Blockchain – a competition to governments? – PL 04 2018

6 June 2018 | 16:15-17:15 | GARDEN HALL |
Consolidated programme 2018

Session teaser

The blockchain technology promises trust that is independent from government or business institutions. What are the use cases of this technology? What impact does this have on development and society? Will governments become obsolete? Do we need regulation - just to prevent bad side effects or to reinstate the power of governments and existing businesses?

Keywords

Blockchain
Cryptocurrencies
SmartContracts
Governance
Regulation
EnergyWaste
UseCases
ImpactOnDevelopment
DecentralizedApplications
DecentralizedDNS
PublicAdministration
eGovernment
eResidency

List of proposals

Awareness of Data management and Critical internet literacy 90
Building an ecosystem for Climate change issues using ICTs. Applications, sharing of solutions, research and development 18
Distributed Governance for Blockchains and Smart Contracts 139
Impact of digital currency and Bitcoin in development and less development countries 198
Shape of the future: The regulation of the cryptocurrencies 7
Crypto currency and Blockchain 15
Block chain technology and economic development 136
Future of the Digital Currency and Blockchain Technology 151
Blockchain usage challenges 3
How to regulate the energy waste of blockchains 111
Blockchain in Public Administration and e‐ citizenship: advantages and risks 243

Session description

Blockchain is a new and promising technology. While trust has been lost in governments, banks, central banks and other institutions, this technology is trustless - meaning it does not require trusting a central entity. With computers gaining increasing importance, we are less willing to trust a single entity or some administrators to properly care about our digital life. Public blockchain technology promises to be able to grant things beyond government and institutional control. Governments are challenged by this loss of control. Criminal use cases of blockchain technology like money laundering or terror financing are used to argue in favor of a tight regulation of blockchain technology. However, shouldn't we have democratic institutions decide about the rules and independent technology to ensure that everybody - including governments - play by the rules? For example, validating identities on a blockchain will remove the power of governments to create fake identities or to delete real identities. The session panelists will present some blockchain use cases and will discuss blockchain specific regulation with a focus on cryptocurrencies and tokens.

Format

Panel discussion with about 4 panelists

People

Please provide name and institution for all people you list here.

Focal Point and Moderator

Jörn Erbguth, phD-student on blockchain governance, consultant on blockchain, smart contracts and data protection, lecturer at Geneva School of Diplomacy and Université de Genève linkedIn Twitter

Organising Team (Org Team)

Arvin Kamberi
Erica Vaccaro
Amina Beriša
Ceren Unal
Maarit Palovirta
Clement Genty
Liora Amina Berisha
Salomé Eggler

Panelists

Walid Al-Saqaf, Södertörn University, Senior Lecturer, LinkedIn Twitter
Olivier Bringer, Deputy and acting Head of Unit at European Commission
Nestor Dubnevych, Partner at lexnet.io, CLO Patentbot, Senior Associate at Juscutum Attorneys Association, Ambassador KyivLegalHacker, LinkedIn
Olga Duka, Zeus, CEO LinkedIn
Susanne Tempelhof, Bitnation, CEO LinkedIn
Mariam Turashvili, National Agency of Public Registry, Head of Project Management and Sales Division, LinkedIn

Key Participants

Liora Amina, One World Platform, cryptoanarchist
George Paliani, Zeus Exchange, International Relations Advisor, cryptodiplomat LinkedIn Instagram
Vakhtang Maskhulia
Elena Yurkina, Ingvarr Advisory & Trust, counsel, LinkedIn

Remote Moderator

The Remote Moderator is in charge of facilitating participation via digital channels such as WebEx and social medial (Twitter, facebook). Remote Moderators monitor and moderate the social media channels and the participants via WebEX and forward questions to the session moderator. Please contact the EuroDIG secretariat if you need help to find a Remote Moderator.

Reporter

Ana Maria Corrêa

Current discussion, conference calls, schedules and minutes

See the discussion tab on the upper left side of this page. Please use this page to publish:

dates for virtual meetings or coordination calls
short summary of calls or email exchange

Please be as open and transparent as possible in order to allow others to get involved and contact you. Use the wiki not only as the place to publish results but also to summarize the discussion process.

