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Upgradation in privacy laws by European Union may affect Blockchain technology adversely.


Mar 30, 2018 Posted /  1889 Views


Upgradation in privacy laws by European Union may affect Blockchain technology adversely.

The European Union recently issued a new set of data-handling regulations as an update to its General Data Protection Regulation (GDPR). These new regulations which take effect from May 25, 2018, basically deal with how the sensitive information of users is handled by companies. As part of the new regulations, companies must comply with the request of any EU citizen to completely delete his/her user information stored by the company. It is a landmark ruling which throws light on a topic that has been brought to the forefront particular in the aftermath of the Cambridge Analytica and Facebook controversy.

Cambridge Analytica (CA) is a British political consulting firm which combines data mining, data brokerage, and data analysis with strategic communication for the electoral process. The controversy was that, the data analytics firm used personal information harvested from more than 50 million Facebook profiles without permission to build a system that could target US voters with personalised political advertisements based on their psychological profile. The social media company, Facebook has received a number of warnings about its data security policies in recent years and had known about the Cambridge Analytica data breach since 2015, but only suspended the firm and the Cambridge university researcher who harvested user data from Facebook .

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According to Michele Finck, an Oxford University lecturer specializing in EU law, blockchains in their current operational architecture are not compatible with the new GDPR:

“On a tamper-proof ledger, these rights cannot, however, be easily implemented. It is safe to assume that at present most blockchains are not GDPR compliant because they are unable to implement these rights. A number of technological solutions are currently being developed that might facilitate this in the future, but we are not there yet.”

Greg McMullen, a German-based lawyer, says blockchain companies will be faced with immense compliance headaches due to the new regulations. He also went to say that the move will most likely impede the development of blockchain-based applications. Developers and entrepreneurs will face the hard task of trying to ascertain if an application should be built on a blockchain in light of the new laws.

One of the core principles of Blockchain technology is that once the user's data is entered into the record, it is public and becomes available at all the nodes of the network to validate them and also becomes immutable, which contradicts this new European  regulation, wherein anyone can demand deletion of their personal data from the public databases. In brief, this regulation will surely have a vital impact on the development of the Blockchain technology in countries or they would have to mend the rules and regulations of this privacy law so as to exempt Blockchain technology from the law's scope. Blockchain based applications are solving infinite number of real world problems. Due to this regulation the countries might be left behind in the Blockchain innovation and research.


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Tags: Europe blockchain technology blockchain

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