The terms “hack” and “data breach” elicit a great amount of fear in today’s ever-connected world. Hackers are a tremendous threat to any large corporation, something that major companies like Equifax have learned the hard way.
Since the introduction of the General Data Protection Regulation (GDPR) and other data security legislation, companies are drafting policies and creating technology that can better protect their customer information and data.
In the midst of these new directives, there has been much talk about a new technology that might be able to more safely house sensitive data: Blockchain.
Blockchain has slowly been moving into the data security limelight, positioning itself as a possible remedy for secure data storage in a number of sectors.
But before any talk of trying to use this technology, it’s helpful to get a clearer sense of what it is. What is blockchain? How does it work? And how can we benefit from it?
What is Blockchain
Blockchain is a shared ledger for transactions that have taken place online.
Think of blockchain like a cloud-based file sharing portal where document editing can happen in real time. In the past, sharing documents meant sending a document to the recipient, and requesting feedback or edits. We need to wait until receiving a return copy before we can see the document or make other changes to it.
This is how databases work today. Two owners cannot be working within the same record at once.
With blockchain, all parties involved have access to the same information at the same time in one network, and the single version of a record (and only one) will always be visible to them. Essentially, blockchain technology allows digital information to be distributed across a network, but not copied.
To build a blockchain, as each transaction occurs, that information is put into a ‘block.’ Each block is then connected to the one before and after it. Transactions are then blocked or grouped together, and each block is added to the next in an irreversible chain.
Imagine this process being done continuously within the same system, and you have a blockchain network.
Why We Need It
Blockchain is a ‘decentralized’ technology. By means of decentralization, the system requires all parties to give consent before a new transaction is added to the network. In addition, because blockchain is a shared ledger, once information is stored in a block of information in the system, transactions cannot be altered.
The blockchain network lives in a state of consensus, one that automatically “updates” and checks in with itself every ten minutes. Given the way blockchain is built, this is a self-auditing system. And it presents obvious benefits.
First, the blockchain is not stored in any single location, meaning that records are essentially public and verifiable. The transparency allows for safer and faster transactions across all parties.
Second, because there is not a centralized version of information in the system, the blockchain cannot be controlled by any single entity, or any single individual.
This makes it difficult for a hacker to corrupt the data.
In a centralized system, when a hacker occupies one version of the data, the rest of the system is essentially obsolete. But with blockchain, even if the hacker gets a hold of one block of information in the network, they would have to get to the next block and the next (and so forth) to successfully take over the system.
If a company has millions of transactions made each day in a blockchain system, it would be extremely difficult for the hacker to gain access to all blocks of transactions.
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Before considering blockchain, a company should think about the number of legal documents, client information, and transactions involved.
Depending on the industry, one must track and record every single piece of information that occurs during every transaction. And that can turn out to be a lot of information stored.
For example, in the diamond industry it is essential to track diamonds from mine to final customer, and the process can be complex. Issues such as diamond smuggling, fraud, and unethically mined stones pose real challenges to this industry. With blockchain, however, it is possible to record and ‘check’ these transactions.
After the diamonds have been mined, the company keeps a record of high-resolution photos of each diamond at every touchpoint along its journey. With a blockchain, every touchpoint for each diamond would thus form a block.
This process continues for tracking real-time records of every payment transaction, holding certificates of authenticity of each piece of jewelry, and maintaining product details of the diamond.
The same idea applies to those in enterprises across the translation services industry as well. From recruiting clients to finalizing their translation projects, every active “point” would need to be carefully recorded in the blockchain system.
Two of the most beneficial factors blockchain technology offers enterprises are security and trust, since all aspects of their information are stored safely.
What Lies Ahead
Blockchain technology has been around since 2008. But with data security and identity protection becoming more of a concern to corporations and the general consumer, it is worth finding out more about how companies store customer data and what they do with that information.
While blockchain technology is not yet prevalent across industries due to its complexity, many financial institutions that deal with numerous online interactions and e-commerce have found it quite useful, including Bitcoin.
You do not need to know everything about how blockchain works to use it. But knowing the basics will be helpful if you decide to take the first steps to keep your data safe through the best technology currently available. Before your data is in any way compromised, take the necessary steps to make sure it is being fully protected.