Blockchain – a buzzword in recent years. Many have heard it, but few seem to understand it. And how do blockchain and data protection even speak to each other?
What exactly is Blockchain Technology?
The simplest explanation is that it is a revolutionary technology that creates an environment in which secure and authorised digital transactions become possible.
At the core of the system is the identification of users and the authentication of transactions. This is something that would usually be done centrally by one person or entity controlling the process and holding all the data, such as a Bank. A good example would be making a purchase on your debit card. You insert your debit card into a card machine, that sends a message to your bank with your card’s details, the shop’s details, the details of the transaction and asks you to verify your identity by entering your pin. Normally the bank would verify and record all this information centrally and act as the intermediary.
How does blockchain work?
However, with a Blockchain, this process would be decentralised and handled collectively by each member of the Blockchain. Each would hold a continuously updated record of transactions and related parties and would act together to verify each transaction.
The Modern phenomenon of Cryptocurrency and by extension Bitcoin, all became possible as a direct result of this technology. However, Blockchain Technology isn’t only limited to banking and financial transactions, it has the potential to be integrated into many other areas such as the storage and transfer of sensitive information, access to verified digital identities and casting, tracking and counting of votes in an election environment.
Blockchain and data protection
With the introduction of the Protection of Personal Information Act in South Africa and the risk of fraud and doing business online; businesses are under unprecedented pressure to find an effective means of securing the credit cards and the personal information of their customers.
By adopting Blockchain Technology, businesses can effectively respond to this pressure, especially in areas where the transmission and storage of confidential information are at stake.
Blockchain Technology has the potential to help establish a culture of transparency between employees and employers and customers. A Blockchain acts with full transparency, whereby a person’s actions are fully visible to everyone else, forcing parties to become more honest with each other as there is nothing to hide. From a Human Resources Management perspective, this has implications for the way in which leaders manage change, organisational design, values alignment, and strategic oversight.
A Blockchain also holds the potential to create and store electronic contracts which can hold parties to a future state. For example, if one person is to complete a set task, the Blockchain pays out that party for meeting that task’s pre-determined requirements. Thus, an arbitrator is no longer required. This means businesses need to draw up less legal documentation and can rely solely on a Blockchain to facilitate their transactions.
Corporates can be more assured in their decisions and will have greater power in overseeing transactions with the usage of a Blockchain chain system. This will be a positive change for the South African Economy, where trust in transactions can stand as a barrier to doing business.
People will be more comfortable doing business in an environment where one cannot act without the other verifying it on the blockchain’s system. Moreover, cheaters in the system will be marked quickly and outed from participating in the blockchain, weening out perpetrators and helping to establish a culture of honesty and reliability for South African trade