Blockchains, as you may have heard, are the latest buzz in FinTech and Tech-Media. They are the forefront of the decentralization movement, and rely on a global network of donated computational power which secures the network. For example, in bitcoin, one cannot change their proverbial password or private key.
The key innovation which the blockchain enables is a fully transparent, time-ordered, immutable, and constantly growing list of everything that has ever happened (both transactions and messaging) within a particular network of nodes.
Many banks are positioning themselves to leverage Blockchain technology. They are opining the positive business benefits of lowered costs and shortened latency times, and rightfully so. This is the most important innovation since the Gutenberg Press, after all.
Traditionally, miners undertook the responsibility of securing the Bitcoin Blockchain through solving cryptographic puzzles in order to receive newly minted Bitcoin and minuscule ($0.06/move) transaction fees.
Currently, banks and other traditional players are creating “permissioned” or private blockchains where only certain individuals who are granted permission could access the data on that blockchain. These people, perhaps, would have access to personal information collected through AML and KYC checks that others do not. Through creating a “permissioned” blockchain, we are playing into the same centralization of information problems that have persisted.
Even if said blockchain is fully-secure or built to a industry-scalable level, the attempts to grant permission to only certain individuals are met through the age old problem of managing login information. Will a password have to be entered? Or a Q.R. code scanned in a phone? Maybe biometric information will even be involved?
Either way, centralizing the metadata over who can log in and what their credentials are is problematic, dangerous, and susceptible to hacking.
Alternatively, blockchain flattens the playing field and makes information accessible equally to everyone on the network. This form of transparency is valuable and will open up many opportunities for analytics firms and marketers alike. The miners, who are independently owned and controlled, secure the network and receive newly created cryptocurrency rewards for doing so.
With a blockchain, trust is transparent and quantifiable. Security and privacy are left up to mathematics and open software, rather than centralized organizations. As we watch the evolution and advancement of blockchain technology and related software, be sure to be aware the problem of having humans centrally accessing information.