The role of blockchain in cybersecurity and data privacy
There always used to be a need for protection of personal and confidential data. Blockchain technology has changed the situation and took cybersecurity and data privacy to another level and its role is dramatically great in this area. Its decentralized structure helps blockchain become more resistant to fraud and authorized accesses, it is immutable and operates transparently and publicly which allows all participants to check and verify the data integrity.
Smart contracts help to automate complex financial procedures with the help of transparency and matching with rules and regulations. Blockchain also makes the verification of personal identities simpler and takes down the risk of fraud, fake transactions and other malicious and dangerous activities. Smart contracts are often engaged in the process of enhancing security by the ability to restrict and cut down the access to certain data.
Blockchain also allows users making transactions using the combinations of digits and symbols instead of personal data and this function ensures the security and privacy level. It also helps to address scalability issues, guaranteeing that networks can process bigger amounts of information without risks of decreasing security. Another method to cyber and data security a stronghold is tokenization. In this case sensitive data can be replaced by unique tokens, which minimizes the possibility of compromising any personal information for its further misuse. Some advanced encryption methods (such as homomorphic encryption) are applied to ensure the possibility of computation using encrypted data without revealing sensitive information.
According to the statistics, the part of blockchain technology at the market is in rapid evolution and expansion and estimated to become larger at 86 percent by the year 2030. More than a half of companies and organizations all over the world see blockchain among their top priorities.
How can cybersecurity be changed with blockchain?
There are several aspects which can help to improve cybersecurity by means of attracting blockchain technology. This effect may be reached in the variety of fields and industries: for example, in supply chain security (to help all members of the chain trust the information provided by other participants), in education sphere (ensuring students’ and teachers’ sensitive data and records, academic credentials and certificates being stored securely, which may reduce the possibility of fraud, mistake or loss to minimum), in healthcare (securely storing patients’ health records and giving access only to authorized parties, such as doctors, which also helps to avoid excessive bureaucracy and speed the process up), in governmental structures (creating, verifying and storing private information and citizens’ IDs, which takes significantly down the possibility of mistakes, data loss and fraud), in banks and financial organizations (helping to process transactions securely, avoiding errors or losses, and offering insurance for clients´ funds and accounts, which makes them less vulnerable to hacks and malware) and other industries and institutions. The technology continues raising popularity in various industries, helping to address security challenges and drawbacks.
But which aspects and features are helping to address cybersecurity challenges? Here are some of them:
- Specification of records. All records ever made on blockchain are immutable from the beginning and forever (once made, they can not be altered) and completely temper-proof. Nobody and nothing can add changes or forge them.
- Data encryption. Every single piece of information on blockchain is protected by secure algorithms of encryption and after that it is added to the chain. Owing to this, the altering of the hash functions of any block of the chain is impossible and the data integrity is rising, which leads to the fact that the risk of breaches is minimized.
- Consensus. In traditional systems there is a centralized authority (may it be a person, a group, a company or an institution) that makes all decisions and takes all the responsibility in case of failure, mistake or illegal activity. In the blockchain system there is no such party and decentralized consensus is reached by a number of nodes, which are involved in the verification process with such mechanisms as PoS or PoW. Owing to this, the data is secured and no single person can take over the property rights or network itself, moreover, the data is resistant to manipulation and other effects, which can possibly cause harm.
- Transparency. Blockchain technology helps to keep the data safe but at the same time it goes on maintaining transparency. This highly important aspect helps to make financial records and store them without risk of manipulation by any third party, which ensures prevention of fraud and misuse and, thus, helps to keep data in formatted compliance.
- ZKP (Zero-knowledge proof). It is a special technique which allows checking and verifying information pieces without disclosing anything, which helps to validate user data without compromising its privacy. Blockchain encrypted structure offers such a function. Different cryptographic algorithms are executed to authenticate a computational statement. There are two major types of ZKP protocols, which can be applied on blockchain: they are called interactive protocol and non-interactive protocol. Interactive ZKP protocol is used to help with addressing algorithm riddles. Those algorithms are especially coded to verify the statement of the ‘prover’ party. The interactions are carried out online until the ‘verifier’ party is convinced (in this case both participants must be connected to the network at the same time). On the other hand, non-interactive ZKP protocols need more computational power than interactive ones, although the verification can be carried out offline and the generated proof can be verified only once, but there is no indicated time for it.
- Decentralized identity. During every interaction in the network the data – whether it be surfing history or username and password – is linked with the user's digital ID. This information is not stored in the personal database and it is difficult for the owners to claim ownership rights and access control on their personal data. On the contrary, blockchain technology provides them with self-sovereign decentralized identity, which allows users to become independent from the storage of the platform they interact with, and keep their data on personal devices. In addition, several decentralized identities can be created and each of them will be protected with a separate private key, which ensures the validity authentication of the stored data.
- Blockchain-federated identity. Federated identity helps not only to link electronic user ID and attributes stored in several identity management systems but also shift between different platforms faster and easier. It enables SSO, which can help with user’s authentication or, for example, making a token valid in various software systems. Blockchain-based federated identity structure allows users to utilize smart contract auditing to control the possibility of accessing their personal data. Blockchain immutable structure enhances data security in the network without attracting third-party participants. Blockchain technology helps to improve protocol implementation for federated identity and SSO (Single-Sign-On) by the support of data privacy and cybersecurity.
Closing thought
The vital necessity of taking cybersecurity and data privacy to the next level in different spheres of life, especially in sectors, referred to as finance, forces the users to focus on blockchain technology. Owing to the blockchain immutable, decentralized nature, it becomes one of the most attractive options. During recent years the involvement of the technology in the security sphere in order to protect participants' transactions and personal data has grown dramatically and goes on growing further aiming at getting rid of the risk of fraud and avoiding malicious attacks. The part of blockchain technology in the market of security services is supposed to double at least in the near future, helping to address security and privacy challenges and errors.
