Data privacy has become a serious issue in recent years as consumers grow aware of the malpractices by corporations who collect large chunks of data. According to a 2021 report by KPMG dubbed ‘Corporate Data Responsibility: Bridging the Trust Chasm’, 86% of U.S consumers are concerned about the current state of data privacy. Additionally, 68% are not comfortable with the amount of data being collected by organizations.
Despite these concerns, the report notes that 70% of the companies featured in the survey are expanding their data collection efforts. An approach that 62% of the interviewed business leaders believe should be accompanied by better data protection policies and checks. However, it is still not certain that enhancing the current data protection structures will completely restore consumer confidence.
If history is anything to go by, market-savvy consumers have learnt that most of the data economy underpinnings are invisible to the common shopper. This is because consumer data is often passed through multiple third-party services, increasing the possibility of being compromised along the way. Furthermore, corporations are the main beneficiaries, either by selling data or using it to improve their products and services.
For instance, Facebook has previously been accused of mishandling its users’ data. Mark Zuckerberg appeared before the senate in 2018 following the Cambridge Analytica scandal. As per the allegations, the social media giant had exposed close to 87 million users’ information, allowing the data mining firm to develop social engineering algorithms to influence global politics.
The Challenge in Data Privacy
With the rising concerns in data privacy, stakeholders, including regulators, corporations and consumers are taking some preventive measures. The European Union, for example, introduced a data protection law in 2016 known as the ‘General Data Protection Regulation’. While it has been effective to some extent, it is yet to fully address the fundamental issues in data privacy. Let’s take a deep dive into some of the challenges to get a better picture.
- High Cost of Maintaining Data Privacy
Organizations may be willing to protect the data collected from consumers but this comes at a high cost. Data security systems and audits cost a fortune, not to mention that they do not fully guarantee a breach. This high maintenance cost has left medium and small sized companies at a crossroad on whether to implement advanced security systems. Even some big players are still compromising data security, only focusing on the potential returns.
- Increased Vulnerabilities
While the connected web has opened up more opportunities for businesses, it has brought about a similar measure of vulnerabilities. According to a survey by Statista, 74% of the respondents (working in large U.S entities) noted that the company had experienced a data breach in 2021. This figure is expected to rise in the coming years given the shift to remote working environments, most of which rely on vulnerable web ecosystems.
- Emerging Tech Interconnectedness
Emerging technologies such as the Internet of Things (IoT) have also contributed to the growing challenges in data privacy. This technology enables communication between smart devices; but at what cost? Interconnected IoT systems are more exposed to data leaks, allowing malicious players to access critical data while it is being transmitted across IoT nodes and sensors.
Decentralization; Giving Users Control of their Data
Though it may seem like an uphill task to address the issues in data privacy, decentralized ecosystems are gradually changing the narrative. Built on blockchain technology, decentralized protocols such as Profila introduce an ecosystem where both consumers and brands can benefit from the shared data.
Unlike the approach taken by today’s corporations, the Profila ecosystem features a decentralized digital marketing platform on the Cardano blockchain. Ideally, consumers can leverage this platform to create a profile, featuring their personal data and product interests at any given moment. Profila ensures that this data is protected and immutable based on the Cardano blockchain infrastructure.
Users also have the option of sharing their personal data with brands that are marketing their products on the Profila app. In return, they are compensated with a 50% commission from the advertisement fees paid by a particular brand. This creates a win-win situation for both parties, given that brands will receive more honest feedback and reduce their advertisement costs by targeting the right consumers.
Even better, decentralized marketplaces such as Profila expose users to the larger DeFi ecosystem. This burgeoning market has grown significantly since the debut of the first governance token in May 2020; as it stands, there is over $211 billion locked across various DeFi protocols that offer services such as lending and borrowing, derivative instruments and yield farming.
Data has become the new oil, once refined it can fetch millions. However, the primary beneficiaries of this new trend are still the large corporations. Decentralization will introduce a paradigm shift, favouring the consumers who have long endured the malpractices by the likes of Facebook. As we usher in this new era, data economies will be defined by incentives to both consumers and brands, instead of the centralized model where the latter takes home the lion’s share.
David is a crypto enthusiast and an expert in personal finance. He has created numerous publications for different platforms. He loves to explore new things, and that’s how he discovered blockchain in the first place.