The EU Blockchain Observatory and Forum has recently expressed that the General Data Protection Regulation (GDPR) law that went into effect a couple of months ago could greatly hinder the development of the blockchain space and all its resulting benefits.
According to an EU Blockchain Observatory and Forum report dubbed “Blockchain Innovation in Europe,” this is mainly because there are various ambiguous legal connections between the GDPR law and blockchain technology.
As per the report, “As long as the legal framework around personal data and blockchain remains unclear, entrepreneurs and those designing and building blockchain-based platforms and applications in Europe face massive uncertainty. That can put a brake on innovation.”
GDPR opens various points of conflicts in regards to blockchain philosophy
The report also hints at the fact that one of the biggest problems that is likely to arise is because GDPR empowers individuals to have their data amended in order to maintain accuracy, as well as have the data deleted if it’s no longer required.
This part of the law goes against almost everything that blockchains stand for as blockchains are immutable, meaning that data can only be added and by no means removed from the chain.
Of course, individual data rights are protected via a central authority. In short, if things go wrong, that central authority is going to be held accountable. In the case of blockchains, though, data is processed individually by all the network’s nodes, and no central authority exists.
Another interesting point that’s stipulated in the GDPR law is that data can only be transferred to third parties based outside the European Union. The only condition worth mentioning here is that the data is to be held in a jurisdiction which offers data protection levels that are equivalent to those in the single market.
As expected, with blockchains it’s close to impossible to choose where the data will end up. This is because the blockchain is replicated on all the nodes which can be located anywhere in the world.
As to why these conflicts arise in the first place, Tom Lyons, the author of the report, says that “The law was conceived and written before blockchain technology was widely known, and so was fashioned with an implicit assumption that a database is a centralized mechanism for collecting, storing and processing data.”
The report ends in a somewhat optimistic manner by stating that blockchain tech is indeed very new and that things might change for the better in the future.