As the computing environment becomes more open and diverse, and as threats become more sophisticated, enterprises need a way to validate identities and transactions without having to resort to cumbersome, obstructive blacklists. IT validation and regulatory compliance pose similar challenges. Complex, resource-intensive governance mechanisms burden IT, slow business innovation, and divert attention from the company's core mission. How can we simplify validation in every step in the execution of a transaction, process, or contract? How can we make it impossible to steal or compromise an identity, whether of a user or a "thing"? How can we put users — not companies — in control of their own identities?
Blockchain offers an exciting new way forward. It is a ledger architecture that can protect identities, data, and transactions against compromise by recording across links in a highly distributed digital ledger. If any link in the chain is altered, added, or removed, the entire chain is suspect. As an example, if the identity of each node of a network is recorded on a blockchain, the network can be trusted. Conversely, if an unauthorized node enters a network, a compromise has occurred. Blockchain offers a proactive approach to secure a new generation of digital platforms and services.
Blockchain and Identity
Cryptocurrency applications have gained the most attention during the early days of blockchain, but these only scratch the surface of its potential for the secure transfer and storage of value — and in particular, the validation of trust.
To date, enterprise IT, security, audit, and support functions have struggled to provide adequate protection of data, transactions, and digital and physical assets. In a highly converged, cloud and on-premises enterprise, the next revolutionary step in security will come from the realization digital transactions that are highly distributed, tamperproof, encrypted, and fault tolerant. That's exactly what blockchain enables. In this way, blockchains can bring unprecedented security to events, title, financial/medical/legal records, Internet of Things connectivity, management activities, process verification, data transfers, identity management, transaction processing, provenance — the list goes on.
Some of the most fundamental trust validation applications for blockchain will focus on identity. Today, identity theft is a pervasive and seemingly intractable problem. How can we eliminate that risk? To begin with, blockchain makes it possible to put users in control of their own privacy. That's a simple yet radical concept — so radical, in fact, that it seems obvious only in retrospect. Why shouldn't we be able to manage our own identities instead of leaving such a crucial matter to companies whose priorities and agendas may be quite different? Why shouldn't we be the ones to determine who can access our personal information, or when our credit should be locked, or how our identity is used by third parties? In that sense, blockchain's distributed ledger can do more than just make it nearly impossible for thieves to change or steal our information on login attempts. It also solves a more fundamental problem we didn't even know we had: restoring our control over our own digital identities.
The mechanism is straightforward: By applying blockchain technology as a kind of digital watermark to identity applications from birth certificates and passports to online account logins, we can make individual identities nearly impossible to compromise. As individuals interact with businesses, governments, and other organizations, the personal information we provide to establish trust can be hashed and distributed, then called back only in partial elements as needed, leaving the complete identity safe from compromise. Providing both privacy and transparency, this approach can also help organizations meet the requirements of regulations like Open Banking in the UK and the General Data Protection Regulation in the EU for customer control, as well as simplifying compliance with financial industry know-your-customer rules.
Blockchain Bridges Borders
Unlike past approaches in which companies have sought to own the platforms and dominate the technologies used for security and validation, the highly distributed nature of blockchain promises a more open future. By disenfranchising security, identity, and trust from corporations and countries, blockchain has the potential to bring about a truly global economy. Cryptocurrencies such as Bitcoin and Ethereum have already decoupled currency from state control; now, a new generation of blockchain-based companies are working to provide a broader range of services traditionally provided only through government agencies.
The potential of blockchain is equally exciting for both enterprises and individuals. Companies can radically improve security, compliance, efficiency, and control across virtually any process or transaction. From the consumer's perspective, blockchain enables control of personal information and individual identities to shift from companies to their customers; allows governmental monopolies on currency and public services to be broken; and safeguards individuals against fraud and identity theft. It's a future worth looking forward to — and it's coming fast.