Blockchain has been the one of the hottest new technologies of the past couple of years. It’s important to remember that working with blockchain has important repercussions when it comes to information governance.
With blockchain you don't have to know who is on the other side of the transaction.
Blockchain is a technology and infrastructure that allows for the execution or completion of transactions without precisely knowing who is on the other side of that transaction. With blockchain, you don’t need identity verification.
In the popular media, blockchain—and the relationship it has to virtual currencies such as Bitcoin—has a financial focus. But blockchain also can apply to any transaction or passage of data or contracts in any industry.
Blockchain provides transparent, secure and immutable transaction transparency.
There are three key characteristics of blockchain: the technology is transparent, secure, and immutable. Blockchain is transparent in the sense that you can look at the trail of the movement of data. You can see the exact line of steps where data has been passed along. That’s the “chain” in blockchain.
That’s important, from an information governance standpoint. Though you don’t need to know or trust the recipient of your data, you do know that your data can’t be changed. No one can destroy your blockchain without your active participation and consent. You would be aware of the change. In effect, the technology engenders trust because of the viability of the data.
Blockchain is secure in that there’s an encryption and hashing mechanism that requires a key in order to get access to the data (or the currency or the contract.) You can’t steal the data (or currency) because it’s distributed all over the world. And because of that distributed nature, in combination with the encryption and hashing, nothing can be altered without the key.
Blockchain is immutable because past records can’t be changed. Think of a financial ledger. You can continue to append the ledger with information, but you can never change the original or base data.
Blockchain facilitates the transfer of information or documents. The immutability of that transfer presents a chain of custody. By allowing the information to be distributed, the vast majority of the users would have to agree on any change.
Blockchain provides an opportunity for efficient information governance.
That’s why blockchain provides opportunities for efficient information governance. One application might be GDPR with its provision that allows someone to request your data. One possible application: it may be easier, after giving permission to distribute your data, to get that data back and revoke an organization’s right to use the data.
The core of information governance concerns rules about the storage and transfer of information. Blockchain is a totally different way to transfer, consume and store data.
Why the market for data intermediaries will become more challenging.
As more sectors employ blockchain infrastructures, the market for data intermediaries will become very challenging. Many of these companies may cease to have value. Take the case of Electronic Medical Records.
The chain of information from a patient to provider to payer needs to be secure. But with blockchain you know as a patient that the minimum necessary information is there, and that the information can’t be changed.
Normally, the more people who touch information about you, the more risk there is to you. But with blockchain, you as a patient know that the information can’t be changed, and that only the right people have access to the information.
Will blockchain redefine the financial services industry?
In the popular press, blockchain has been more discussed within financial services companies, since it represents a new application of cryptography and information technology to the age-old problem of financial record keeping.
That’s another reason why some people in our industry believe that blockchain technologies may lead to far-reaching changes in corporate governance. Many major players in the financial industry have began to invest in this new technology, and stock exchanges have proposed using blockchains as a method for trading corporate equities and tracking their ownership. Some even say that the existence of a “bank” as a financial “intermediary” may be threatened with blockchain.
If that were the case, some relationships within financial services would change. An Oxford University Press essay published this year talks about those changes “The lower cost, greater liquidity, more accurate record-keeping, and transparency of ownership offered by blockchains may significantly upend the balance of power,” the essay suggests.
Blockchain may provide more flexible sourcing in the energy sector.
The World Economic Forum published another report this year that suggests an application for blockchain in the energy sector. “A blockchain-based platform enables us to simply and securely balance the grid from both ends at the same time,” the reports authors, Jon Creyts and Ana Trbovich, write. “[This] dramatically increase[s] asset utilization in a capital-intensive network. … Expect to see more straightforward applications of energy blockchains in the near term. One of the first will allow you to select the source of your power.”
It’s hard to predict the overall effect that blockchain will have on information governance, especially given the open source nature of the technology. It’s possible, for instance, that players and solutions will be highly fragmented, as is often the case with new technologies. That Wild West may be balanced by big players that begin to build blockchain solutions.
The core attributes of blockchain align well with information governance.
The core attributes of blockchain—transparency, security and immutability—align well with best practices in information governance. Good information governance also relies on these same three things.
If you don’t know what you have, if your data is in an unsecured location or if you have no control over your information, you are courting disaster. If you clean up your data environment and you control how to get to information and where it’s stored, you’re on the right path.
Practicing the three tenants of blockchain—transparency, security and immutability—is valuable regardless of whether your organization is going to be using the technology. We’re happy to advise those organizations seeking to build an information governance construct around their blockchain efforts.