Home News Is the New EU Data Protection Regulation a Threat or an Incentive?

Is the New EU Data Protection Regulation a Threat or an Incentive?

16 min read

The General Data Protection Regulation (GDPR), a sweeping and stringent European Union (EU) vast authorized framework for private knowledge privateness, grew to become efficient on May 25. Ready or not, this framework goes to drastically rework the enterprise of any digital enterprise. The International Association of Privacy Professionals (IAPP) forecast that at least 75,000 privacy jobs will likely be created as a outcome, and that Fortune’s Global 500 firms will spend near $8 bln in order to ensure they are compliant with the GDPR. But what does this imply for the blockchain?   

The GDPR’s targets are: to create a uniform knowledge regulation framework inside Europe, and to strengthen people’ management over the storage and use of their private knowledge. It was adopted in 2016, and after a two-year transition interval, is now in power.

Obligations and rights

The GDPR introduces new procedural and organizational obligations for “data processors” – together with company in addition to public entities, and provides extra rights to “data subjects” – the time period it makes use of for people.

Public and personal organizations, when left to themselves, are inclined to accumulate knowledge even earlier than understanding what they’ll do with it, kind of “gold rush” in private knowledge acquisition. The GDPR goes towards this behavior by specifying that knowledge processors shouldn’t accumulate knowledge past what’s immediately helpful to their fast interplay with shoppers. In impact, the knowledge harvest ought to be “adequate, relevant and limited to the minimum necessary in relation to the purposes for which they are processed” (Article 39 of the GDPR).

Besides setting out what’s or isn’t allowed, the GDPR additionally specifies organizational guidelines that knowledge processors might want to undertake to any extent further. For occasion, their technological structure should erase by default client knowledge after utilizing it – “privacy by design”.

Secondly, any entity thought-about to be a “data nexus” will likely be required to have a Data Protection Officer (DPO) liable for managing compliance with the GDPR. This DPO will likely be beneath the authorized obligation to alert the supervisory authority each time a threat to knowledge topic’s privateness arises (Article 33).

New European Data Protection Regulation

Data topics, on the different hand, will likely be higher knowledgeable on how their non-public knowledge is saved and processed (Article 15). They will, as an example, have the proper to ask for a copy of the info firms held about them. Furthermore, knowledge processors have to tell the knowledge topics in particulars about the processing of the knowledge, and the way it’s shared or acquired.

Besides transparency, the GDPR offers residents extra management on how their knowledge is used. Article 17 lists situations beneath which they’ll be capable of request the deletion of their knowledge from enterprise databases, or the so referred to as “right of erasure”.

As Sarah Gordon and Aliya Ram remarked in the Financial Times nonetheless, “ultimately, the impact of GDPR will depend on whether individuals decide to exercise the greater powers the rules give them”. When is the final time you refused your consent to Facebook’s privateness coverage?

A loaded gun with world attain

The GDPR imposes extraordinarily hefty charges for firms not abiding by it. Furthermore, its attain goes far past the EU.

For firms, a go to from the knowledge safety auditor would possibly grow to be much more scary than a go to from the tax inspector. An intentional, or repeated, non-compliance with the rules laid out by the GDPR will result in a fine up to €20 mln or up to 4 percent of the annual worldwide turnover of the offender – whichever is larger. Rather than simply counting on firms’ DPOs to ring the alarm bell, common knowledge safety audits are additionally going to be carried out.

Even although stricto sensu, it solely protects knowledge topic inside the EU, the GDPR’s attain is, in follow, world. For a begin, knowledge processors situated exterior the EU that deal with the private info of EU residents should abide by it.

Also, the EU innovates in that it now ties data flows to trade flows: any nation eager to signal a commerce cope with the EU should signal as much as respecting GDPR. In the previous decade, the USA has grow to be the world financial police, fining banks huge amounts for not complying with its anti money laundering regulations. With the GDPR, will the EU grow to be the world’s knowledge safety champion?

Is blockchain escaping the GDPR?

The GDPR was first proposed by the European Commission in 2012, with an preliminary concentrate on cloud providers and social networks, at a time when blockchain was not a recognized phrase. Cloud providers and social networks, not less than in the pre-blockchain world, are organized principally centrally: many knowledge topics work together with a distinctive server entity – the knowledge processor/controller. Central administration creates an straightforward single assault level for regulators. But how will the GDPR have an effect on decentralized protocols resembling public blockchains?

It is evident that given the skinny line between pseudonymity and identification – the blockchain shops some probably private knowledge – beginning with one’s transaction historical past. It might as such fall into the scope of the GDPR.

At first look, one would possibly suppose there’s a direct contradiction between GDPR and public blockchains.  For occasion, amongst the many rules set out in the GDPR, the “right to erasure” seems to be notably at odds with the immutable nature that, in frequent parlance, is at the core of the blockchain know-how. Assuming for a second this contradiction holds, this begs the query: who’re the accountable knowledge processors in a purely decentralized blockchain system?

All in all, articulating the logic of the GDPR and the blockchain, utilizing the “data processor”/ “data subject” divide, appears tough. No doubt a strenuous authorized debate lies forward.

Blockchain with GDPR?

Nevertheless, the the blockchain shares many targets with the GDPR. Both purpose at decentralizing knowledge management, and tempering the energy inequality between centralized service suppliers – partly by suppressing these, in the blockchain mythos – and finish customers. While the authentic Bitcoin specification didn’t assure anonymity, many technological improvements, starting from elementary tumblers to zk-SNARK purposes, introduced us nearer to this excellent. This kind of anonymity might be not what the regulator is after nonetheless – are there options instructed by the blockchain which might be extra simply accepted by the regulator?

One notably promising analysis avenue is the mixture of trusted {hardware} and blockchains. On public blockchains, all knowledge is replicated and shared throughout all machines in the community. This makes transaction knowledge deletion, and privateness, a nightmare for customers. Recent research has begun trying into how “trusted computing enclaves”, such as Intel SGX, might present safe and confidential knowledge storage and privateness.

Combining trusted computing with public blockchains signifies that the privateness of information could be protected against exterior threats, and saved off-chain, with the blockchain appearing as the remaining decide for who can entry that knowledge or not. Because good contracts imply now not having to belief centralized service suppliers, knowledge rights could be managed solely by way of the blockchain and trusted {hardware}, by customers; returning management and privateness of their knowledge again to them. Several tasks at present pursue this concept, in the hope it might rework the blockchain from a GDPR nightmare to a fairytale.

One such try is a joint effort of Imperial College London and Cornell University. Teechain, is a venture which makes use of trusted {hardware} to allow safe and environment friendly off-chain transactions for a public blockchain. It takes an attention-grabbing step in the direction of asking whether or not or not transaction privateness could be discovered on all public blockchains, not simply those who present anonymity by default. An various venture, which additionally led to stay demonstrations, is the collaboration between iExec and Intel initiated inside the Enterprise Ethereum Alliance (EEA).

Are your favourite blockchain tasks taking the needed steps to adapt to this privateness regulation earthquake? If not, perhaps it’s time to implement merchandise with “privateness by design” at their core. As at all times, constraints will breed creativity.


The article was co-written with Joshua Lind, a Ph.D. Candidate in Computing Science

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