Tokenization as a solution to privacy?

With the rise of recommendation algorithms and on-premise personalized marketing being available with few clicks on G-Suite, the issue of privacy and the protection of personal data has became a major ethical problem of today’s world. Many leading world institutions are trying to grasp to problem, both with regulations or new state-of-the-art technologies which promise to deliver safer and fairer use of personal data. One possible solution might be the tokenization of user data. Let’s have a look how this disruptive technology might change the landscape of digital privacy forever. 

By tokenization is meant the practice of breaking down assets (such as personal data) into individual tokens which can be then traded and manipulated with. It is important to note that these tokens are always encoded in blockchain (they are the individual nodes of the blockchain web), meaning there is no central issuer making them. Main advantage of blockchain is that every transaction is publicly listed and is reviewed by the collective of all the nodes [i.e, accounts] together. This basically enables to obstruct the need for a third party when making a negotiation, as the transaction is being affirmed by the users themselves and not an intermediary like a bank or state. 

While blockchain solutions are known to be currently centered around cryptocurrencies, another usage may lie in tokenizing other assets, such as personal data, as analytic company Gartner writes in the book  The Real Bussiness of Blockchain. Each user, be it of social media or websites, would obtain tokens representing his personal data and what he will do with them would be completely on his own. He could, for example, sell tell them to a large analytical company, which would then in turn use them for personalized marketing. Or he may decide to keep them for himself. The big leap from today is that the personal data would not be collected by a central authority (be it a large corporation owning the social media or website, or a state as it is the case in China), but the data would be tokenized and decentralized, users being the primary owners of them. 

Whether or not this technology might solve the issue of privacy, is a difficult question to answer. While this trend would surely democratize user data market, it would fasten the trend of making user data a commodity as well. 

Author: Oldřich Příklenk

picture: chatgpt