MEDIA Protocol And Blockchain Security — Part 5

The team here at MEDIA Protocol are deeply committed to creating a more direct, transparent and secure ecosystem for content creators, publishers, and consumers through the revolutionary application of blockchain technology. We’re here to connect the worlds of marketing and technology for everyone’s benefit.

We’ve got love for both worlds, but from our own experience we know that they can sometimes feel, literally, worlds apart. So we’re committed, not just to connecting them, but to creating a common understanding between them.

This series of articles aims to explain the ins and outs of blockchain security to help everyone — the marketeers, the technologists, and the content consumers — understand the principles behind this game-changing technology.

We want to help educate by demystifying the potential applications of blockchain technology. Most importantly, we feel it’s vital to highlight and clarify the security elements of blockchain; how it safeguards data, enables open and transparent record-keeping and ensures secure digital transactions.

Strap in, and welcome to the MEDIA Protocol Blockchain Education Programme.

Part 5 — Different Ways Of Handling Real-world Identity On The Blockchain

Managing identity online under existing systems is a fragmented, ad-hoc system where data is handed over to companies, in good faith, to be stored in their centralized databases. This means there’s no universal gold standard to verify the identity of the person making a particular transaction.

How Does Blockchain Verify Real-World Identity?

Digital signatures can be applied to smart contracts and other blockchain transactions.

As outlined in our previous post on how blockchain prevents impersonation, the use of cryptographic hashing — the combination of a public and private key — creates a unique and verifiable identity that only that one owner can use. If that user keeps their private key secure, it is almost impossible for anyone else to pass themselves off as that unique user.

Due to the distributed ledger system that blockchain uses, the hashed data is also not stored in any one location. It doesn’t belong to any single entity or company. And it is not subject to the weak points that centralised databases have.

Significantly, the other party to the transaction, the one requesting the verification, also doesn’t receive or retain that hashed data. It’s verified over the blockchain, with all the additional security measures that entails.

What Are The Benefits Of This?

This self-sovereign identity means individuals own and control their own data directly. Nothing has to go through middlemen, and no data is handed over to be stored elsewhere.

Which prevents situations like Cambridge Analytica, because users don’t surrender their data to companies like Facebook, leaving themselves susceptible to the ways these companies choose to share it with third parties.

Blockchain reduces identity fraud. With nothing stored in one place to steal, hackers can’t just gain a list of targets from a database. The user is back to being one random person in a pool of 7 billion. You would need to be individually picked and targeted, which is much harder to do.

Additionally, blockchain technology prevents the common problem of Sybil attacks. These are fake profiles, set up for fake identities, on closed systems like Facebook, Twitter, or Google.

Without the private key verification, users will not be able to create fake profiles or dummy accounts.

What About Anonymity?

Not every transaction will require linking to real-world identity — the user will retain a choice whether to do this and create a traceable record.

The distributed ledger system means that although transactions are linked to the user, the user data is still not stored in one place that would be easy to trace or hack.

That data is never transferred to the other party, it is only accessed via the blockchain. Your data is safe because the only place it is ever stored is on your own personal device.

What Are The Real World Applications?

Currently:

• In countries such as Estonia, the government has moved many essential state functions online. Citizens have their verified digital identity and can use it to sign smart contracts and even vote in elections.
• Purchasing and trading of cryptocurrencies and tokens. In future, verifying identity fully could be incentivised with higher rewards in exchange for that more complete picture of the customer.

The potential for blockchain technology to handle real-world identity is far-reaching. Here are a few examples you can expect to see in the near future:

• Creating a smarter, streamlined way of buying property, cutting out the often expensive and time-consuming middlemen. Digital identities could have the credit score and other financial information included.
• This is matched with the property intended for purchase and then financiers bid to provide the mortgage or other financing. Only the decision-making information, e.g. the credit capabilities, would be made available to the financier.
• Developing reputation management systems, or Know Your Customer. This would let customers build meaningful profiles so businesses know what best to offer them.

Is Blockchain The Future Of Online Identification?

Blockchain is a clear solution to the piecemeal, variable standards of identification spread across countless companies and countries using the internet. Creating a universal standard that isn’t subject to central storage, and thus hacking, would allow for greater trust in everyday transactions.

It can also streamline existing processes and contracts to be more efficient for both sides, and for any third parties required.

Read All Parts In Our Blockchain Education Programme:

Part 1 — Blockchain: Is It Secure?
Part 2 — How Does Blockchain Apply To Cyber Security?
Part 3 — How Does Blockchain Create Transparency?
Part 4 — How Blockchain Ensures That No-One Can Impersonate The Owner Of An Address
Part 5 — Different Ways Of Handling Real-world Identity On The Blockchain (This article above)

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