What is a data trust?
EVERYTHING YOU NEED TO KNOW
In this age of the internet, many people have been duped to believe that tech giants are the rightful custodian of data. Data has been considered the “New Oil,” and everyone is salivating at the enormous data that streams across the internet every second. So, should our sensitive private data be governed and controlled by third-party tech giants? You probably won’t buy that idea, and that is why the concept of data trust has become critical to every organization. But, what really is data trust?
Data Trust Definition
Traditionally, trust refers to a three-party relationship where an asset or value is transferred from a buyer to a seller through a trustee. Now, data trust simply improves on this concept to establish a technology platform that gives the sovereignty and control of data assets to the transacting parties without the need for a human intermediary.
Many people would agree that data should be governed by those who created it in the first place. By establishing trust in how data is collected, managed, used, and shared across platforms, we place the value of data in the hands of the many internet users instead of a few tech giants or government agencies. In other words, to realize the full benefits of data, users must retain trust in how data is collected, managed, and shared.
Data trust has been considered the most viable way to improve data privacy and trust, and several pilot projects have been executed to demonstrate its usefulness. With innovative technologies like the Blockchain, it is possible to increase access to data while retaining trust.
Data Trust Applying Legal Trust to Data
Just like traditional trusts held and made decisions concerning property or investment, data trust applies the same conception by holding some value while making decisions about the use of data. It is a tech-backed legal framework that provides independent stewardship of data for the benefit of a group of individuals or organizations. The benefit could be something like aiding research on a new treatment method, creating a new business, or empowering a community, citizens, or consumers.
Data trusts could steward open or shared data while the data could be generated from private, public, or third-party sectors.
Trustors could include anyone who holds data, be it individuals or companies. They typically choose to grant some rights to manage and control data to data trust trustees who can make decisions about who can collect, access, or share data and for what purpose. On the other hand, the beneficiaries of data trust include those who have been given the access to data for various purposes like research and development, or those who benefit from what they can create out of the data, e.g. targeted adverts, supply-chain management.
Now, data trust can be established through various technologies. Data trusts could steward open or shared data while the data could be generated from private, public, or third-party sectors. However, since it’s becoming increasingly difficult to trust humans with sensitive private data, decentralized technologies like blockchain provide a more viable solution.
Data Trust and Blockchain Technology
Other than powering popular cryptocurrencies like Bitcoin (BTC), the blockchain technology has been known to enhance data security. As data increasingly becomes a valuable asset across the globe, there is a rising need to safeguard its security. Data-centric companies like Amazon, Apple, Facebook, Microsoft, and Alphabet are reaping big from the value of data. Surprisingly, some of this data is collected without the users’ knowledge. So, securing data has become a critical priority for businesses and individual alike. And today, data trust solutions are coined around the secure, transparent, and decentralized blockchain technology.
Blockchain’s impact in establishing data trust is through the following features:
Encryption and Validation
Blockchain technology allows data to be encrypted, making it impossible for third-parties to modify or tamper with it. Users save a cryptographic signature of the file or document on a blockchain. Due to the decentralized nature of blockchain, users can cross-check document signatures across all the nodes and ledgers in the network and verify that the data has not been altered or shared. Blockchain undoubtedly enhances data privacy and trust through a reliable, independent data verification protocol.
Decentralized Data Governance and Trust
Many organizations have questioned the integrity of some data trustees, and understandably so. Well, it may be difficult to entrust an intermediary with your sensitive data, unless there are clear legal frameworks. But even if that was so, hackers and cybercriminals could easily take advantage of the centralized nature of data storage and strike hard. Blockchain is a decentralized platform that does not rely on a central point of control. It works as a digital ledger of transactions where every computer stores a copy of data. This makes the platform transparent and secure. Blockchain uses consensus protocols across numerous nodes to validate a transaction in an incorruptible way. Again, as the data is stored on multiple servers, it is extremely difficult to hack or tamper with it even if one or two servers were compromised.
As an innovative technology that continues to grow in popularity, blockchain provides an ideal platform to establish data governance and trust. Companies can securely store their huge amounts of data and share with beneficiaries based on smart contracts. A smart contract is basically a computer protocol that electronically facilitates, verifies, and enforces a contract negotiation or performance. When it comes to data and trust, smart contracts play a central role in ensuring transparent, secure, trackable, and irreversible transactions between trustors and beneficiaries without the need for third parties.
The Importance of Data Trust to Companies
Every company has some form of data, such as personnel files, financial transactions, supplier details, customer data, product information, and much more. All management decisions are made based on this data to improve processes and the quality of services or products. Actually, data is the most important asset a company holds. On that ground, data security and trust is critical. You need to guard and manage the availability of data to employees who need it, maintain the integrity and accuracy of the data, and uphold confidentiality by allowing access by only authorized persons.
Through data trust, you will safeguard the reputation of your company and establish it as a brand that people can trust with their sensitive data.
Transparency and control are the fundamental principles that build an organization in this digital era. When trust is established, customers and partners will be willing to share their personal information. And, as an organization, you can gain better insights into the interest of your employees and customers for the benefit of everyone.
A business model that places transparency at the heart of its operations actually builds the trust by design. That way, new opportunities open up, quality marketers show up, and a deeper engagement with clients and stakeholders ensues.