Blockchain Groups Demand Europe to Exempt BitCoin From Data Privacy Rules

Posted by Chetan Bali on April 25th, 2018

Innovation Marketplace: Blockchains are not just about a virtual address holding some monetary value. Since they also store personal data (and in huge volumes), there are high chances that the European Union may classify it under the data privacy act. There are lot many infringements are happening regarding the data of the individual, the latest one being the Facebook scam, and seeing all this the countries are now going for tighter regulations.

GDPR or the General Data Protection Rule will take off from the may of 2018 and will be deciding the potential of blockchain and its working in Europe. According to the provisions of the data, if any citizen of the EU requests a company to remove/erase all their data from their records the company is legally obliged to do so.

In an expert comment by The Verge, it was told that “Modifying data on a blockchain is very hard,” Oxford Law lecturer Michèle Finck told The Verge, “If you were to delete or modify data from the blockchain to comply with the GDPR’s rights to amendment or the ‘right to be forgotten,’ you wouldn’t just change that piece of data, but the hash of the block containing the data and of all subsequent blocks.”

To this, Finck added that “I think it’s safe to say that currently, most blockchains are incompatible with the GDPR, especially permissionless blockchains.” She said that although many blockchain projects are currently thinking about how to design tech that would be GDPR-compliant, the problem is that “there are so many points of tension...way beyond the right [for personal data] to be forgotten.”

What is surprising is the twist in logic. Blockchains were formed for the very reason of storing the data forever if a transaction is made on it, and not to delete it, something which users don’t understand. Andries Van Humbeeck, the co-founder and blockchain consultant at The Ledger, be, told the Verge this saying,”This is what blockchain is meant for.”

He also added that if modification was made in one block, all the other blocks will be modified too creating a lot of trouble and confusion.  He said that, “If you purge a block of transactions, the truthfulness of all subsequent blocks of transactions becomes questionable.” Transaction recording helps blockchains keep track of payments, and a false transaction could have financial consequences for users. When it comes to the blockchain that Bitcoin is powered by, “all Bitcoin transactions after that purged block become untrustworthy, which would undermine the complete system.”

It is now clear that blockchain technology and GDPR will never be on the same page and for this reason, either of them will have to change. For this blockchain can come up with new technology to keep the data safer than ever and in return, GDPR can maybe relax the rules a little bit. But this is not the final verdict. The judged might as well side with blockchains and say that they are not obliged to delete the data.

Coin center in a warning said, “The result of the law, then, may be that Europe is closing itself off from the future of the Internet to its detriment."