Blockchain Revolution

4.
Security
Principle: Safety measures are embedded in the network with no single point of
failure, and they provide not only confidentiality, but also authenticity and
nonrepudiation to all activity. Anyone who wants to participate must use cryptography
—opting out is not an option—and the consequences of reckless behavior are isolated
to the person who behaved recklessly.
Problem to Be Solved: Hacking, identity theft, fraud, cyberbullying, phishing,
spam, malware, ransomware—all of these undermine the security of the individual in
society. The first era of the Internet, rather than bringing transparency and impairing
violations, seems to have done little to increase security of persons, institutions, and
economic activity. The average Internet user often has to rely on flimsy passwords to
protect e-mail and online accounts because service providers or employers insist on
nothing stronger. Consider the typical financial intermediary: it doesn’t specialize in
developing secure technology; it specializes in financial innovation. In the year that
Satoshi published his white paper, data breaches at such financial firms as BNY
Mellon, Countrywide, and GE Money accounted for over 50 percent of all identity
thefts reported that year, according to the Identity Theft Resource Center.
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By 2014,
that figure had fallen to 5.5 percent for the financial sector, but breaches in medical
and health care jumped to 42 percent of the year’s total. IBM reported that the average
cost of a data breach is $3.8 million, which means that data breaches have cost at least
$1.5 billion over the last two years.
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The average cost to an individual of medical
identity fraud is close to $13,500, and offenses are on the rise. Consumers don’t know
which aspect of their life will be hacked next.
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If the next stage of the digital
revolution involves communicating money directly between parties, then
communication needs to be hackproof.