Messages

Blockchain technology promises decentralised trust, which is independent from governments, public authorities and traditional business institutions.
Blockchain technology could have great social impact. It could improve the detection of fake news, and even preserve property rights. The Internet is instrumental in the development of blockchain because of its transparency and decentralisation.
Blockchain has removed third party agency and made changes to our current governance paradigm. Governments should use more blockchain technologies. Governments tend to overregulate and should not regulate before fully understanding, implementing and testing disruptive technology. Blockchain will replace human resources and can compete with governments, but it can also improve transparency in government transactions.
Regarding human rights, personal data should be able to be erased, and blockchain technology could be a threat to that. On the other hand, blockchain enables more transparency and participation, which are important human rights values.

Find an independent report of the session from the Geneva Internet Platform Digital Watch Observatory at https://dig.watch/resources/blockchain-%E2%80%93-competition-governments

Video record

https://youtu.be/H0zrRlgmopg

Transcript

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This text is based on live transcription. Communication Access Realtime Translation (CART), captioning, and/or live transcription are provided in order to facilitate communication accessibility and may not be a totally verbatim record of the proceedings. This text is not to be distributed or used in any way that may violate copyright law.

>> JORN ERBGUTH: Now we are going to our Blockchain panel. With very distinguished panelists. Please go on stage. The topic of the Blockchain panel is "Blockchain -- A Competition to Governments?"

Okay. Let's start with our distinguished guest Mr. Olivier Bringer. He is the deputy and acting held of the unit of the commission of the European Union. Welcome. Then could you please introduce yourself and say a few words?

>> OLIVIER BRINGER: Yes, okay. So those of you who are here at the workshop on AI, see me again. I hope I won't bore you.

Yes, I'm in charge of the next generation internet initiative in the Commission. You had an overview of the initiative yesterday in the speech from our Commissioner. So the purpose of the initiative is to build an internet that serves the humans. So an internet that is trustworthy, that is sustainable, that is secure, that is inclusive.

For that we think that we need to master the technologies because, of course, if the technologies come from elsewhere we don't really have a say on their design.

So one key technology of this next generation internet is Blockchain. The way we see it is that it will allow to increase the decentralization of the internet. It will allow more direct interactions between people, and it will increase user control. So we see it as a key building block of the future internet. We are really at the start of our reflection on Blockchain. We started around cryptocurrency, but now we are also reflecting about the technology. The important point is that we really want to invest in the technology. We think that is very important. That we look into the technology itself, that we look into the way it can be used in different use cases, and those use cases are unlimited. I mean, it goes from cryptocurrency -- everyone knows it, financial sector -- to public administration, but also many other areas, healthcare, logistics.

So this is the point where we stand. I could say a bit more on the different initiatives we have launched later on.

>> JORN ERBGUTH: Thank you, Olivier. I would like to continue with Mariam Turashvili. She is presenting to us the project in Georgia using Blockchain, one of the first governments doing this. Can you put on the mic?

Take this one.

>> MARIAM TURASHVILI: This one? Okay, I think this works. Thanks for inviting me and having me here.

First I will talk about the initial public registry, the legal entity of public law under the Minister of justice. It was established in 2004 and our main functions together with the land registry and the property registration, we also register the business there, register entrepreneurial and non-entrepreneurial legal entities, we have mapping and also tax, land, market registration, also the political parties of the citizens and municipalities.

So establishment of national agency of public registry was the most important steps towards taken to the systemization of the real estate related information in Georgia. For that purpose comprehensive reforms have been taking place and still are ongoing in the NAPR, mainly four areas.

We are trying to make registration easier, simpler and using technologies. That's how we came to Blockchain.

Georgia was -- thanks.

Okay. So Georgia is one of the first countries that started using Blockchain technology and we so far are using it for our land registry. Private property registry.

Many countries when they start thinking about using Blockchain technology, usually they want it for corruption elimination purposes, but in our case that was not the reason. You can check, Georgia has really high positions in World Bank business rankings and corruption dealings, we have a high ranking.

What we have is the land title registration. Information about property ownership according to Georgian records is public and published on our website. So having them on our servers and having them public on the website gives us the guarantees and gives us the protection. But we want to provide higher level of security, higher level of protection. And that is how we came to Blockchain technology.

