Why we don’t use blockchain

When starting to design our Fully Anonymous Identity Resolution (FAIR) network protocol, one obvious direction was to look at blockchain technology.

After all, blockchain provides a solid decentralized framework that facilitates simple data exchange and consensus building between multiple parties. Blockchain has evolved in the last few years, moving from the marginal to the mainstream, with the promise to truly revolutionize the way we store, share and authenticate transactional data.

As a product-first company, we started by analyzing and identifying what it is that we want the solution to achieve. Our key requirements can be summarized as:

1. Create trust between parties - all member companies need to know that their business secrets and customer data is kept secure
2. No centralized database - if there is no centralized database, there is nothing for hackers to attack
3. Complete privacy - without sharing or exposing any consumer data, not even in a hashed or pseudo-anonymised fashion
4. Full anonymity - no one can learn who is asking to validate an identity, which identity is being validated, or who is vouching for the user
5. Clear data control - each company holds the data about their own users, and do not replicate or duplicate it anywhere else
6. Fully compliant with GDPR, CCPA, and all other privacy regulations - this includes the user’s right to be forgotten, and the right to correct any inaccurate data

We then started looking for the right technology that can help us achieve all the above requirement. Blockchain was at the top of the list. However, as we dug into the blockchain technology on one hand, and the privacy requirements on the other, we realized that blockchain may not be the right technology for what we are trying to build.

Blockchain is:

“An open, distributed, immutable ledger that can record transactions between parties efficiently, verifiably and permanently.”

In a nutshell, blockchain technology provides transparency, and the ability to generate consensus on the state of the stored data without the need for a…