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Crossed Out But Not Forgotten: Blockchain and Data Protection Regulation

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  • Eric Eissler
    ⭐ Features

    Immutable ledgers pose a major compliance problem to the new GDPR that just entered into force in the EU

Crossed Out But Not Forgotten: Blockchain and Data Protection Regulation
Cover image via u.today

The EU’s General Data Protection Regulation (GDPR) contains Article 17 in the law that is more commonly known as “the right to be forgotten.” This article is a great defense for citizens of the EU who wish to have all data and records about them permanently deleted so that they do not exist anymore on the Internet. The excerpt below is from the GDPR; Paragraph 1 of Article 17 reads as follows:

The data subject [EU citizens] shall have the right to obtain from the controller [holder of personal information, company, etc.] the erasure of personal data concerning him or her without undue delay and the controller shall have the obligation to erase personal data without undue delay where one of the following grounds applies:

[Further more exact points are listed].

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Compliance challenge: amend rather than delete

Since it entered into force on May 25, 2018, any citizen of the EU may ask any company with data about them to delete it and provide them proof of deletion. However, with Blockchain technology and its inmutable, decentralized ledger technology, one simply does not click “delete.”

Therein lies the problem: data of individuals who wish to be forgotten can only be “crossed out” on a Blockchain.

The data can still be viewed on the Blockchain even if has been “removed”. Essentially, this individual record stillexists. Since May 25, 2018, this is now against the law, because this person wants his/her data removed and it cannot be erased.

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Workaround

There is a workaround, but critics call into question of if it is semantically compliant with Article 17-semantics will be discussed later.

Most importantly, what can be done, is to use the blockchain not as data storage, but rather as a guardian of the personal data that is stored off chain.

For a public Blockchain, the system can be changed so that the records are stored elsewhere, off chain, and the only way to get that data have permissions set up.

For example, a request is sent to the Blockchain for person x and the requester has permission to only the data he/she needs to see, that person then gets the API keys to access that data temporarily and the keys are returned.

Now to be compliant with Article 17, that data can either be deleted on the off-chain computer  and/or the Blockchain data can be randomly encrypted and the keys were thrown out. In this scenario, the data exists but no one has keys to access it and if there were keys, they are randomly encrypted so that they cannot unlock the data.

The data is not, however, “erased” and that leads to the questions of is that semantically compliant with Article 17?

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Reduction in transparency

The downside of the new law is that the GDPR has actually spawned more questions about what happens to data that is off chain.

This is because the workaround removes some aspects of interactions when the Blockchain is being used to only process permissions requests or used for verifying only specific data. Problems that arise from this process are the following:

Opponents of the law will try to frame an argument as such: So while trying to make citizens lives better, the GDPR works against the new Blockchain technologies that are trying to improve transparency in the public space and limits what blockchain can offer to the public spheres.

However, this stance is easily defeated as you would never want to put any personal information on a Blockchain anyways because it will remain there forever. Imagine, a bank account or credit card number there forever.

Even worse, your home address or personal identification number.  

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What is the GDPR? Who does it affect?

The GDPR is a new data protection framework that applies to nations within the EU and the UK. The new laws provide citizens more control over how their personal data is used and impose strict rules on companies managing and processing this personally identifiable information anywhere in the world.

Companies based in the US but also have operations in Europe are rushing to comply with the changes. However, it would be interesting to see if US companies that enact compliance with these new privacy policies also extend these new rights to non-EU citizens.  

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About the author

Eric Eissler is based in Chicago and works in higher-education administration and finance. He is a freelance writer covering blockchain technology, fintech, cryptocurrency, the oil and gas industry, and international politics.

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Why China Fever on Bitcoin is Already Dropping After 1 Month of Blockchain Optimism

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  • Joseph Young
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    The so-called “China fever” on crypto like bitcoin has noticeably declined since President Xi’s speech on October 28.

Why China Fever on Bitcoin is Already Dropping After 1 Month of Blockchain Optimism
Cover image via 123rf.com

Since Chinese President Xi Jinping expressed his support for blockchain technology on October 28, the so-called “China fever” on crypto like bitcoin has noticeably declined.

The price of bitcoin fell from around $10,600 to $8,500 and cryptocurrencies that are known have Chinese development teams such as NEO, Ontology, and TRON have slightly increased over the past three weeks, but not enough to be described as a speculative mania.

Why demand for bitcoin and other cryptocurrencies is not on the rise

Following the newly established vision of the Chinese government to push the development of blockchain technology, expectations for strengthened momentum of the cryptocurrency market rapidly increased.

Initially, such expectations combined preceded an abrupt overnight increase in the price of bitcoin to above a key “psychological level” at $10,000, but the price fell back to “pre-Xi” levels in a relatively short period.

Global markets analyst Alex Krüger said:
“Have mainland China investors increased their demand for bitcoin? BTC volumes quickly dropped back to pre Xi news levels; online searches in China are back down to pre Xi news levels; website traffic for exchanges catering to China barely changed since the news.

The ‘Chinese tokens,’ NEO, ONT and TRX, have all done well since the aftermath of the news, while VET (a supply chain oriented blockchain) has been cruising on China news. Don't think though this is a sign of a ‘speculative fever’ of any kind.”

The analyst emphasized that prior to the statement of President Xi on the focus of China to facilitate the development and implementation of blockchain technology, the penetration of cryptocurrencies in the region was already high.

Also, most mainland Chinese cryptocurrency investors are said to have been trading digital assets through overseas markets like Hong Kong, purchasing stablecoins like Tether with the Hong Kong dollar.

Hence, it is possible that the public already anticipated the government of China to eventually reiterate its plans to encourage blockchain development with the People’s Bank of China (PBoC) consistently stating that its plans for a state-operated digital currency is in the works.

“It is without doubt that with the announcement of Libra, governments, regulators and central banks around the world have had to expedite their plans and approach to digital assets,” Dave Chapman, BC Technology Group executive director, said.

Is this the end of the Xi-effect?

Some technical analysts have suggested that the upside movement of bitcoin to $10,600 in late October may have not been primarily fueled by the optimism around China’s blockchain development initiative, and that a cascade of short liquidations amidst a build up of sell pressure caused the rally.

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About the author

Joseph Young is an analyst based in South Korea that has been covering finance, fintech, and cryptocurrency since 2013. He has worked with various recognized publications in both the finance and cryptocurrency industries.

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