Blockchain Trust Issues In An Age of Data Abuse

Opinion, Regulation | August 2, 2018 By:

Last year was a hard one for consumer data. Data breaches impacting everything from Yahoo and Equifax to Uber and the CIA pushed already-distrusting consumer confidence even further down the drain. [1] The infamous Equifax breach alone compromised the data of 145.5 million people. [2] Understandably, the vast majority of consumers don’t trust the way companies handle their personal data. In fact, a Harris Poll conducted for an IBM study suggested that 60 percent of U.S. consumers were more troubled by the lack of cybersecurity than the potential for a new war. [3] We’ve already seen a flurry of government responses across the globe pertaining to data privacy and security, most notably with the EU’s GDPR, but those regulations aren’t likely to satiate consumer hunger for more trust.

Consumers are already giving companies so much of their personal information because, to them, it’s worth the trade for these products or services. So, companies owe it to consumers to tell them how they’re using data and to disclose if they’re using it for less-obvious ways. Facebook’s recent data scandal is a wonderful example of what not to do. Companies should better communicate with users about how they are using sensitive personal information and always be conscious to keep their trust.

At the same time, transparency also is critical to maintain — and sometimes regain — consumer trust. Companies should not only be open with people trusting them with their data on how they’ll use it, but also how they’ll protect it and, in the event of a data leak, what they’re doing to fix the problem. TimeHop suffered a data breach on July 4 that was met with a quick response from the company detailing what information was compromised, what steps were taken to stop the leak, and details on how it will do to prevent a similar situation from happening in the future. While they inadvertently underestimated the amount of data that had been stolen, TimeHop’s swift response is a great example of how to be transparent with users. [4]

However, blockchain offers a tremendous opportunity to give consumers opportunities to trust organizations better, but they will need to understand the technology more. It’s only through more applications where blockchain is used that consumers will both gain more understanding of the technology and how it adds trust and trust to data use.

Blockchain is immutable, decentralized, verifiable, and nearly impossible to hack. There is no central authority or third party involved, which reduces the chances of an Equifax-like breach to nearly zero. Should a team of hackers be able to break into blockchain-backed data, the entire network would be immediately notified and the problem would be mitigated quickly and without the amount of damage that otherwise would occur. By moving to blockchain, companies could better guarantee their customers that they are doing absolutely everything possible to keep data safe.

We can all see that consumers have been burned by companies’ carelessness with how they use personal information. Data breaches are reaching pandemic levels, and it’s simply going to continue to get worse unless companies make a concentrated effort to earn back the trust of their consumers.

At Colendi, we deal with very sensitive information from our users. We calculate credit scores using machine learning, analyzing data from smartphones, transactional, social media and other sources. It would be incredibly detrimental to the people we are here to serve if we let their information fall into the wrong hands. However, as a blockchain-based technology company, we believe that by exercising transparency, honesty and leveraging the most secure technology possible, companies can slowly win back the all-important trust from their consumers.