Privacy, confidentiality, and anonymity—how do these concepts differ, and why are they so important? The world wrestles with dilemmas around these as more and more of our lives are affected by the collection and storage of data. Although most people aren’t aware of it, Bitcoin transactions and blockchain actually solve these problems. That’s the topic of Bitcoin creator Dr. Craig S. Wright‘s first “Bitcoin Masterclass,” a two-day event streamed from London on January 25-26.

There are eight sessions in the Bitcoin Masterclass in total. Livestreams are available here, and the recording will remain on CoinGeek’s YouTube channel for viewing later. All are recommended for people who’d like to learn more about what Bitcoin can actually do.

Data, but accomplished properly

At the heart of Dr. Wright’s first presentation is how data should be managed correctly now and into the future as electronically-stored information becomes more universal. Existing methods can be unsecure, too revealing, or spread across multiple systems.

Imagine if there was a way to keep all records, no matter how personal or confidential, in a way they could be collated and useful, but only to relevant parties to prove that information exists without revealing it or leaking other details that don’t need to be known, or to keep partial records and details private, even to those who may have all your other information filed.

“It’s about having information that’s needed when it’s needed. Another aspect is by who,” Dr. Wright says.

Much time has been wasted in Bitcoin development over the years on ways to make transactions anonymous. That’s because people often confuse anonymity with privacy and confidentiality. In reality, complete anonymity is neither desirable nor achievable. For honest transactions, there should be ways to verify who you’re transacting with and even keep records if there’s a need to do so.

“If you’re not using identity, you’re not signing,” he adds, noting that recorded identity in accounting has existed in law since Roman times, possibly even before that.

That doesn’t mean that pseudonyms can’t be used or that someone should lay all their personal information bare every time they transact. Even under existing systems, we give away far too much of our personal data for even the smallest purchase (credit/debit cards are a big example). Companies and even governments store far more information about us than they need to and have a poor track record of keeping it secure.

Dr. Wright mentions information security’s “CIA” principle: that information should be confidential, have integrity, and be available.

Bitcoin provides the means to achieve these principles. Parties can share keys proving transactors’ identities, or any other information relevant to their business, without making that information public or accessible to anyone who doesn’t need it.

Automating these processes with wallet software

Dr. Wright called on wallet developers to integrate processes into their applications to simplify this.

“Let’s start thinking about our KPI process,” he says.

Root keys and categorizing data can be shared using ECDH (Elliptic Curve Diffie-Hellman) secrets, which could break transactions into smaller parts and allow different keys for every transaction. The software can quickly determine if a key is valid and if it belongs to a certain party, even if a key hasn’t even been created yet, and even if one party is offline.

An individual or company could keep complete records of all their transactions and personal stored data and collate that information when needed (e.g., at tax time). Governments and businesses could keep records on stakeholders and customers while only ever seeing the portions of those records relevant to a specific purpose. Another example is changing your residential address. At present, there’s an ever-increasing number of different services you have to notify. Bitcoin and a stored digital ID would allow you to update just one record and broadcast it to necessary services.

There’s a lot of concern over future digital identity proposals, and much of that concern is valid. Many organizations have been guilty of over-collecting, over-sharing, and poor security practices. Likewise, many still favor cash because of the (assumed) extra layer of privacy it provides.

Bitcoin fixes the data storage, privacy, and security problems with how it manages access to that data. It can even be more private than cash (as Dr. Wright points out, even physical money is traceable via individual serial numbers on banknotes).

The important takeaway is that we needn’t fear the Big Data and Digital Everything world as long as data can be handled properly. Bitcoin handles data properly. To find out all the hows and whys of this, watch Dr. Wright’s Bitcoin Masterclass series, and be sure to work its concepts into real-world conversations.

Tune in for Bitcoin Masterclass Day Two here.

Watch: Blockchain for Government Data & Applications

New to Bitcoin? Check out CoinGeek’s Bitcoin for Beginners section, the ultimate resource guide to learn more about Bitcoin—as originally envisioned by Satoshi Nakamoto—and blockchain.