So now, why Blockchain? Let's say previously information was protected within the country. We wanted to have the international levels of security. So how is it done? I will not read the slides. Probably you can see it there. How it is done. So we have not changed our existing system. We do not have our private Blockchain, as you already heard from Vlad, we use the public global Blockchain and after we show the extract which is the main product, the hash code is generated for each extract. The code is only for each extract and after this code is sent to the Blockchain system. If you will check it, then this identical hash is in the Blockchain of Bitcoin and on NAPR website can verify the authenticity of the extract. This is very brief how it's done because I do not have much time to talk about that.

Later we started thinking, is this the only thing, the storing function, is this the only benefit we can get from Blockchain technology? Of course not. The technology is, the capacities and possibilities of the technology is very broad. So first we wanted this pilot project to check the compatibility of the system to the compatibility of the will technology to our system. Then we started the SmartContracts. SmartContracts means, there are three parties engaged in SmartContracts, APR bank and the Blockchain system provider, in our case it is Bitfury Group. The main problem, sometimes we have there is when to pay money. So in our, according to the Georgian legislation, the transaction takes four days, maximum four days. So citizens are often confused when to pay for the property when they are buying. When they are submitting the documents or after transaction is already completed.

So now the transaction registration and the money transfer will take place together. So if the transaction is successful, then the seller gets the money. If the transaction is rejected, then the money is returned to the buyer. This is for now we hope that the first product we will have in late this autumn, I guess, and for the future we are already thinking about automation of the processes, the whole processes. So there will not be the necessity of using, any certified documents or stamps, they will not be needed anymore and the citizens will not have to address NAPR at all and they can do it with their smartphones with smart applications and SmartContracts.

I want to tell a bit more about the challenges we have in this process. First of all, of course, it is the legislation cannot always follow the first development of the technologies, but we are working on Blockchain related regulations together with the Ministry and the international organisations. Another, of course, public awareness is also the problem, to simply explain what is Blockchain and why do we need it if everything was so secure before. It is not easy, but we are trying.

And one more is they often ask about the cryptocurrencies. Of course, Blockchain is related to cryptocurrencies but the technology itself is absolutely independent. We do not have our own cryptocurrency and we are not planning to have it.

Now, the technology has developed so far and is probably will be developing much more because while it is interesting for everyone, for governments, for public, private sector, for individuals, as long as it is fast, simple and comfortable.

I think that's all my time.

>> JORN ERBGUTH: Thank you very much, Mariam. We think it's a great project and thank you very much for the presentation.

Next we have Victor Dubnevych, he is a lawyer, active in legal tech and most important for us here, active in the project going on in Ukraine. Maybe you can tell us a little bit about that.

>> NESTOR DUBNEVYCH: Thank you. Hi, everyone. It is a pleasure to take part on today's discussion. So I am the Ukraine based lawyer. I work a lot with Blockchain projects. We provide legal supports for them. And we have an interesting statistics. During the last year in the Ukraine we launched 19 ISO projects which collected approximately $160 million. And not one of them is incorporated in the Ukraine. All of them are incorporated abroad. It is really a huge market, huge brains in the Ukraine but there is no legal framework. We work a lot with developing the legislative processes. We have Blockchain bills for solving this problem and forgetting more efficiency in the Ukrainian economy.

Another thing I am involved in is legal tech, we have our Patentbot where you can register your trademark in ten minutes. We have plans to use Blockchain technology for protecting your IP rights here. Maybe during our panel discussion we will discuss about this experience also. Thank you.

>> JORN ERBGUTH: Thank you. Victor and next we have walled Al-Saqaf, a senior lecturer from the Sodertorn University in Sweden and also quite active at ISOC.

>> WALID AL-SAQAF: Thank you. Hello, yes, thank you. In fact, yes indeed you'll notice I have two hats here. I'm having to wear them both because I've taken time from my full-time job at the university to be here and also ISOC is supporting my travel. On the other hand I would like to note my academic role at the Sodertorn university is important because as academics, we don't take things to granted. We have to study them. Blockchain is one of the areas I would like to study, an understand whether this technology is really the real deal or it is hyped, is it a bubble? Is it not?

I take things rather objectively in that sense. So I cover the Blockchain technology in my academic capacity as a researcher in understanding how it can improve aspects of media technology, in particular. Can it improve, say, the detection of fake news, which is a big thing nowadays? Also the proof of creation, is it possible to use that as a way to preserve Intellectual Property rights? These are areas I cover on the academic side.

