Blockchain And Privacy

Many associate the term Blockchain with the digital currency Bitcoin. We use blockchain as an umbrella term for a hodgepodge of technologies. This article gives a first overview of the world of blockchains.


Simply put, a blockchain is a set of time-stamped records stored by several nodes (computers). A single entity does not control these nodes. These records are kept in blocks and encrypted with the previous block’s hash value. This creates a chain of blocks. Once a new block is saved, the last block is no longer editable. Each participant (node) keeps a copy of the entire blockchain and is constantly updated. Using a complex mechanism, the nodes agree on who is allowed to define the content of the current block.

The most important properties of a blockchain are

  • immutability
  • transparency
  • decentralization


Immutability is undoubtedly one of the most critical features of any blockchain. Immutability means that no developer or contributor can insert or change data without validation by other contributors. When a transaction is submitted to a blockchain, a certain number of participants must validate that transaction to be included in the block. Once a transaction is included in a partnership, it can no longer be modified. The participants who can validate a transaction are called validators. Each blockchain has its mechanism to verify the trustworthiness of a validator. Most of these are purely technical procedures, which exclude human inadequacies or agendas.


Decentralization means that no single person or authority controls how the data is processed. A traditional network infrastructure follows the client-server model. In this model, operation and development are controlled by one or more people assigned to an organization or organizational unit. The rules are set by the organization or by a higher authority (e.g., a government).

A decentralized blockchain eliminates this dependency. The participants (nodes) are distributed worldwide and communicate encrypted via the Internet. The failure or shutdown of a node has no impact on the blockchain. No central body decides on participation in the blockchain; participation is possible for everyone.


All participants can view the entire blockchain. Every single transaction can be traced. Of course, a transaction in a blockchain contains very oversimplified data. A Bitcoin transaction only includes the ID of the sending and receiving wallet, and the number of Satoshi transferred. The transaction does not reveal who owns the wallet. The content of the trades depends on the blockchain and the purpose. Unique blockchains can also be used for the encrypted storage of data.


Information security is aimed at confidentiality, integrity, and availability. These aspects can be guaranteed to an extremely high degree in a blockchain. The decentralized data storage ensures availability since there are no points where a failure would affect the entire blockchain. In a way, immutability ensures integrity since an attacker would need to control the majority of nodes to validate a change—the confidentiality is guaranteed by encryption methods that today’s standards cannot crack. Safety is certified by the procedures used and does not depend on a higher authority. Each participant authorizes transactions using a private key. The biggest weakness is, therefore, the storage of the private key. However, this is the responsibility of the participant.

The use of service providers means high risk since the security level can be increased, but there is a dependency on an external body. Especially when using cloud providers, there is the additional problem that the service provider is subject to another jurisdiction, and access to the data by foreign government institutions cannot be ruled out. There have been many exciting developments in recent months that make blockchains interesting for the processing of personal data. Most of these projects are still in their infancy, but we still want to report on them early to make these developments accessible to our readers.

Also read: How Does A Private Cloud Work?

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