Between generation, collection, and monetization, data is proving an ever-evolving conversation. Now that nearly every device, from computers to smartphones to smart appliances and more, is collecting data, the volumes created daily continue to grow.
However, data collection alone is not necessarily where the ultimate value lies. In many respects, its intrinsic value depends on how the data is analyzed, interpreted, and deployed to improve personalization, products, services, and more.
Still, many existing practices for collection and storage are coming under greater scrutiny, especially as regulatory policies centering on privacy, like GDPR, gain traction. Moreover, the modern methods of storing and sharing data have many potential security vulnerabilities, and could expose personal data and identities to malicious actors.
Whether matching stringent regulatory compliance practices or providing more secure infrastructure, many blockchain services contain the answer to these growing challenges surrounding data.
Tackling the Privacy Angle
The focus on privacy has intensified dramatically over the past decade, as more consumers grow leery of how their credentials and data are being collected, monitored, monetized, and stored. Ordinarily, organizations keep these reams of personal data on centralized servers, exposing user data to serious vulnerabilities and points of failure. Moreover, they can silo this data to create monopoly-like structures that block competition and disadvantage users. Blockchain-based projects like KILT Protocol offer a vastly different approach to remedy this reality.
Instead of presenting a users’ trustworthy credentials directly, such as by using an email address to sign up for a service, the protocol issues verifiable, revocable credentials. These credentials effectively replace a user name and password. Through KILT’s system, a user’s identity (whether an individual, enterprise, or an object) is attested to and then verified, helping build trust while avoiding repeated credential verification by a third-party service.
In effect, KILT can be considered a replacement for constantly showing and sharing your identity to prove you are who you say you are, by acting as a trusted source of information. Most importantly, this model prevents companies from sharing user information between them, thereby restoring user control over personal data and the possibility of sharing it when and if users want to do so.
The Oracle: A Secure Bridge to Off-Chain Data
Many blockchain utilities, especially smart contracts, depend on triggers within the blockchain universe and real-world data used to verify conditions and execute contracts. For example, imagine a legal smart contract for transferring ownership of a house.
The money to pay for the property is in escrow in a smart contract that requires verification of real-world data, like the physical transfer of a deed. Yet, if the blockchain cannot pull data, such as the validated transfer of the deed by a third party, how can the smart contract conditions be fulfilled, unlocking the money for the seller?
This is where blockchain oracles come into the picture. Oracles are effectively a secure channel of communication between real-world data and a blockchain. Among the projects achieving this feat is Chainlink.
Bringing real-world data onto a blockchain in a readable format presents a serious hurdle. Chainlink addresses this challenge by acting as middleware, mediating between the data and the blockchain.
Smart contracts effectively request data from a Chainlink oracle, which then take this request in one programming language and translate it into another useful language for querying off-chain data. Once retrieved, the data is then converted into a format that the smart contract can read.
Instead of providing this service via a centralized oracle design, Chainlink is decentralized to avoid the very same single point of failure vulnerability that poses a threat to commonly employed data storage and sharing techniques. Ultimately, this helps realize the goal of connecting two disconnected universes of data.
Taking the Reverse Approach
Bring off-chain data on-chain is potent and valuable, but what about the opposite scenario of bringing blockchain-based data off-chain? Blockchains create huge volumes of data, between hash rates, transactions, instances, and other related activities. Yet, given the different blockchain programming languages, moving data off-chain in a readable format by off-chain systems and applications requires a new workflow methodology.
PARSIQ has delivered a solution to bridge these gaps by providing a tool designed to monitor and process blockchain data. It effectively provides the workflow automation tools needed to connect legacy systems and off-chain applications to valuable blockchain-based data. The platform’s suite of products helps handle everything from database querying to instance notifications, serving any use case its clients can dream up.
While this has primarily been applied in fields like DeFi, PARSIQ has practical use cases outside of the blockchain universe, whether involving transaction tracking for compliance purposes, financial accounting, or building insights on the different properties of competing blockchains. Building actionable intelligence from blockchain data is much more practical with this monitoring solution, not to mention the off-chain applications and systems that can benefit from these data points.
Shifting Blockchain’s Value Proposition
Blockchain is more than a destination for speculation, as the projects above demonstrate. Blockchain’s unique properties and functionality, compared to legacy systems, make it a productive repository for data and promising replacement for centralized solutions.
Besides for their potent uses helping provide a bridge between the two universes and restoring ownership over user data, blockchains on their own contain vast troves of data, making the connection that much more valuable.
Disclaimer: The information contained herein is for informational purposes only. Nothing in this article should be taken as a solicitation to purchase or sell digital assets.