How Blockchain Can Solve Modern Identity Theft Crisis and Be a Core Reason for “No More ID Theft”

Identity theft is a major worry for many people today. This was compounded by the Equifax breach that leaked the data of over 140 million Americans. The data in that breach included information such as addresses and social security numbers in addition to names and phone numbers. It was a nightmare scenario and there has been a lot of press coverage of the incident.

There's more bad news regarding identity theft because, since that breach in 2017, there have been another 29 breaches of various companies that have affected over a billion people worldwide. Companies that should be held accountable simply have the wrong attitude towards identity theft because the laws do not hurt them enough in the case of a breach.

Laws, Consequences And The Attitudes Around Personal Data

Let's take a look at what companies are required to do with personal and what consequences they face in the event of a breach. Data protection laws are (or at least were) created to allow companies access to your identity data. The FCRA in the US, or the ECHR in the EU attempt to safeguard your data by holding companies legally responsible in the event of a data breach.

The sad truth is that most companies simply take out insurance to cover any breaches they might have. This insurance covers any costs they might incur if they were sued for not adequately securing their identity databases. It's a telling sign that there are no real measures in place to notice a breach. Most of the breaches detected have been from security researchers finding them on dark web sites selling the information.

A clear example is PCI compliance and how woeful the rules re regarding credit cards. All that is mandated is that the credit card information is encrypted, with the additional rule that the CVV number is not stored in any database. All other details can be stored in plain text files, and frequently are by companies that do not have the resources to manage a proper security system. That means hackers have easy access to your name, your address, your phone number/s, and your entire order history. Information like this is gold for thieves who can now see an itemized list of what they can steal from a house. Combined with social media data, they can plan out what they will steal, when they will steal it and when you will be away from home.

As a result of the lax rules and the focus on using insurance to pay off lawsuits, IT professionals in those circumstances are told to get the systems ready as quickly and as cheaply as possible. This is so that data can be taken easily, and again, cheaply. Obtaining and storing the data is far more important to companies than securing it against attacks, which is a scary thought when looking at how breaches have increased in scope and frequency int the last 5 years. Particularly with regards to state-backed groups from North Korea, China, and Russia.

The Blockchain Is The Only Answer We Have To This Epidemic Of Identity Theft

Blockchain, at its very core, is about trust without a middle man. That your computer can reliably talk to another computer and agree on terms without anyone having to meet, this means that it is highly secure and this is shown by the value of the Bitcoin bug bounty according to Evar Dion. He says that anyone who managed to crack Bitcoin's protocol would find themselves with a billion dollar bug bounty. Having access to that kind of power is enticing, but no one has been able to crack it yet – though many have tried and failed.

Distributed ledger technology is secured by a, at the present time, unbeatable encryption protocol. Once you factor in additional layers can be added in easily, you begin to see how much Icould mean to the identity industry.

One company that is working diligently on identity securing systems is IBM. They have what they call the “IBM Blockchain Trusted Identity System,” a service that allows crypto exchanges to improve their KYC/AML processes. It is a system that allows the companies to authenticate clients without having to give up control of the data. Since it is based on blockchain technology and likely in a highly secure location, many think it is the first of a long line of security systems to prevent identity theft.

There will be many more such systems – and once they fully come online and are tested in the B2B sphere the adoption into the mainstream will be quick and easy.

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