Data is power, blockchain technology makes data 'honest'

Data is like the seed that allows information, knowledge and wisdom to germinate and bloom. The photons that hit your eyes, the sound waves that enter your ears, the skin nerves that reflect all your touch, these are raw data. Our brain tends to believe that this data is real and responds to the real environment. So the brain automatically extracts information from this data and builds knowledge, which is the basis for our actions. Simply put: data is extremely important.

But what happens if the data is somehow corrupted? The DIKW pyramid (data, information, knowledge and wisdom) collapses. Information, knowledge and, increasingly, the devices upon which decisions are based will all be faulty. And because we rely more than ever on automated big data, data corruption can be extremely costly, even fatal.

To make it easier to understand, let’s first explore a real-world use case that fundamentally relies on data integrity, tying the IoT to the economy. Exponential rainfall insurance:

For farmers in emerging economies like Kenya, the difference between a good harvest and a bad harvest can be like the difference between being able to afford the necessities of life and enduring malnutrition and hunger. As a result, insurance providers and farmers have begun adopting an innovative insurance model where farmers receive a payout from the insurer if there is not enough rainfall in a given season to guarantee a good harvest. The model relies on data from local IoT weather stations to determine whether the provider’s payout to the farmer is appropriate. This model is very efficient because it allows the insurer to avoid the costly and error-prone human factor that would otherwise require the insurer to verify claims for each crop and manually settle each farmer’s claim. However, because in this model, data becomes the only thing that determines whether Party A (the insurance company) needs to pay Party B (the insured), there is an incentive for both parties to change the data to favor their side. So, in this example, let’s take a deeper look at data integrity and its importance.

Data Integrity

The term ' data integrity ' refers to data that you can rely on to be honest and complete. Unfortunately, as we discussed at the beginning, there are huge incentives for people to falsify data, and as it stands today, data falsification is happening all the time.

There are essentially two ways to falsify data: hardware and software. The hardware approach is to "censor sensors". This can be easily accomplished by preventing the sensor from collecting real data about its environment and replacing it with false inputs. In the use case we gave earlier, data tampering was easily accomplished by simply placing an umbrella over the sensor to instantly invalidate the data from the weather station. In other words: garbage in equals garbage out. The solution to this basic hardware barrier to data integrity is to keep the sensors hidden, or monitor them, and have sensor Byzantine fault-tolerant redundancy, such as placing more sensors for data comparison. Fortunately, for data integrity, the "censoring sensors" approach requires a dishonest party to first locate the sensor, and then continuously make inputs to manipulate the sensor's data inputs while avoiding detection of this dishonesty.

Software: This more effective way of falsifying data involves altering the data after it has been entered into a central database. A sensor may do its job perfectly and accurately record rainfall, but if this data is later manipulated, all the work of the sensor is in vain. For the insurance company, with direct access to the database, data tampering is as simple as pressing a few buttons. For the other party (the insured), data access is a challenge, but this can be done by hacking into the database, or bribing insiders to change the data on their behalf. The insurance industry is just one of many industries that have taken advantage of these tactics. The severity of data tampering in these industries ranges from relatively harmless to life-and-death.

There are countless examples of students breaking into the school's central database to falsify their grades.

In the age of digital medical records, this presents dauntingly devastating possibilities. It is not hard to imagine a nefarious black hat or cyberterrorist altering a hospital’s database of medical records that might contain the types and dosages of medications a patient is taking. This could turn deadly with the push of a few buttons. Similarly, in clinical drug trials, there is an incentive to tamper with data by modifying data or study milestones, which can waste funding at best and allow dangerous drugs to enter the market at worst. Finally, as we rapidly enter an era of wearables, brain accesses, and biotech implants, the importance of data integrity increases by orders of magnitude every year.

If you think about it, we are on the cusp of an autonomous age, where liability is delegated to agents. It is natural to assume that companies building self-driving cars have compelling incentives to alter the car’s black box data, because if the tragedy is caused by the design of the car itself, not the person who caused the accident.

These examples all revealed the urgent need for a solution that could address the data integrity issues of our legacy database infrastructure.

Solution

The Tangle - IOTA's permissionless distributed ledger - solves this problem by storing data in a distributed trustless manner across the network nodes to ensure data integrity. Now, this approach is publicly auditable because everyone in the interconnected cluster has a copy. This gets rid of the single point of failure. Now, it is impossible for someone to change the original data without the rest of the network seeing that the changed data does not match their copy. Therefore, data integrity is ensured.

Additionally, unlike older blockchains that incur costs to send/store data, the IOTA network is completely free. Similar to how data transfer in older blockchain architectures bloats the network and slows it down, in the IOTA Tangle ledger, it actually strengthens the network’s security and makes it more efficient. Finally, due to the unique architecture of the Tangle ledger, it allows for network partitioning, which means you can branch off the main Tangle ledger and build local networks that still ensure data independence, without having to worry about whether you can have a continuous network connection. Of course, there is no reason to store the entire data set on the Tangle ledger. All you need is to store the hash. The hash is the biometric equivalent of the data, if you change the content of the data - its DNA - the data hash will change, indicating that the data has been tampered with. The IOTA Tangle is a medium specifically designed to send data to ensure its integrity, even at the edge of the network.