On the ISOC side I am often called the Blockchain guy on the Board of Trustees of ISOC. I have been trying to argue that the internet itself is instrumental for developing the Blockchain. The reason for that is the common characteristics of the Blockchain, the decentralization, equality of access, transparency, all have been inherited, those of the internet have been inherited to the Blockchain. In some sense it is like some sort of grand child of the internet. So it has very similar traits. And the same people who developed Bitcoin had somewhat very similar affiliation, mind sets of those who are early adopters of the early internet. In the times of the bulletin boards and the use net, if some of you remember.

So the same mentality of openness, equality, access, distribution, not having a central point of control, not having mechanism censorship. So the characteristics that have been inherited to the Blockchain make it rather appealing on the internet layer.

These are the two areas that I have been involved in. I'm happy throughout the discussion to go more into how governments can deal with it.

>> JORN ERBGUTH: Thank you, Walid. We hoped to have Susanne Tempelhof here, but she couldn't make it.

We have Olga Duka now, she is a cryptoowe and CEO of this exchange that connects the financial market with cryptos.

>> OLGA DUKA: Hello. Good day to everyone. I'm happy to be here. We had a fascinating conversations for the last two days on what Blockchain could change. We have our very special take on this one. And this take, our product which we are building is based on four major trends which we see either challenges, trends which we think we can answer to. Or which eventually influence the industry we are working with right now, which is fin tech but also will influence other industries as well. One is the sharing economy and the future of cities. And it seems to be bringing inequality as the old economy did, but the power of Blockchain may create this future distributed sharing economy with possibilities for everyone. And we are rather interested in the implications of Blockchain to this future trend.

Another one is the future of governance. A we see right now is the whole governance, the concept of it is changing. And public services in some way become the future -- for business. Governance is going digital and Blockchain technologies may be used to empower this world, but we also can see multiple questions on where the government controls it or whether business controls it or whether society controls it and how they all are in a dialogue.

The third one which would seem important is the concept of the future identity, the digital identity. Obviously we have many people in this room, I'm pretty sure, have the idea of how they want to treat their personal data. And currently the discussions about the digital identity seem very important.

Finally, the future of markets and the cryptocurrency and Blockchain technologies brought in a completely new model of economy. We don't know yet, don't yet understand. It seems that in the next few years we will eventually figure out how it should be working.

So based on those challenges, we have our own use case, our own answer as a product. It is a hybrid financial platform which connects financial markets with crypto. And our answer to those challenges is that on one point we highly welcome regulation in financial markets and in cryptomarkets as well. On the other side we would love to see the governance made around on SmartContracts to exclude bureaucracy, to exclude bribery an corruption we have seen around the globe.

Then on digital identity, as far as I understand, that identity is also a question of sovereignty of the government. And a question of national borders. I do believe that our private data belongs to us and our platform will be the first one to adopt such a digital identity when it will be eventually implemented. And it obviously can run on Blockchain.

We are here for the hope of a dialogue on the prospects of regulation because that is probably the only way we can figure out how the future will shape. Thank you.

>> JORN ERBGUTH: Thank you, Olga. I think it is a real game changer now that governments are ready to commit to Blockchain, that governments are ready to say we will be bound by a Blockchain, that we cannot exclusively control. And that we will be bound by it, so we cannot manipulate as we might like, but we are bound by our own rules.

My first question is, of course, what is the position of the European Commission on the Blockchain regulation, use of Blockchain? Should we regulate more? Should we have more freedom? What is the position?

>> OLIVIER BRINGER: Okay. Yes, it is a very important question. So for the moment, I would say we are rather cautious. What we do for sure, we want to invest, as I said, in the technologies. We have already funded 80 million Euros of projects on Blockchain and services that use Blockchain. We are going to fund 300 more million Euros until the end of 2020, to fund Blockchain projects. We think this is very important because this is the way to look into the issue of how to improve the architecture of Blockchain, how to make sure it is secure, how to ensure it is scalable because it is a distributed system. It is a challenge to scale it at the level of the full internet. How to make sure that it is not used too much energy. In the description of the workshop you say Bitcoin uses more energy, more electricity than Switzerland. That is quite impressive.

