In the last couple of years the media, analysts and market participants are inundating the public with information about blockchain, Bitcoin, ICOs, and other digital innovations based on a brave new and exciting Distributed Ledger technology (DLT).
Some commentators are still fiercely critical linking DLTs & the decentralised blockchains with the dark web or outlaws and criminals, whereas others have a completely different view, claiming that Blockchain introduces us to a new era in which we will re-invent the concept of social trust. A
Traditional institutions, in order to exist, need two components: trust and identity. Imagine the future of any institutional arrangement when trust will be the code and identity is our digital fingerprint.
How it works matters to the extent that an end-user needs to know SQL or HTTP to operate their Microsoft Office or web-browser. The fact that most people don’t need to know anything about the software they use prohibits the general public from using computer applications effectively in everyday life. But the basic point behind DLTs & blockchain are that they extremely useful tools for every-day life.
Bitcoin is a digital currency operating on one type of open DLT called blockchain. There are many different options to build around Bitcoin, so many in fact, that it took a group of experts from an ISO and the European Commission to create new definitions and a vocabulary of what can be identified as a DLT. The important is that DLTs and blockchains are something much broader than Bitcoin or its analogue Ethereum The potential applications for the platforms are much wider than just cryptocurrencies as any exchange of value can take place in a completely new way.
Imagine a world where you can buy a house without the need of a notary’s intermediation or one where you can exchange your surplus electricity with your neighbour on a peer-to-peer basis. This would be the same world where the authenticity of your university degree can be verified automatically along with all your other certificates and licenses or where you can track the digital identity of your sushi from the time the fish was caught till the moment it reached your table.
It would also give the public the ability to can vote for the leadership of their country and receive the final results without the threat of fraudulent intervention only minutes after the polls close. This would all come at 1/10th of the cost that we pay today.
DLT is a technology that allows for the validation of any kind of transaction without the need for an intermediary. In one word, DLT is “de-intermediation” of all transaction. It is an entirely new approach that promises two things: either to improve the efficiency of the existing value chains or to disrupt industries altogether. It also promises to reduce red tape, costs, and endemic inefficiencies in the public sector.
This would be a revolutionary new paradigm for the market or public governance.
How to regulate this transition? Wit the DLT/Blockchain Resolution that I will introduce this month in the Industry Committee of the European Parliament will set in-motion the materialisation of the competitive advantages that will come from our status as first-movers. For the first time in many years, the EU is ahead of its competitors both in the US and in Asia. The EU is in desperate need of fast, small victories, and this resolution will help bring about an important one for Europe.
My approach is absolutely innovation-friendly. We should not regulate the technology per se but instead, focus on the individual sector and user. In this way we hope to see DLT maturing freely to provide us with smart solutions to chronic problems. At the same time, moving from the analogue age to the DLT age will require assistance for consumer and the public to become more familiar with the innovative power of the technology and to protect them from potential threats.
DLT is a democratizing force, not only because it removes intermediaries and legacy systems, but also because it allows people to own and control their own data.
Data independence is a significant property for the new ecosystem. DLT provides the basis, or the platform, on which the era of the Internet of Things (IoT) will be realised. The stakes are really high. Thus, it is paramount to safeguard the capacity of DLTs by checking its regulatory compatibilities through General Data Protection Regulation and the technological elements of cybersecurity as DLT, just like any other technology, is not immune to technological change and challenges.
It is thrilling that the European Parliament and European Commission are working closely to bring the benefits of DLTs closer to realisation and to create a secure ecosystem around it for the European citizens.
DLT is a challenge because it has the capacity to bring Europe to the cutting the edge of digital technology, not unlike the way the US led the world in internet technology in the 1980s and 1990s.
The next months will be critical and I hope that by the end of this legislative period that concrete results will be in place.