Facebook and More: How Blockchain Provides a New Way to Protect Data Privacy
In this week’s five-hour-long Facebook hearing in front of United States Senate Judiciary and Commerce committees, the term “data privacy” was brought up and debated over numerous times, without landing on ultimate solution how industry or legislative bodies can go about tackling it. In addition to questions about Cambridge Analytica’s improper access to the personal data of 87million Facebook users, broader issues were discussed including transparency, data ownership, and the disadvantages of concentrating the data in the hands of a few companies like Facebook.
Unfortunately, this is not the first, nor will it be the last such data breach. The intrinsic drawbacks of centralized platforms are roadblocks to a more transparent, secure and efficient network. From this week’s hearings, the following characteristics were brought up multiple times :
1. Expectation gap on “privacy”. A typical internet user's expectation of privacy is drastically different from the notion of privacy laid out by Facebook’s 37,000-word-long terms of service. Whether this gap is deliberately constructed, or just historically emerged, it does generate disappointment, and eventually distrust among user community .
2. Asking users to “opt out” rather than to“opt in”.Since the data refineries including Facebook and Google profit mainly from targeted advertising based on user data, they try to ask users as infrequently as possible to authorize anything — after all, they might not give their permission if you ask them. While deleting your Facebook account might on the surface sound like a solution to data privacy, completely “opting out” is no longer an option in a world nowhere the communication infrastructure for billions of people relies products including Facebook’s Messenger and Whatsapp, and Tencent’s QQ and WeChat in China. Provide an “opt in” solution will be important to give control of personal data back to users.
3. Misaligned incentives. Modern internet is built based on one important condition: free to use. Incentives are naturally mismatched between businesses who consume the data for targeted advertising or even election manipulation, and users who contribute the data not expecting it to be used for commercial or political purposes. New business model and economics should be built around the use of data.
As a long-time big data researcher and advisor, I have always been a firm believer in the positive impact data can bring to individuals, companies and society. To solve the problems of creating value from data without violating privacy, it is necessary to rethink data can in a framework of transparency and trust. After closely observing the evolution and application of blockchain technology in the past years, I believe a decentralized data marketplace is the right step to (re-)gain trust.
Blockchain: A Panacea to Privacy?
The truth is, the use of data is not just about keeping user data private. As angry as Facebook users are about the lack of intergrity of top management of the firm that has more monthly active users than any state has citizens, they obviously do not want to be back in the world where every single data transaction was done by mail. The subtle triangle of the user of data hereby is:
1. Authorizing/De-authorizingof Data
2. Validating of data accuracy
3. Aligning incentives of data exchange
While blockchain technology is not the panacea to all of Facebook’s problems, it does provides a new angle to understand how data should be stored, validated, shared and monetized.
(De)Authorization of Data, with Trust and Transparency
The idea of a distributed ledger is a technological solution to protect data privacy on an otherwise trustless model. The core of this model lies that nodes in the network do not have authority over other nodes, hence getting rid of the middle man in each data transaction. No longer are centralized coordination authorities necessary to facilitate transactions or maintenance updates. Blockchain enables fully decentralized networks that is both secure and transparent.
In addition, the open-source approach of public ledger ecosystem creates trust since participants can examine the code that runs the ecosystem, in contrast to centralized platforms. For data owners who may be reluctant to rely upon external platforms for mission-critical analytics, they can be sure that platform is fully decentralized, transparent, and free for anyone to duplicate, should they find any part of the ecosystem to their dissatisfaction.
Efficient Validation of Data Accuracy
The emergence of smart contract was considered the key to accelerate application of blockchain technology beyond purely serving as digital currency. Since smart contracts are created from open source code, they are considered to be fair, private, and safe for all parties. As data exchange becomes more sophisticated, smart contract will serve as an efficient and trustless way to facilitate these transactions.
An important application of smart contracts in the IoT space. The intersection of IoT and blockchain is particularly appealing since sensors installed physically provide a continuous, verified data source while smart contracts facilitate both the data exchange and potential payment involved.
Aligned Incentives of Data Exchange
My book “Data for the People” (Basic Books, 2017) discusses the rights I believe we as individuals, customers, and citizens should have towards the data we create and share.. Blockchain is a new technological approach towards building, engageing and governing the community. In a decentralized data marketplace, users benefit from authorizing their data to third parties by receiving awards, and more importantly, benefit from improved products and services enabled by the data they contribute.
Decentralized Data Marketplace
I have seen several projects applying blockchain technology to secure data privacy. Good examples are CarBlock, a decentralized transportation data alliance, and Shopin, a decentralized shopper profile.
CarBlock’s founding team came from an IoT/connected car background, and started CarBlock with their 400,000 user base. Rather than giving in the temptation to directly monetizing –i.e., sell — the data collected from their hardware, they respected personal data ownership, and built CarBlock’s decentralized platform that encrypts, validates and exchanges valuable data sets, all under user consent. They have also incorporated core technologies from partners such as NuCypher, and will be among the first ones globally to implement IPFS for mobile. Innovators are enabled by CarBlock to access data to build better services, while users benefit from cheaper, better services as they grant access to their data. Their telegram group: https://t.me/carblockofficial
Shopin, on the other hand, are fighting for user data rights, and to save retailers. Rather than creating yet another marketplace controlled by a central authority, they seek to work with retailers to give shoppers back 3–5 years of purchase data so that every site the shopper visits is personalized by Shopin’s AI on the site of the retailer, supplying next-generation product recommendations by comparing the retailer inventory to the user’s data. So the user data is never exposed, but both the retailer and the user get the benefits of great recommendations that drive higher conversions. All the while, the data is secure on their Blockchain solution. They already did two thirty day pilots where over 700,000 shoppers joined Shopin, and Shoppers who saw Shopin recommendations in the retailer sites converted 22% more (average is usually 3%-4%). The cherry on the top retailers can advertise directly to the users and the users get paid all of the advertising revenue in the form of Shopin tokens which they can spend against their purchases at participating retailers, effectively bringing back Billions of dollars back into the economy of retail if Shopin reaches scale. Fortune.com recently called the the solution to the Facebook/ Cambridge Analytica debacle. Shopin's community telegram group: https://t.me/shopineverywhere
The promises of blockchain technology have been celebrated across many areas. We here focued on the ecosystem perspective, where a significant reduction of the cost verification and the cost of discovery and networking can be achieved, while limiting the amout of control given one single entity, as Christian Catalini pointed out. As the debate over data privacy continues, let ustake this opportunity to carefully examine how data has been stored and exchanged, and incorporate concepts of blockchain for a safer, more efficient data marketplace.
