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Businesses often decry overregulation as something that cramps their style and hampers growth. But there are of course good regulations that make the business environment better for both businesses and consumers; and there are moments when new regulations are in fact business drivers.
That will likely be the situation where personal data privacy is concerned and in particular in the growing minefield of authenticating and protecting that data, both from the point of view of companies securing the data of their customers and other business-critical information in addition to ordinary individuals trying to keep a grip on the data they produce â not just the personal information used to access government services and buy goods and services but also the data individuals produce in their recreational time, such as when they are browsing the internet.
In May this year the European Union (EU), often castigated for its penchant for overregulation, is, unwittingly perhaps, providing a great opportunity for those companies that are working on solutions for verifying, guarding â and monetizing â personal data. Itâs the month when the EUâs General Data Protection Regulation (GDPR) legislation goes live.
Power to the people
GDPR bestows upon private citizens the right to know who is using their data and for what purpose and to be furnished with a copy of that data. Individuals also have a right to know how that data is being used. Importantly, it also requires that marketing from companies is carried out only after receiving the explicit permission of the consumer.
There are massive ramifications that flow from these new laws.
From a companyâs perspective, it will mean incurring costs to meet consumer requests because these have to be fulfilled free of charge. Having an efficient way of processing and acting on those requests under GDPR puts a premium on having the technology in place to do this as cheaply as possible.
To achieve that goal companies will have to know exactly what data they are storing and collecting on individual in their business interaction with their customers, which means keeping records that can be rigorously audited.
Even without this new legislation, the problem of safeguarding personal data and digital identity was already looming large. The German government in particular has been very proactive in pushing for social media companies to disclose how much they are using the customer information they store and their continued limited disclosure regarding how that data.
And for individuals either as consumers or citizens accessing governmental services, there is the ever-present fear of personal information leaking into the public domain, possibly irreparably undermining the trust between seller and buyer or government and citizen.
Self-sovereignty and a marketplace for data
Bearing all of that in mind a new approach to digital identity systems is urgently required, and thatâs where The VALID Foundation comes in.
Developed by Swiss company Procivis, an established player in the digital identity field and an accredited e-government services provider, it has the tools to solve the problems with a new paradigm built around the two pillars of Self-sovereignty and a two-directional marketplace for data.
So what is self-sovereignty?
As the term suggests, itâs all about putting the individual, and corporate entities too, in local control of the data they produce and without reliance on a centralised third party, be that, where appropriate, a government or in other settings a commercial identity certificate provider.
Individuals struggle to remember the assortment of passwords they use to access various online destinations, and can often fall back on a streamlining approach that relies on just one or two passwords for many sites, thereby making their access methods less secure. That implies a loss of control and thatâs just one example of the issues regarding the establishment of sovereignty.
The VALID fix for this is to use blockchain technology to store unique identities and to put the control quite literally in the hands of individuals through leveraging mobile phone technology.
Individuals can monetize their data
Once that control is in place then the individual is empowered to then decide who gets access to their data. This is where the data marketplace comes in. In one sense we already have a marketplace but itâs one-directional in the sense that the data consumers in the form of companies are able to harvest the data of individuals almost a will and without paying for it.
The VALID marketplace puts an end to that by securely connecting identity holders with data consumers so that data can be exchanged on a monetary basis.
In the future, then, when a person surfs the web, they will have the necessary control over their identity that means an advertiser that wants to gain access to their browsing history will have to pay for it.
Now the monetary benefit would no longer be one-directional because individuals have the power to regulate the use of their data.
As the Harvard Business Review put it in a recent article entitled Blockchain Could Help us Reclaim Control of our Personal Data, distributed ledger technology âcould shift the power of (and profit from) data management from big, established firms back to individual usersâ.
Crucially, The VALID Marketplace anonymises data held in an individualâs âID walletâ, with privacy settings and sharing preferences defined by the user.
Data consumers get data they can rely on
And VALIDâs environment also works for the data consumers because it is designed in such a way that the level of fidelity of the demographic and psychographic data determines its value.
The type and reliability of data held in wallets is the basis of the revenue model. That matters for the data consumers, such as those conducting polls and surveys, because a corrupted dataset skews results â just ask the pollsters who got the result of the US presidential and the Brexit referendum wrong. It matters too for advertisers who want to be sure the demographic they are paying to target is a accurately represented.
Another factor worth considering is that fact that 1.1 billion people around the globe are thought to be unable to verify their identity because they have either lost or were never issued with the physical documents to do so. Putting birth certificates, passports and other historical records on an immutable distributed ledger, i.e. a blockchain, at a stroke it eradicates those legacy issues.
If its technology alone is not enough to guarantee success, then VALIDâs Swiss pedigree, associated as it is in the worldâs public consciousness with privacy protection, and the international connections via Procivis should also help to make this company an important player in the digital ID solutions sector.
Disclaimer
The views and opinions expressed in this article are solely those of the authors and do not reflect the views of Bitcoin Insider. Every investment and trading move involves risk - this is especially true for cryptocurrencies given their volatility. We strongly advise our readers to conduct their own research when making a decision.