A huge cache of internal files of the Panama-based law firm Mossack Fonseca (which specializes in creating shell companies) has been leaked, embarassing multiple world leaders and resulting in calls for their resignation. Could a blockchain-based system have fared better at protecting the privacy of its users?
The release of the Panama Papers (11.5 million documents, covering 214K offshore entities, over a 40 year period) is a very big development, no matter how much various world leaders try to downplay it. Governments will act on the information which is now in the public domain, although this information might have been leaked illegally. Leaks of such magnitude pose the question – would a blockchain based ownership system be more secure in protecting the privacy of its users?
According to Jerry Cuomo, IBM VP – Blockchain Technologies, while the blockchain creates trustworthy and efficient technologies, the core technology must be further adapted to further address security and privacy concerns. He refers to this as an 'enterprise-ready blockchain'.
IBM, which is at the forefront of Linux's Hyperledger Project, is working on furthering blockchain applications. An identity management system has been implemented by cryptographers at IBM Labs, whose capabilities include user transactional privacy (anonymity and unlinkability of transactions). Privacy controls implemented in smart contracts precisely specify who can view them. Once these applications are commercialized, we can expect a sea change in how secure records are stored.
The existence of tax havens and confidential ownership of companies is a reality, whether other countries across the world like it or not. If law firms like Mossack Fonseca had implemented secure, blockchain-based solutions, a disgruntled employee / hacker could not have been able to reveal such detailed records of its users. While improved privacy is just one feature of blockchain-based solutions, there are multiple other advantages including cost-savings, improvement in settlement times and lower fraud as well as forgery risk.