Abstract

This conceptual paper challenges the notion that the enhanced data security of blockchain results in superior privacy. Blockchain's fundamental characteristics - immutability, decentralization, and transparency - promote an excessive reliance on historical data. This reliance, in turn, leads to inaccurate predictions and misguides consumer privacy preferences. The paper contends that this stern protection conflicts with the General Data Protection Regulation (GDPR) and the California Consumer Privacy Act (CCPA). We argue that the lack of choice in managing data denies freedom, causing psychological reactance. Additionally, the dependence on past data contributes to an intensified privacy paradox as consumers need to assert accurate privacy preferences. These combined effects result in increased consumer digital vulnerability, which arises from an imbalanced power dynamic in data management. We propose a novel approach, which we call “modified blockchain”. The approach is based on three pillars: i) selective immutability, ii) federal decentralization, and iii) supervised transparency. These pillars aim to effectively integrate regulations, organizations, and end-users within advocating for a socio-technical decision-making approach. This work also broadens the scope of the psychological reactance theory and the privacy paradox literature by affirming that a lack of autonomy in data management leads to digital vulnerability.

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