of regulatory guidance and its implications for understanding it.
Under three categories, these blockchain risks can be broadly classified :
- Similarly with current business processes to those associated nuances gets introduces for which entities need to account.
- In conclusion, Blockchain technologies expose institutions to risks
.2.)Value transfer risks:
- Without the need for a central intermediary, blockchain enables peer-to-peer transfer of value. Assets, identity, or information are some of the values transferred.
- In conclusion, have the interacting parties to new risks by central intermediaries that were previously managed to this new business model exposes.
3.)Smart contract risks:
- On the blockchain, smart contracts can potentially encode complex business, financial, and legal arrangements.
- After that, the one-to-one mapping could result in the risk associated with these arrangements from the physical to the digital framework.
Transform your business processes
By disintermediating central entities or processes, improving efficiencies, and creating an immutable audit trail of transactions, the blockchain peer-to-peer framework offers the potential to transform current business processes. Above all, to decrease interaction, lower costs, or settlement times, and improve transparency for all parties it provides there are opportunities.
Transformation business models from a human-based trust model to an algorithm-based trust model blockchain technology takes place. Moreover, this might expose firms to risks that they may have not encountered before. To respond to such risks, firms should consider establishing robust governance, risk management strategy, and controls framework.
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