Blockchain: Where to from here?

Posted on Posted in Central Banks, Cryptocurrencies, E-voting, Institutional Research, Music, Patents, Rights Management, Supply Chain

Blockchain - where to from here?Blockchain: Where to from here?

The European Parliament have just been delivered a report on one of the biggest questions facing society today - "How Blockchain Technology Could Change Our Lives".

The Science and Technology Options Assessment (STOA), who are responsible for informing the European Parliament and it's various committees on new technology, bring us this in-depth report which first introduces blockchain technology, and follows with a study on each of 8 areas where blockchain applications could have significant impact. We have summarised some of the contents for our readers below, but the report itself is a highly recommended read!

 

Supply Chain 2.0

Commercial activity in Europe is itself a vast network of producers, distributors, retailers and consumers. These elements represent a complex and often extremely inefficient method of meeting demand with supply. Introducing a fast, accessible, accurate and low-cost way to track and trust the goods and intermediaries along a supply chain could have significant consequences for business in Europe. The report finds that questions around data protection, for example at the point of sale to a final consumer, will need to be addressed.

 

Reimagining Public Services

Recognising that public services are often hampered by data quality issues and a lack of transparency, the report cites blockchain as a potential solution to allow public service records to be created and verified with a greater level of speed, security and transparency. The UK and Estonia have been active with related research and trials. Blockchain-based land registry management systems which are live in Ghana, Kenya and Nigeria are also noted.

 

Autolegality?

Smart contracts are reviewed in the context of their clear potential, but also their representation of risk.

The report concludes that smart contracts are unlikely to replace traditional contract law (or traditional contract lawyers!) but not before it brings us through some of the more "radical" interpretations which may persist.

"Self-contained, self-performed and self-enforced"

The authors recognise that the "grassroots blockchain movement" may pursue a more vigorous replacement of traditional legal structures using smart contracts, making code equivalent to law. Mistakes in the code would, therefore, be mistakes in the law with potential consequences for natural justice.

 

E-voting

Blockchain has the potential to support the development of public-government engagement, increase turnout and reduce costs in voting activities at both national and at organisational levels. At a national level, with Blockchain enabled e-voting systems (BEV's) there is a high sensitivity to issues around security and any human vulnerabilities which could be exploited - the subject of coercion is explored, as are issues of accessibility and anonymity. As a BEV result must be unquestionable (or, at least as trusted as a paper vote), further studies will be needed before adoption at national scale but there are opportunities for organisational BEV's to lay some groundwork in the meantime.

 

Upending Patents and Monopoly Money

Patents are intended to give innovators a period of time during which their new product, design, service or approach can be marketed without the threat of copycat products. In return for this temporary monopoly, they are required to publish the details of their unique offering so that competitors may use it and further develop the concept or make enhancements which are later brought to market. This is how an ideal cycle of innovation should work. However, there are flaws with the existing patent system, undermining the intended rights of the patent holder where, for example, a weakness in the document can be exploited by a competitor prior to its expiration. Applying blockchain based contracts to these issues could help avoid related disputes. In perhaps another more obvious application - hashing a document detailing the design specification of a new product, and being able to supply proof of existence via a blockchain could remove many of the issues faced in this space.

 

Creative Rights

By now, readers will be familiar with the concept of the internet as a "reproduce many and share copies widely" network, versus blockchain as a "protect and transfer one unique unit" ledger. The internet is often used as a source of copies of digital material, with little or no regard to the loss of earnings faced by artists and creators of digital content. The report notes that blockchain has the potential to finally address this issue, at the same time as bolstering consumer rights.

"no distribution model, until perhaps blockchain, has managed to respond effectively to the realities of the illegal trade in digital content in the internet age, while balancing the interests of the original author, the customer and the various intermediaries."

 

Currency

Well, this is awkward.

Here, STOA references the 2014 European Banking Authority opinion on blockchain-based currency and notes that, in the EBA report several risks were highlighted and that other immediate benefits were disregarded. In contrast, this report recognises the continuing growth of digital currency use in Europe and attempts to rationalise this growth against a backdrop of known issues.

"Simply put, if there were no substantial benefits to using blockchain-based currencies in Europe, then there would be no substantial use in Europe. Adoption of blockchain-based currencies continues to grow, however, despite a major security breach which tested Ethereum's ideological foundations."

Overall there is a fair-handed, if unadventurous approach to cryptocurrency, but with an interesting nod to a potential "techno-social upheaval".

 

Conclusion

This important, in-depth analysis provides an overview of some of the most hotly debated technological and policy issues in Europe, and anticipates the likely considerations at parliamentary level. There will no doubt be further studies, and perhaps more granularity on individual subjects in time but for the moment, this is a huge step forward in unbiased information. Well done, STOA.

 

Join Us!

Membership benefits include access to workgroups, research, networking and educational opportunities, events and more.

Related: Who are STOA and what is their purpose?

Featured image is courtesy of FreeImages.com