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Blockchain: Data Protection Solutions

How to use Blockchain technologies to protect personal data

Personal data is something that we want to protect as much as possible. From time to time, there are reports of personal information databases being hacked. Can this be avoided? We’re going to talk about Blockchain technology – simply about something complex.

Blockchain literally means “chain of blocks”. This type of encryption is used to store digital data located on multiple computers. They are connected to a single network and do not have a centralized computer. How does Blockchain work for beginners? All information about the data is contained in the chain of blocks, and each new link in this chain contains both new information and data from the previous block. This unique information is linked to a specific person and cannot be deleted, changed, or falsified.

How and When The Blockchain Appeared

In the 1990s, several American scientists developed the concept of a data block based on cryptographic algorithms and a complete binary tree containing hashes of data blocks and hashes with added values. This system generated an authenticity certificate with a fixed creation date. It was a theory until 2004 when it became clear how blockchain works. Harold Thomas Finney II, an American programmer, became the creator of a new system – RpoW – the first prototype of a cryptocurrency.

The next stage was a decentralized payment system based on blockchain technology – Bitcoin. Today, blockchain is used for fast and reliable transfer of digital data.

What is blockchain and where it is used?

Blockchain does not store digital data; instead, all transactions that have been verified for authenticity are recorded in chronological order in their blocks. Records of transactions are combined into blocks, and blocks are formed into chains. Any attempt to modify or delete records will result in the destruction of the chain of blocks.

This technology is specifically designed to protect personal data based on cryptography. After transaction data is formed into blocks, they undergo cryptographic verification and are recorded in a database. All information related to blockchain technology is stored in a well-protected, decentralized network. Access to it is opened using special cryptographic keys. Thanks to this, it is impossible to forge information stored in the network.

Bitcoin and other cryptocurrencies use blockchain to generate tokens, make purchases, and exchange value. The PayPal payment system allows payments with cryptocurrencies. While everyone knows about Bitcoin, the creation of digital national currencies is still in its early stages. China was a pioneer in this area, creating the digital yuan, which was officially adopted in the global economy. A blockchain wallet application is created to work with digital assets, storing records and the history of account transactions.

There are no limitations on the areas of blockchain application, it is in demand wherever the speed of information transfer with the highest degree of protection is important.

Other areas where personal data protection is important:

  • Smart contracts. Encrypted digital contracts based on cryptography with automatic control of the contract conditions. They confirm the authenticity of the product and protect against illegal actions. They allow reducing transactional and possible legal costs that inevitably arise when concluding traditional contracts.
  • Electronic waybills. The main purpose is to track the path of the goods from the manufacturer or supplier to the end consumer.
  • NFT stands for Non-Fungible Tokens, which are unique tokens that are not exchangeable and carry information about the owner’s rights to any virtual object. These can be photographs, digital paintings and illustrations, virtual 3D models and 3D videos, music, and so on.
  • The video game industry. Popular GameFi projects use blockchain technology and NFTs in online games with paid content. Players earn virtual money that can be withdrawn from bank cards. In addition, the technology allows them to make trading operations in the game, buying and selling artifacts and characters.
  • Decentralized financial assets. Using services and applications with distributed ledger technology on the blockchain, DeFi allows for investment in new types of digital assets without intermediaries at any level, and with complete decentralization of processes and financial flows.
  • The healthcare industry. Personal data protection is implemented in medicine through electronic medical records containing personal data. Blockchain technology provides data retrieval, storage, and exchange, as well as data immutability.

How reliable is the Blockchain?

Despite the high reliability of the technology, there is always a risk that it will be subject to hacking attacks. For example, during the period from January to September 2022, hacking attacks on blockchain platforms caused damage to $2.5 billion (according to the Slowmist Hacked and Atlas VPN report).

Losing the hash key that opens access to a blockchain wallet will result in a complete loss of assets with no possibility of recovery.

A secure and decentralized network is based on a secure system of nodes, or simply put, participant computers, united into a single network. If one or more computers lack the necessary security protocols, the data obtained can be hacked or altered.

Prospects of Blockchain Technology

Despite being introduced over 10 years ago, blockchain technology remains more accessible to large corporations that can afford to invest in the development of new technologies.

This system has a high level of protection against external interference, and in the future, blockchain will allow the processing and storing of information without human intervention.

At present, blockchain technology is mostly used as a financial instrument. There are already cases where this technology has significantly reduced the time it takes to conduct large international transactions from a week to a few hours.

Another potential application of blockchain technology is the reduction of document processing time and the prevention of fraud. Thus, the technology has good prospects for implementation in major sectors of the economy, including transportation, aviation, the automotive industry, healthcare, the financial sector, etc. The New Line Technologies, focused on innovation and implementing them, can offer the development of your ideas based on Blockchain technologies if your project requires high-level data protection or solutions for working with cryptocurrency. Check out our projects in the Blockchain and BigData industries.