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Bitcoin continues to be in the news as a new form of digital currency. But the underlying technology -- cipher block chaining -- is also gaining increased attention. How is cipher block chaining important to data governance?
Cipher block chaining allows information assets and transaction records to be secured through distributed computing technologies. That means that a vital record does not require centralized control in a vault or a corporate secure cloud service, but its contents are distributed across multiple networks and systems. Encryption is used to protect how content and the records are accessed and maintained.
Block chaining has tremendous potential to overtake existing information governance models and methodologies. One of the fascinating qualities of cipher block chaining is that everyone participating in a particular platform can validate transactions. While identities are not known, the transactions are public. A community consensus emerges that a specific transaction is authentic at a level of computational confidence that has not been previously possible. Hence, trust emerges.
Throughout the Internet's duration, there have been some technologies that transcend commerce and society faster than we can imagine. This is going to be one of those technologies. The Internal Revenue Service recognizes digital currencies as real property that has economic value: Your gains or losses when buying and selling them are taxable. NASDAQ announced in early May 2015 they are using the block-chaining technology to improve the reliability of trading records, notably in the pre-IPO phase before a company goes public. One startup is already offering file storage systems using technology where payment can be made using Bitcoin. That is incredibly interesting, and the momentum is breathtaking.
At this point, the technology cannot be ignored. We will soon be prepared to trust digital records as superior evidence of the truth far more than we trust antiquated paper assets or oral testimony. Current information governance reforms are being driven by the incredibly high costs that e-discovery exposed when trying to find and validate information. Now that those costs are recognized, corporate executives will continue to focus on lowering those expenses. Block chaining allows our machines to calculate those validation efforts automatically. The early adopters will realize enormous savings on the bottom line.
As illustrated by NASDAQ's initiative, working within an established marketplace or network can be enormously useful toward finding business partners with similar motivations to move ahead. A decade of e-discovery spending has demonstrated that designed, innovative governance of information yields enormous bottom-line savings. One can logically anticipate that it will not take 10 years for those lessons to be applied to help realize this technology's potential.
These technologies are rapidly advancing awareness that digital information assets are a new kind of property. Effective information governance creates data and records that will be valued in the market. Today, we are seeing trusted data offered instead of cash in many types of commercial transactions. But the critical variable is that the data must align to the rules on both sides of the transaction. These technologies are enabling automated negotiations to occur. As a result, the related data moves at a greater velocity and has far more value in the market. The key is to extend information governance into the design of every IT asset controlled by a company -- including those stored with cloud service providers -- so the rules are transparent and capable of automated execution.
About the author:
Jeffrey Ritter is one of the nation's experts in the converging complexity of information governance, security, the use of digital information as evidence and the emergence of cloud-based services. He advises companies and governments on successful 21st-century strategies for digital information management with legal and business value. He is currently developing and teaching courses on information governance at Johns Hopkins University's Whiting School of Engineering and at Georgetown University Law.
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