So this is really something we really strongly are going to invest in, and invest even more in the next budget of the European Union, which we will disclose today and tomorrow.

Then I say we are cautious because we are looking at the markets. For that we have launched what we call an -- foreign owe Blockchain. It is a multistakeholder group. You have regulators, you have technologists, you have Civil Society, academia. They are going to help us -- sorry, we have launched it with the support of the European parliament. That is important.

And this group of people are going to help us look into how Blockchain can be used in different sectors, including public sector. We are looking to issues of interoperability because Blockchain is a technology that grows. You have different kinds of Blockchains. So how to ensure interoperability, how to place the right legal frameworks. This group is going to advise us on that.

And another important initiative is that we have Member States, 24 of them have agreed to a declaration on Blockchain. They have agreed that they would collectively discuss those issues, discuss interoperability and try to build a Pan-European Blockchain infrastructure.

So we are going to do that by financing it through an instrument called connecting Europe facility. It is an instrument we use to build highways, to connect countries, but we do it also at the digital level. So in that case we try to have the right connector between Blockchain system developed by governments in different countries, to provide cross-border services.

So that is a very important development. We are all on the same page. We want to avoid Member States, the Commission wants to avoid divergent approaches. We want to be as harmonised as possible.

Maybe to finish on the cryptocurrencies, we had a fin tech action plan that we issued in the spring. There as well we have said that we will look into the market developments. We will work with the European financial supervisory authorities to see whether we need to intervener not in the specific, under financial rules. For sure Blockchain brings huge opportunities. For example, to raise funds through ICOs, initial coin offerings, but there are also risks. When you look at the situation of the Bitcoin, for example, it brings risks for consumers and investors. We need to see how to address those risks.

But the idea is really to have a framework that favors innovation because we are at the very start. We have to nudge those people who are developing the technologies, who are developing the use cases. That's really in the interests of the European consumer.

>> JORN ERBGUTH: Thank you, Olivier. Well, what do you on the panel, please prepare your questions in the audience as well. We will take questions from the audience. Do we need more regulation? Shall we use Blockchain in government more? What kind of regulation do we need? Or do we need more freedom to use Blockchain? Are there hurdles in the current law that we need to remove? If you could provide a brief answer on your state there? Yes?

>> NESTOR DUBNEVYCH: So I think that if we speak about the regulation of Blockchain and cryptocurrency we need to understand what is the starting point of this process. I would like to explain an interesting project on my opinion. This can replace notaries. Its name is approve, it is a mobile application which you can use for entering into a contract.

>> JORN ERBGUTH: Can you be brief for the regulation?

>> NESTOR DUBNEVYCH: Yes. I finish about this, yes. So you can use it, you can make have some conversation with your the other party and record this conversation and hash the record into Blockchain.

But if we spoke about the legal status of this record, whether it will be an agreement and whether we will get money in the bank if we show this record, we face a lot of problems because there is no regulations. We think the point is that, the starting point is that we need to define such opportunities of this technology and then we need to make some checklist of what we need to regulate for opening these opportunities into the market.

>> JORN ERBGUTH: Okay. Mariam, you said already that we are a bit behind in technology. You are asking for more regulation or for more laws?

>> MARIAM TURASHVILI: No, no.

>> JORN ERBGUTH: Take the other mic, please.

>> MARIAM TURASHVILI: I was not talking about regulations. To give a perfect example of what I meant in the legislation, is a bit behind. Our Civil Code implies that the agreement between the parties should be in written form and understandable language for both. So is this code which is used in SmartContracts in a written language understandable for both parties? No. So we need to adjust the legislation to follow the development of the technology. That's what I meant in the regulations.

I will answer to your second question about outcome should governments use Blockchain more or not. I think they should. And we are also planning to expand a bit. We want to become a hub in the country. Next what we are planning will be the registration, to integrate the business registration. Other governmental organisations are addressing us and we are happy to share our knowledge and experience.

Blockchain should be used by different organisations because again it is fast, it is secure and it gives the higher protection and trust.

>> JORN ERBGUTH: Thank you. Olga, you are active in quite a lot of different countries. When you compare them to Europe, do you think Europe is ready ahead?

