Blockchain Challenges Legacy Systems
Datawallet Blockchain — Strategic Series: Article III
Abstract
This is the third article of a four-part series that explores the Web3 and Blockchain revolution (You can read the other articles here: Article I, Article II). Blockchain technology has brought about rapid and tangible change to a host of industries, particularly finance and data. In this article, we will examine the dramatic innovation and disruption of blockchain — evidence that this technology is here to stay. We will also assess how the value proposition of blockchain technology ties in with the wider themes of societal change; in areas such as data sovereignty, financial sovereignty, and transparency.
Value Chains
The scope of blockchain’s disruption begins with back-end processes, but similarly supports a multitude of processes down-chain. At a primitive level, these include data access and permissioning for potentially all kinds of user data, culminating in tangible disruption for end users. This ‘full-stack’ disruption creates disruptive change over many aspects of an industry’s value chain, and delivers innovation across a vast range of processes.
Blockchain has brought about broad revolution to traditional systems. Innovation has manifested itself through smart contracts, self-executing contracts based on code, and the ‘InterPlanetary File System’ (IPFS) for peer-to-peer sharing of hypermedia. Additionally, Web3 technologies have driven decentralized data storage and sovereignty for users.
These applications are only the beginning of the wider disruption within the decentralized economy. Blockchain is starting to take precedence in mainstream adoption, made possible by a wealth of new dApps and tools, such as our proprietary solution Datawallet — which provides a hybrid approach which utilizes blockchain technology for data sovereignty.
As part of this broader innovation we’re witnessing the emergence of the Internet of Value. A concept where value — either monetary, assets, or valuable personal data — can be transferred across borders as quickly as we exchange data via the internet. [1] Leading the charge are projects such as Interledger and Cosmos, open protocols for complete interoperability between different distributed ledgers. Likewise, Datawallet is creating a personal data management platform, transcending borders and restoring self-sovereignty to individuals.
So, are these innovations a new narrative for the way we share and transact data and value? We are in the midst of a crucial time for blockchain technology, attracting serious enterprise-grade research and development to push the entire industry forward. Together, we are providing the building blocks of the new decentralized economy — and a new vision for the future.
Disruptive Effects
Having explored the ways in which blockchain technology has matured, what disruptive effects is blockchain exerting upon legacy financial systems and traditional gatekeepers of personal data?
The financial and information management systems we’ve come to accept as the norm, are now being turned on their heads via blockchain technology. For the first time ever, individuals are getting the financial and data sovereignty previously available to banks and large data silo providers (Google, Facebook etc.).
Individuals are now free to pay for everyday items, such as groceries or rent, through cryptocurrency rather than national currencies. This was previously impossible, until third party applications built innovative solutions via blockchain technology. Unlike financial custodians, who have control over users’ funds, a cryptocurrency user controls the private keys, exerting complete financial sovereignty — a strong step towards the disintermediation of financial gatekeepers.
After considering blockchain’s historic disruption, and the potential for wider industry propagation on the horizon, what are the three key areas in which blockchain can forge a new paradigm in user self-sovereignty?
User Controlled Keys
Not your keys, not your crypto. That’s an important mantra for many cryptocurrency owners, who have learned the hard way that entrusting funds to third parties can lead to loss or theft. The same is also true for data.
Data breaches are a prevalent issue for centralized personal data storage solutions, and once individuals hand over their identification to a third party, that information is no longer in their control. In short, they are giving away ownership of their data for free.[2]
Instead, the Internet of Value, facilitated via blockchain empowers individuals to take control of their financial and data assets, by owning personal keys, and storing their data in a decentralized wallet which they have explicit control over.
Decentralized Governance
In addition to consensus processes being largely autonomous — or not requiring direct intervention to process transactions or votes governance — the open sourcing of these mechanisms ensure they remain transparent and fair, promoting true participation and proportional representation. But what does this mean for individuals?
Those who would previously entrust their funds or personal data to a centralized third party, were completely at the mercy of the service provider. Should that third party choose to update its terms, withhold and block funds, or use personal data for advertising, individuals would traditionally have little recourse to intervene.
In contrast, a blockchain-based ecosystem where consensus-based governance that removes authoritative security weaknesses is implemented, would mean all users can have equal access to the system, and participate in changes to the protocol, regardless of their status. This would help steer decentralized autonomous organizations, and restore power to individuals. This is one of the first times in history where organizations can give their users true democratic decision-making powers and enable them to become active participants in the future of a protocol.
Full transparency
Finally, distributed ledger technology would enable full transparency. Now, individuals are freely available to conduct their own personal audit on a company’s blockchain, tracking addresses to prove their data hasn’t been misused, and enabling more informed decisions about the legitimacy of service providers.
Many business value chains stand to benefit significantly from blockchain technology. For the first time, users have the potential for true sovereignty over their financial assets and identities by holding the private keys to their own data. Likewise, transactions are made transparent via distributed ledgers, and unlike traditional financial or information systems, are accessible to independent auditing and proof of custody requests via public ledgers. Through consensus mechanisms and open source code, users can actively participate for the very first time in the governance of blockchains, previously unseen in legacy financial and personal data systems.
Could blockchain’s disruptive innovation therefore compare to that of the printing press, the initial technological innovation which revolutionized the way we shared information? Undeniably, blockchain is already disrupting the way we share and store financial and personal data.
Conclusion
Because information is freely available for independent auditors in blockchain and open-source technology, professional auditing companies will have greater confidence that transaction data, or the integrity of personal data storage, is upheld to the highest degree. These developments are consistent with our wider vision for Datawallet.
Given the surrounding innovation in blockchain, Datawallet’s solution comes at a perfect time for the market. By harnessing the power of blockchain, Datawallet is transforming the future of data by creating consensual, transparent, and secure data exchanges. It is a holistic personal data management solution that incorporates the innovation of blockchain technology into everyday data exchanges — and ultimately, enables global self-sovereignty over our digital identities.
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