A New Era in Data Privacy: Why Distributed Ledgers Are Essential to User Control of Personal Data

Individuals are increasingly concerned about data privacy. One-third of Americans have actually switched technology providers because of privacy concerns, according to the 2022 Cisco consumer privacy survey.

Governments are taking notice – and holding businesses accountable. In November 2022, Google paid more than $390 million to 40 U.S. states to settle a data-tracking dispute. The same month, Meta was fined $275 million for straying outside of European privacy guardrails.

But what about governments themselves? Agencies handle large quantities of personal data. As trust in government ebbs, how can agencies respond to public clamor for control over their personal identifiable information (PII)? Just as important, how can they get out from under the burden – in time, cost, and technology – of managing all that data?

The answer is taking a decentralized approach when managing resident PII. With a decentralized model, individuals retain ownership of their own data. When a government agency requires a resident to provide personal information, a decentralized solution like Voyatek’s Decentralized Identity for Government (DIG) allows agencies to verify information without ever storing it. Essential to this model is the use of distributed ledgers to verify personal data – without the need for a centralized data repository.

What’s a Distributed Ledger?

A distributed ledger is a database that’s synchronized across a large network of connected servers. Every data item in the distributed ledger – such as an issuer decentralized identity (DID)– is processed by every node in the network, creating consensus as to its veracity. Each data item remains trustworthy, because any change to it would be seen by all nodes in near real time.

A blockchain is a common type of distributed ledger. It’s made up of an expanding list of connected records called blocks. Each block contains a cryptographic hash of the preceding block. The result is a chain of blocks that are irreversible, because retroactively altering data in one block would alter data in all subsequent blocks.

The Advantages of a Public Ledgers for Credential Sharing

Beginning with the day we’re born, we share personal information with and receive valid credentials, documentation, of verifications from the government. From birth certificates to drivers’ licenses, social security numbers to unemployment benefits, throughout our lives we exchange information digitally with the government to receive services, pay taxes, send mail, register to vote, enroll our kids in school, etc.

In most cases, those interactions require each agency to repeatedly gather, verify, store, protect, and maintain various personal data records. Some of those records might be incorrect and inconsistent. Many of those records might not be needed for the transaction in question. But agencies must store and manage them, and individuals have to worry about who has access to them.

A decentralized solution does away with that redundant data management – and the associated privacy concerns. Instead, it relies on distributed ledgers for decentralized, secure, and trustworthy verification of PII.

How it Works

When individuals transact with an agency, they typically need to verify static identifying data, such as their Social Security number, as well as evolving personal data, such as employment information. Those data records are known as credentials.

With Voyatek’s decentralized solution, individuals first load a secure digital wallet app onto their electronic device. When an organization issues a valid credential to them, it’s saved to their digital wallet, along with a public decentralized identifier (DID) of the organization — a string of numbers and letters that verifies the validity of the credential. The same public DID is registered to the distributed ledger.

If individuals need to use a credential to transact with another organization, the organization can quickly and easily verify its validity through the distributed ledger. There’s no need for the organization to individually store and maintain the credential. The credential itself is never accessed or stored by Voyatek, the government agency, or on the ledger.

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Why Use a Public Ledger?

It’s true that a government agency could just as easily store the Public DIDs on a web service (and some have in the past). But there’s a key advantage to using a ledger instead: Ledgers are immutable. Once a piece of information is registered to the ledger, it can’t be changed – even by the most skilled hackers. But if a hacker breaches a web service and changes the DID of an unemployment credential to that of a fishing license–now everyone who is approved for a fishing license can qualify for unemployment benefits. The web service becomes a central, singular point of failure.

It’s also true that a private ledger could be used instead of a public ledger. Private distributed ledgers, like IBM’s Blockchain Platform or Microsoft’s Azure Blockchain Service, control who can participate in the network. While private ledgers still allow some degree of traceability and transparency, the “owner” of the ledger can still modify it – removing the benefit of immutability. Plus, the smaller scale of private ledgers makes them more expensive and more vulnerable to breaches.

That’s why Voyatek’s solution leverages a public ledger—it’s decentralized, self-governing, and inherently safe from hacking and breaches. Agencies should look for a solution built on a public blockchain that offers a true decentralized identity solution.

-Voyatek Leadership Team