With secure data tokenization, we will see a mass migration of both applications and users from existing power infrastructures to blockchain.
Data is becoming one of society’s most valuable resources. And yet, our existing approaches fail to unleash its massive intrinsic value. Why is this the case?
The issue is that our data — who we are, and what is relevant about us — is defined and collected by corporations and governments. Consumers were alarmed to find their phones were being tracked by the government, for example. These organizations, whether private or governmental, seem interested primarily in using your personal identity and your data streams to enhance their power. If you are an average user, this means you are missing out on significant ways to define the data about and from you and leverage it for your own value.
Unsurprisingly, consumer trust online is at all-time lows. Loss of privacy and fears about security make the average person wary of interactions on the internet. Today, the majority of our data’s value is captured by a small handful of technology companies that have the means to aggregate and analyze it. Although some companies, such as Apple, are making small strides in informing users about data privacy by using “nutritional labeling” on apps, most consumers feel their data isn’t something they can control.
This situation leaves users feeling like the data they hand over to these companies is unfairly used, with only a small fraction of its value being returned to them. For businesses, the data marketplace is unwieldy, while data separate from its context and computational systems lacks appropriate value.
At the same time, the crypto world won’t truly take off until many more people are actively engaged with the ecosystems. And yet, privacy is still missing at layer one. The challenge is in seeding the supply of compelling new services, and that, in turn, will draw mainstream demand from tens of millions of ordinary users.
The missing data control layer
To address this lack of consumer trust and confidence in the web, we need new technology that allows users not only to control how their data is used but also gain value from it in a fair, open exchange.
The missing piece? Technology that allows each of us to define our own digital identity and control access to our own data. Thus far, attempts to do this have been fractured and siloed.
What if each of us first could “define” our identity, separate and apart from both government and corporate control? A digital passport, of sorts, utilizing self-sovereign identity to demonstrate who you are, in a secure, scalable manner. And what if each of us then could “control” access to our data, sharing only how and when we choose, on our own terms?
From the user’s standpoint, enhancing one’s privacy and security stems from directly controlling one’s online identity and personal data. This will open up many new opportunities to engage online, for financial and other gains.
How can data tokenization drive demand?
Secure data tokenization, or SDT, is an emerging blockchain initiative that creates a new control mechanism over one’s personal data and ensures that one’s online tracings can remain confidential even when used by an application.
These advances will not only make integrating blockchains into mainstream applications more practical and appealing but also unlock new value for the average user — who, for the first time, will be able to have sovereignty over how their data is accessed and used.
SDT is easily transferable, private and highly customizable. This allows individuals to do everything from controlling how mainstream applications use their data to trading their data on open marketplaces, or engaging in new categories of DeFi apps, such as undercollateralized lending services that require data sensitive to share on the non-privacy-preserving chains like Ethereum. Previous issues of control, access and value now become tangible benefits of SDT.
Programmatic data access rights
In particular, what we call “programmatic data use” can dramatically realign the incentives among users. With programmatic use, smart contracts on a Blockchain 3.0 network can enforce specific policies, while the blockchain records the transaction. Users can set policies for how they would like different capsules of data to be used. These policies regulate the usage of each capsule, even after the data has been shared — ensuring usage is always compliant.
Keeping the data private also ensures that the user data cannot be reused or repurposed in any way without permission. As a result, the user remains in control of their data, opening up countless new value-creation paths that simply have not been possible before.
Programmatically attaching money to the flow of data creates the possibility to establish a direct and repeated relationship between the data producer/owner and the data consumer/buyer. Users and entities on all sides can explore novel ways of cooperating and collaborating with each other.
Once data is encapsulated in supportive computational systems as crypto data, end users can allow selective and consent-based computation on their information. With secure computing environments, end-users don’t have to accept the current uneven trade-off between value extraction and data transfer. Instead, they can maintain access to and the confidentiality of their data, even when the right to use is granted to a third party.
Secure data tokenization will empower users to control access to their data via programmatic access rights, while they are also able to define and manage their online identity through self-sovereign identity.
New use cases for crypto data
Tokenized data and its ability to enforce programmable usage policies are a powerful key to protecting our data and a critical milestone toward creating an open, decentralized data economy that offers individual fair market value for users’ information.
Tokenized data can be used to protect data in mainstream applications, such as:
- Healthcare apps. Human health data and genomic data are two excellent use cases. Highly sensitive biometric data from patients can be collected, aggregated and made available to researchers and others for analysis, while the underlying datasets remain fully secure and protected.
- Social media apps. The personal details we share on social media apps fuel lucrative, hyper-targeted advertising and marketing campaigns. With data tokenization, social media users are able to control what data is shared with third parties, including advertisers, and even request a share of the ad profits from social media platforms.
- Financial apps. The promise of open finance is incredibly appealing, but the currently open design of blockchains makes it nearly impossible for secure transactions to take place with an appropriate degree of confidentiality. Data tokenization adds that privacy and security component as part of the user’s data control layer.
- Token markets. Tokenized data also can be used in entirely new kinds of open marketplaces. Users can sell, barter or donate their data for a wide range of purposes, such as advertising, research and analysis.
A pressing use case: Immunity certificates and COVID-19
As vaccines begin to be distributed throughout societies, immunity-tracking systems can leverage crypto data in crucial ways. Individuals would have the guarantees they require to feel confident that their data is protected and not abused.
Programmatic usage policies could be set, ensuring that only specific queries could be run by specific officials, and secure computing environments would help to ensure that data couldn’t be copied and used for ulterior purposes. Pools of crypto data with similar policies could then be made, allowing officials to easily access the data they need to combat the global pandemic.
Where to go from here?
To fulfill the immense promise of these technologies, a number of steps remain before us. These could include:
- Further developing a digital stewardship agenda (including a new edge-to-all design principle)
- Exploring additional use cases
- Educating policymakers
- Initiating a tokenized data ecosystem of stakeholders.
As consumers become more aware of their privacy and data rights, it is inevitable that they will scrutinize access. This shift could open the floodgates to more distributed applications and more widespread consumer use.
The views, thoughts and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.