Things are changing rapidly and there is a significant rise in demand for decentralized data solutions. How do decentralized data solutions work? How effective are they? In which business instances can they help?
Decentralized data protocols and marketplaces give individuals and enterprises the opportunity to monetize their data in a way that is safe and compliant. Through blockchain technology, information is traceable and verifiable via its decentralized application archive.
Data that flows through its decentralized archive is immutable and cannot be changed, allowing for increased control both within and between enterprises, and permitting smoother collaboration.
Data storage systems based on blockchain are better protected against hacks or leaks, thanks to blockchain’s immutability. Amid the rise of blockchain applications, there is a new architecture for data governance where policies can be programmed into the blockchain code itself, thus providing trust, openness and interoperability for domestic or even cross‐border data flows.
There are a number of key characteristics that are integral for decentralized solutions to operate efficiently.
Self-sovereign status
First of all, decentralized protocols must have a self-sovereign status. They must be considered a new, decentralized network that enables data owners to control rights over their information and authorize role-based access rights to data consumers. Consumers must have full autonomy over their data and what happens to it.
For this to happen, there is a need for a tool or application for a company to manage, standardize, and share their data. Many organizations can utilize data marketplaces to share, monetize, and acquire data in a trusted and cost-effective manner. In the near future, we expect to see a rise in organizations utilizing their data in this capacity.
Data integrity
Data integrity is another vital element for decentralized data protocols to work. Data integrity can be summed up as the overall accuracy, completeness, and consistency of data while also referring to the safety of data with regards to regulatory compliance such as GDPR, and security.
These are maintained by a collection of different processes, rules, and standards implemented during the design phase which are coded with sufficient policies to ensure the organization is fully compliant.
In short, once these rules and regulations are encoded, the blockchain can automatically enforce them while also helping with auditable data and transparency.
User consent and ongoing transparency
All organizations should acquire users’ consent for data collection, and provide information on data treatment. Both of these elements should be immutable and recorded on the blockchain. Data exchange will be prohibited if no authorization records are found on the chain.
Right now, there is a need for on-chain data authorization. There is a multi-dimensional element to data integrity endorsement, where many off-chain data sources are trusted, like public authorities, and NGOs, which can lead to data breaches.
In order for an advanced decentralized data solution to work, there is a need for a decentralized data protocol to handle the communication and rules under the situation of no central authorities.
We need to move away from centralized control where consumers have no say in how their data is being utilized or shared. There needs to be a place for fair data pricing and trading where peer-to-peer data exchange based on free pricing and distributed data storage exist without any centralized censorship or data control. Only this way can ownership over data can be verified.
Now more than ever it is important for businesses to explore and prioritize blockchain-based data solutions. In doing so, it will inevitably protect their consumers’ data, business, products, and community. There is no time like the present, so what are you waiting for?
NOTE: The views expressed here are those of the author’s and do not necessarily represent or reflect the views of BeInCrypto.
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