The confluence of private data stores and cryptocurrencies

Users have migrated from running all their own software and storing files locally to accessing their data through cloud-based software solutions. The migration of files has also been accompanied with flows of personal information to corporations. Most financial transactions that we currently perform are already in digital form.

Consumers authenticate themselves with their real identity to communicate to a bank that the real person, “Jonathan Levin”, wants to settle a monetary obligation. In recent years, consumers have started to question this modus operandi due to high-profile cases of hacking, common cases of identity theft and rife credit card fraud. Two industries provide an alternative from two very distinct angles, private data stores and digital currencies. Together they form a counter culture. Both aim to put the user back in control.

The private data store industry has been around for about a decade. Typically, the tools enable users to keep their sensitive data secure and assign access control. With much of our personal information of who we are, where we live, who we know and what we spend money on scattered all over the internet, private data stores are attempting to give this back to the user and, in some cases, help users monetise it (see Jaron Lanier for a vision of the world where people are paid to give away their personal data).

Deployment in any of these markets is crucial. More advanced services, like Open Mustard Seed, sit between a user’s phone and the apps that usually get granted access to behavioural data on the device (microphone, camera, location, etc.). In this new world, the behavioural data remains on the device but the device ships code to apps that ask for information. With Open Mustard Seed still under development and the user experience of other personal data stores leaving something to be desired, they have not taken off even in the wake of millions of compromised credit cards, gmail accounts and the like.

On the flipside, cryptocurrencies have grown considerably in user base and presence in the mainstream media. With high profile thefts and fraud, Bitcoin’s public-private key architecture has brought real meaning to financial autonomy. Consumers can either secure their own private key to hold bitcoins or can trust a third party to store it for them. The loss or theft of a private key in bitcoin means that a user no longer has access to their funds. The sexy attractiveness of uncensored financial transactions, massively volatile prices and no government manipulation meant that cryptocurrency user growth has outpaced personal data stores. Meanwhile it certainly has educated a considerable number of people in the general population, including this author, about the possibility to be autonomous with financial and personal information.

Personal data stores are possibly more advanced in their thinking about granular user control of individual pieces of private data. They allow you to manage every aspect of your data, select the counterparty or service that you interact with and control what you share in that relationship. Bitcoin services have lagged behind in this regard. Many companies ask users to surrender the control of their coins to ensure a better consumer experience. However, there is potential to move towards this model where multi-signature technology can help represent different financial controls. In digital currencies, transactions can have programmable criteria that need to be met for funds to be dispersed. Consumers can set up a rule that 2 out of 3 private keys are needed to sign a transaction before the funds are spent. Approximately 7.5% of all bitcoins are currently secured with this type of technology and this number is growing.

Armed with a powerful base layer of user control we can engineer the appropriate solutions for lending aspects of our data or security of our funds to trusted parties when we need to get things done. For different use cases and transacting parties we will have different levels of intermediation and trust. Technologies that enable granular control over use of funds and data will certainly play a role in a world where intermediaries and data silos are no longer required. The creators of both digital currency products and private data stores should strive to identify the key points in the consumer journey that will continue this important educational journey.

I am grateful for useful conversations with William Heath (Mydex) and Patrick Deegan (OMS). Any errors remain my own.