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What is crypto-currency?
Crypto-currency is a computer-based payment system that is backed by the blockchain. It is a digital currency that has no relationship with the state and is not monitored by it. The currency is stored inside a digital vault that is hosted by its overseers and requires an internet connection to access. This computer invention protects users’ identities. It prevents hacking and keeps a record of transactions. Cryptos have been designed to increase the confidence and security of people carrying out financial transactions via computer systems. But not only that, crypto represents freedom with the exit from the current banking system to a new world of transactions secured not by a banker, but by the users themselves.
How, then, is user information stored?
Secure information storage
Indeed, the place of each piece of information conditions the authentic existence of all the others. All user information is linked to each other, since no single piece of information in the chain can be removed without affecting the other pieces of information; the information stored in the blockchain is indivisible. They cannot be falsified, rectified or deleted. These three conditions describe the blockchain’s principle of immutability.
The General Data Protection Regulation attaches importance to the limited retention of personal data. When personal information is no longer of direct interest to the person storing it, it is deleted.
But in this case, what information must the Blockchain retain in order to function?
Information required by the Blockchain
User identity is difficult to individualize, since personal information will be visible on the Blockchain. The principle of transparency applies here. It is the very essence of the blockchain: to inscribe authentic information in a digital ledger. Any user can therefore see what is written on the Blockchain.
In the case of the Bitcoin Blockchain, anyone with this crypto can find out about transactions and their amounts. A Bitcoin merchant can find out about transactions carried out by his customers or competitors. Knowledge of consumption habits is of great interest, as it constitutes personal data that is proving to be useful.
Marketing departments want to know this personal data, as it is far more useful than the consumer’s identity. Using the computing power generated by Big Data, the economic operator would have in his possession a wealth of information on the various transactions carried out on the Blockchain. What’s interesting is that the public information does not mention the name or bank details of the seller or buyer. Users simply have access to the amount, date and validity of the transfer, thus ensuring its safekeeping.
The advantage of protecting personal data observed
The use of the Blockchain enables the anonymity, or pseudonymization, of the data that is entered on the register. The public key of each Bitcoin user enables pseudonymization of each transaction.
In fact, it is the Bitcoin exchange or storage intermediaries who, as soon as a user subscribes to an offer, give him or her a public key, enabling the creation of a pseudonym. Pseudonymization is a security measure taken upstream by the intermediaries, not by the blockchain itself. In concrete terms, the user holds a private key that is inaccessible to others, and when he carries out a transaction, a public key is automatically generated with his pseudonym, thus protecting access to his private data.
We can sum up this situation with a quote: “the only real interest of blockchain in terms of data protection is its integrity and decentralization.”
Can we envisage any prospects for improvement?
Possible improvements
The limitation of pseudonymization is that, while personal information is anonymous, it does not provide total protection for user data.
So, the first advantage may be the creation of ZCash Company, which has developed a so-called cryptographic tool based on the principle of zero-disclosure proof of knowledge. The purpose of this principle is to demonstrate that “you know a secret, without revealing it.”
In addition, the use of this cryptographic tool would make it possible to have a digital fingerprint that would be a kind of result that no one could have achieved unless they were the seller and buyer in question. The advantage is that the register would only contain proof of the existence of the transaction, but no information about the transaction itself.
To conclude, we can compare the protection of personal data in Libra technology (from the famous Facebook group) and Bitcoin.
Libra technology is subject to semi-centralized control of personal data, since Libra will collect a set of personal data from its first use, which it will have to share at the government’s request. The problem that users may encounter is that the sale and sharing of their transactions may be disclosed to partners such as Facebook, for example, without the user’s consent. In contrast, Bitcoin has no obligation to disclose anything to the government, in principle because it is impossible to identify an individual personally.
This comparison highlights the aspect of semi-centralization and decentralization. We note that Bitcoin is decentralized and has a measure of personal data protection that appears more secure. Users are free to make their own transactions, and are not subject to government verification. Libra, on the other hand, allows the government to study the user’s transactions, which can then be used for tax purposes.
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