Blockchain technology has won accolades for improving efficiency and transparency in business operations. It has also been seen as improving security. But blockchain security is a complex issue that pits anonymity against trust, according to IBM’s Security Intelligence , a thought leadership and technical expertise hub for executives who manage enterprise risk and security. Permissionless blockchains such as bitcoin’s do not require identity information from their participants. The bitcoin blockchain achieves trust through encryption. After each transaction, the cryptographic operation makes the transaction part of the chain. Private Blockchains: IDs Matter Private blockchains serve a different purpose. The goal is to create a private network for known participants. Hence, participants’ identities are important. For private blockchains to deliver their potential benefits, they need to provide identity and access management (IAM) functions. Such blockchains need to identify rather than anonymize their users. Why Identity Matters Parties to a blockchain smart contract are identified and given particular roles. Specific actions are linked to specific participants. For example, party A offers to sell a toaster to party B. Party B accepts the offer, and party A sends party B the toaster. The delivery service then delivers the toaster and party B pays party A. The transaction can be embedded in a smart contract, which is a blockchain with rules. Besides recording externally entered transactions, the rules allow certain actions to take place among participants. A smart contract can transfer payment from a buyer to a seller when the delivery service sends a receipt to the blockchain. But the question remains: how do we know the parties’ true identities? The Identification Process There are two parts to the identification process. The first is to identity verification; someone has to assert that part A is party A, and someone also has to verify their […]
