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Parliament shines spotlight on #EUBlockchain for a new generation of digital services

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As the European Parliament debates the future of blockchain technology, Philip Boucher outlines some of the issues in an article for the European Parliament's 'Scientific Foresight' committee. 

Blockchain technology is a remarkably transparent and decentralised way to record lists of transactions. The technology is complicated, controversial and fast-moving, but is also of increasing interest to citizens, businesses and legislators across the European Union.

Transactions of any kind are usually faster and cheaper for the user when completed via a blockchain, and they also benefit from the protocol’s security. Whereas transactions in Europe are usually swift, inexpensive, and secure enough for most purposes, users and proponents of blockchain applications often see additional benefits, perhaps in their transparency and immutability, or simply in the fact that they allow users to transact without recourse to traditional financial and governance institutions.

Potential impact on society

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Blockchain development has numerous potential impacts on society. Some of these are relatively direct. For example, it takes energy to run blockchains and, depending upon the size and the way it works, this can be quite intensive. It is often said that Bitcoin blockchain was responsible for electricity consumption comparable to that of Ireland in 2014, and has continued to grow. While more efficient algorithms and hardware can and are being developed, the energy intensity of blockchains (and, indeed, that of all digital processes) may become an increasing problem in the future.

To say that blockchain’s popularity is due to increasing social trends to prioritize transparency over anonymity, decreasing traditional financial and governance institutions, and expectations of greater levels of accountability and responsibility in all aspects of our lives, is only part of the story. Nevertheless, using blockchains instead of traditional ledgers actually provokes these very shifts in society.

European response to blockchain development

Even if blockchain technology is not the solution for every problem, is not always as decentralised as we might think, and will probably not lead to a revolution, it does appear likely that it will live up to at least some of the hype, and could have a substantial impact in many areas of our lives. We should accordingly prepare for the challenges and opportunities they present.

Indeed, a recent European Parliament report on virtual currencies (rapporteur, Jakob von Weizsäcker (S&D, Germany), adopted by the European Parliament in May 2016, recognised the many regulatory challenges presented by blockchain technology, while calling for a proportionate approach at EU level so as not to stifle innovation or impose superfluous costs at this early stage. The report also called for the creation of a horizontal task force, led by the European Commission and consisting of technical and regulatory experts.

Beyond the financial domain, the European Commission is also looking into the challenges and opportunities of blockchain technology for various industrial sectors. The JRC’s EU policy lab in co-operation with DG GROW began #Blockchain4EU: Blockchain for Industrial Transformations in March 2017, a project to explore the possible uses and impacts of these technologies across a number of areas, including connected things, autonomous systems, supply chains, assets monitoring, logistics, intellectual property, authentication and certification, and digital manufacturing.

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EU Reporter publishes articles from a variety of outside sources which express a wide range of viewpoints. The positions taken in these articles are not necessarily those of EU Reporter.

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