Tigran Bayburtsyan

Co-Founder and CTO at Hexact Inc. (https://hexometer.com). Software scalability expert!

Decentralization sounds awesome? But what about Privacy?

Privacy preserving cryptocurrencies
Privacy preserving cryptocurrencies

Beginning of this year was huge deal breaker for Blockchain ecosystem. The best use-case so far Cryptocurrencies started to generate enormous hype and their growth in value created new way of doing business, especially for companies who are focused in making Blockchain infrastructures.

Same happened also for our case! From the beginning of this year we are started to think about Privacy and Data security differently, because it is clear that at the beginning it is OK to have everything public from the main idea of decentralized blockchain, BUT what about if you want to have immutable ledger, which is the main idea behind blockchain, and want to share that information only for specific participants without breaking decentralization?

Issues of Decentralization

The word “Decentralization” means that there is no central point which makes designs, each participant is equal and every participant should know Who Sent What to Whom. By saying Sent I mean not only money from cryptocurrencies, but also any data that we need to exchange immutably.

To dive deeper in this, let’s discuss healthcare example. Imagine if you have your healthcare data on blockchain, and your doctor is able to see it, and make a designs based on that. BUT if we are talking about classic blockchain example, your data is shared with all peers participating in that blockchain network, including other patients, multiple hospitals etc… And I’m sure it’s not an ideal for you that your medical data is public.

Blockchain in Healthcare is not an easy challenge
Blockchain in Healthcare is not an easy challenge

This is the exact case for Bitcoin or Etherium. For that cryptocurrencies, you don’t know identity who is behind that wallet, but you know all transactions, and can track future transactions, because everything is just a public ledger.

So if we are thinking about making real world applications with Blockchain, the first thing that we need to think about is giving Data Privacy Control to every participant.

Data Privacy is really a big deal ?

“Data Privacy” in current centralized internet seems like a joke :) , because if you are sharing your files with Dropbox for example, you can’t be sure that they are not going to keep a copy of your file, or share that file with other people privately. Of-course they are telling “We are not doing that!”, BUT how we can be sure? Currently there is not way unfortunately.

One of the main actions that happened is GDPR complience in Europe laws, which is pushing companies to give a tools for users to delete their data from companies servers. But it is not preventing them to analyze, and aggregate your data without letting you know about that. In most cases telling you “We need to analyze your data to provide better service to you”.

Currently in most cases we are OK to share our files with Dropbox because we have some level of trust about that company. But if you think about decentralized way, are you willing to share your files with anyone participating in that blockchain platform? I don’t think so!

The reason is simple, we need privacy! Some parts could be public, but most of our life we are living in Privacy.

Fixing privacy for blockchain platforms

We started to think “how to add privacy to existing blockchain platforms without re-inventing a wheel?”. The idea started to evolve more after building first cryptographic implementation of system called Proxy Re-encryption https://en.wikipedia.org/wiki/Proxy_re-encryption

Proxy Re-encryption diagram
Proxy Re-encryption diagram

This cryptographic principle gives ability to manage Public/Private keys in a more scalable way, and encrypt data once, then just provide individual or group access to that encrypted data. In other words “Your privacy travels with your data”.

For standard cryptographic way each time when you need to share access, you have to get that persons public key, encrypt data with that public key and then share it, so that he would be able to decrypt it with his private key. It is obvious that it’s not scalable, especially with decentralized way, where you have this immutable ledger, and each time you will have to encrypt data, put it in Blockchain.

Proxy Re-encryption is solving huge data exchange dilemma, where you don’t have to worry about data encryption for every new participant, and you have a control to revoke re-encryption key from service, so that nobody or only specific participant no longer would be able to access your encrypted data.

Our company Skycryptor released open source libraries to easily integrate Proxy Re-encryption to existing application workflow, and in most of the cases it is seamless. https://github.com/skycryptor

Economic benefits of Proxy Re-encryption

Having data privacy as a first positioning for every blockchain platform is giving huge advantage from the others, because if blockchain is expanding in other markets like Healthcare, Enterprise platforms, Supply Chain etc…, saying that “My blockchain platform will keep you data private if you want to…” will help you get more and more use-cases which are almost impossible without having privacy statements.

Proxy Re-encryption is changing the way how we are sharing data, and because of that, it’s evolving to handle more and more business cases.

So if you think “Oh! We also have a key management problems in our application…” then I would be happy to hear how you are solving it now, and how this article helped you to learn more about what’s out there

Don’t forget to 👏 and share this article!

More by Tigran Bayburtsyan

Topics of interest

More Related Stories