Enigma’s (ENG) Privacy Protocol Will Make Rating Agencies like Equifax Obsolete
Privacy issues have come to the fore in recent years, especially after the hack at rating firm Equifax in July 2017.
It also reared its head after a whistleblower revealed that Cambridge Analytica had secretly harvested personal data of millions of Facebook users.
Worse, the data was used to create misinformation and influence public opinion.
Cryptocurrency start-up Enigma wants to change this. One sector that could be disrupted by the platform’s technology is credit score rating agencies.
But before we look at how ENG can transform the sector, let’s have a glance at what it is.
Currently, centralized credit bureaus like Equifax and TransUnion handle most of the Personally Identifiable Information.
This information includes user information (names, addresses, social security numbers, birth dates etc) credit information and other records that contain personal data.
These companies don’t provide tamper-proof security and privacy. Criminals can access and use such personal information to open and operate bank accounts or credit lines.
All these can be done without the user’s knowledge, only for the victim to suffer losses and damage to their creditworthiness.
And these rating sites are a fertile ground for criminals and scammers.
Enter Enigma (ENG)
Blockchain has been touted as one of the solutions for these obvious abuses of privacy.
While it is an upgrade to traditional privacy methods, it too has shortcomings that make it less effective or even undesirable.
It is because blockchain in itself doesn’t offer complete control and privacy. As such, privacy is still compromised due to the transparent nature of blockchain.
Enigma wants to change that by offering complete privacy using blockchain and secure computing.
The start-up wants to transform the credit scoring industry by ensuring that users have full control over what they share, with whom, and when.
According to the platform, its “privacy protocol can enable a secret contract-based decentralized credit scoring approach that provides full data security for individuals.”
What’s Enigma (ENG)?
Enigma is an off-chain network that seeks to help blockchains solve two of their biggest challenges. These are scalability and privacy.
In so doing, the Enigma protocol brings security and decentralized data computation to the marketplace. It has a great ambition.
“At Enigma, our vision and focus are to make secret contracts — and the applications they will power — a reality.We believe they are absolutely necessary to enable true decentralization at scale”
What’s a credit score and how’s it calculated?
A credit score is an analysis of an individual’s credit files and related information to ascertain their creditworthiness.
Banks and other lenders use this metric to determine whether you qualify for loans, at what level of interest and so on.
The data used is provided by institutions like banks, utility companies, and credit card firms.
One problem is that users never know how the score is arrived at and worse still, may never know how to improve it.
And then there’s the problem of who has access to that information.
Normally, credit scores are only shared by the users of the lending party. However, rating and credit agencies like Equifax may sell this information to certain companies.
Worse still, these companies can be breached and data stolen, leading to identity theft and such as criminal acts.
Blockchain solutions can tackle the challenges via smart contracts.
However, blockchains are publicly auditable and all data inputs are visible to anyone who cares to check. And that’s where Enigma’s secret contracts come into the picture.
Secret contracts are like smart contracts. However, other than ensuring the correctness of information, they introduce privacy.
With this, data is completely hidden from nodes on the blockchain. What users get is a secure environment in which sensitive data like personal information can be kept.
Users are becoming increasingly aware of the exploitation by data harvesters. The only solution lies in the use of revolutionary solutions like Enigma’s secret contracts.
As the world moves towards decentralization, traditional centralized platforms may find it difficult to operate.
With secret contracts, users can input data in a secure way without the danger of any information being exposed to other users.
An individual can easily obtain data and ensure it is correctly imputed to give a correct credit score. Afterward, the user can choose who and when to share her credit scores.
Centralized rating companies like Equifax and TransUnion risk becoming obsolete should Enigma’s technology work.