Data: The digital currency of the future

3 min
Tags: personal data digital currency Data economy data collection

Data: The digital currency of the future

At the same time as the Internet, a supposedly free culture has emerged that - once established - can no longer be removed from the minds of users. Digital offers such as Facebook, WhatsApp, mobile games, smartphone apps, search engines: All free of charge. Or is it not? Of course not, because internet users pay with a separate digital currency: personal data.

Supposedly free culture in the digital age

"Click here and download your free e-book!" Millions of times this and similar sounding phrases can be found on commercial websites. Internet users like to take what is advertised as "supposedly free". Only a few people are aware of the perfidious data collection mania behind the method.

Without thinking, registration forms are filled out with address, age, place of birth, email address and marital status, only to get the coveted free product. However, the disclosure of personal data already allows the provider of the supposedly free e-book to resell it, which is often much more lucrative than charging a price of 5.99 CHF for each download.

Personalized advertising for transparent customers

Personal data is as valuable to companies as a bank account filled with Swiss francs. The more details are known about a person, the more targeted personalized advertising can be. However, the transparent customer is not an invention of the Internet age.

Long before the first online sales, personal data served companies as the basis for creating customized offers. The choice of daily newspaper provided information about the level of education, and the place of residence contained clues about the financial situation and purchasing power. In Germany, for example, civil servants and public service employees still benefit from lower rates for car insurance.

Data economy: Market with enormous growth potential

The trade in personal data has grown into a billion-dollar business. In 2020, 4,000 data brokers were active in this market worldwide, generating a total turnover of 200 billion US dollars (source: Wirtschaftswoche). Experts predict that the data market in Europe alone will grow to as much as 82 billion euros by 2025. And this after "only" 60 billion euros were turned over in this segment in 2018.

The enormous sums that can be achieved by selling personal data also call criminals to the scene. In January 2023, around 37 million customers were affected by a cyber attack on the Telekom subsidiary T-Mobile US. According to the company, it is possible that the hackers have captured phone numbers including billing addresses and birth dates.

Data as a currency

The vast amounts of personal data that are collected, processed and stored around the globe every day have the potential to become the digital currency of the future. A currency must have the following three basic characteristics:

  • It must serve as a storage
  • It must be a medium of exchange accepted by two or more parties
  • It must act as a unit of measurement

If data fulfills these three basic requirements - and the way there is not far - it can take on the role of a currency. To be considered a unit of measurement, data must be of high quality.

Dangers due to data collection

The data collection frenzy of many companies, with tech giants Google, Facebook and Amazon at the forefront, poses real dangers for every user. It is not without reason that they are often based in countries that do not take the legal framework very seriously and do not punish violations of data protection.

Users of wearables, i.e. devices that are worn on the body such as fitness trackers, smartwatches, etc., may be threatened with significant financial disadvantages. Some of these devices collect extremely sensitive health data on pulse rate, blood pressure and blood sugar levels. If the data is sold to insurance companies, this can have financial consequences for users.

User behavior as the key

In the long term, users can only counter the data collection frenzy of many companies by changing their user behavior. Everyone can decide for themselves whether the disclosure of personal data justifies the free edition of an e-book. Throughout Germany, every user also has the right to obtain an overview of the stored data from a provider of free products. A deletion, blocking or correction can also be requested.