Written by Philip Boucher,
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. A new report, ‘How blockchain technology could change our lives’, published in February 2017 by the European Parliamentary Research Service (EPRS), provides an introduction for those curious about blockchain technology, and is aimed at stimulating reflection and discussion. Parliament’s Science and Technology Options Assessment body (STOA) has teamed up with DG CONNECT of the European Commission to host a joint event on blockchain. This workshop will take place on 11 May 2017, from 09:00 to 14:00, at the European Parliament in Brussels.
The event will include an introductory keynote speech followed by two panel discussions. The first, introduced and moderated by Jakob von Weizsäcker (S&D, Germany), will focus on Blockchain for financial services. The second panel, introduced and moderated by STOA Chair, Eva Kaili (S&D, Greece), will look beyond financial applications to consider A new generation of blockchain-based services. The workshop will include opportunities for discussion both within each panel and afterwards.
Follow the discussion on 11 May 2017 – web streaming will be available for those who cannot attend in person.
Opportunities and challenges of blockchain
There are plenty of blockchain-based applications and solutions for tracking all kinds of transaction (currencies, votes in elections, management of supply chains, etc.). A selection of these applications is discussed in the EPRS report.
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
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 prioritise 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 cooperation 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.