>> OLGA DUKA: A good question. Actually, my general take on the regulation is that there is a regulation and there is an execution of that regulation. And if regulation is done by experts in the society one way or another, the execution of this could go to Blockchain in full, which is self regulation or central or decentralized one.

We are going to Europe and we are looking for, are researching at least Malta. Also Germany and Switzerland for their regulation, which is applicable to our platform. But you have to understand that we are a hybrid, which means that we use both licenses from financial world like dealer or custodian. We also apply cryptolicenses such as cryptoexchange or the transmission of digital assets.

And we need both. And it is not the question of if Europe is ready or any other country. It is a question if we can use different sets of licenses in a particular regulation. We are very much looking forward to Malta. We are quite interested in what is going on and it seems that even if we would be able to, which one would assume, would have to take -- we have to wait for Switzerland for at least a couple of years because we not only need the cryptolicenses but also financial licenses as well.

>> JORN ERBGUTH: Okay.

>> OLGA DUKA: We have a specific angle to this.

>> JORN ERBGUTH: Okay, Walid, what do you think?

>> WALID AL-SAQAF: I think that governments tend to over regulate. One of the problems with new technology is that it is better in my opinion to not regulate than to regulate in a wrong way. Usually regulating a technology that is still evolving in itself right now without even having it mature enough would be like shooting yourself in the foot because the government itself was about to adopt it and now it is regulating something that is not adopted.

It doesn't make sense. Measured responses need to be accounted for. One of the important aspects of new disruptive technologies is that by nature they are disruptive. So the old legacy regulations might not even work on them. The way the internet was never, the way governments were never able to stop the internet from allowing people to have long distance conversations. You may remember many of the members of governments were furious when the citizens were able to bypass their international carriers and have conversations without paying the fees that they are supposed to.

So in the same way, governments have to give up. Later, of course, quite late adopted the technology and have their own ways of using it in their favor. So I feel that history is repeating itself. Governments need not rush, but take a step bag and look into it and understand the technology.

I would like to emphasize and appreciate the fact that the European Commission established the observatory form because that is a sign that they would like to learn first and if you've seen the testimony of Zuckerberg at the Senate, you understand the difference between tech Democrats and politicians. It is better to step back and understand things before making decisions.

>> JORN ERBGUTH: One more question before I turn to the public, can we extend it without problem from registry of land? From businesses to registry of IDs? It is a big question now.

Where human rights are involved, it is not any more about business but, of course, can you have multiple identities? Can you be traced on the Blockchain? What about your privacy?

So a short answer, can we extend it to digital identities on the Blockchain? Do you want to start?

>> OLIVIER BRINGER: I am not technically competent to say whether Blockchain is the right tool, but for sure in the internet of the future we need to master -- people need to control their identity. They need to be able to be anonymous when they want. They need to be able to give their full credentials when they want. They need to do it for the purpose they like, for social good or for commercial purpose.

We need a strong digital identity, which is important in the internet of the future. Blockchain probably offers some solutions. There might be others as well.

In Europe we have this framework which is called the EI regulation. It is a good basis, technology neutral but a good basis to develop European identities, but for sure there will be a need for trusted parties that manage your identity online, yes.

>> JORN ERBGUTH: Olga, do you think that IDs is ready for Blockchain?

>> OLGA DUKA: I don't think I am competent to say somebody is ready except our own team, but digital identity can potentially be -- there are two things to that. Again, regulation and execution of regulation. Technology-wise I can imagine digital identity working right away. The distributed data on multiples of computers in a chain longing to a person run on SmartContracts. So whichever moment I want to give away my personal data, I countersign this one and then it goes decrypted through multiple computers in the chain. It doesn't belong to anyone, but it belongs to me.

At the same time it is encrypted enough.

If it is possible, even this concept idea, if it is possible to implement right now, I don't know. It really depends on the governments and on the government's take on the identity, which in a way define national border. Then that is a question of how we are thinking about the future of national borders as well.

>> JORN ERBGUTH: Okay. Walid? You want to comment?

>> WALID AL-SAQAF: Yes. I think that the question here is coming back to the characteristics of the Blockchain. One of the characteristics of the Blockchain is empowering the end user, the end user being the ultimate person whose data is being stored. If I were, let's say I have a wallet and have information in that wallet. It is me who can decrypt using my phone private key that information.

The minute that right is taken away, in some way or the other, it is no longer the same concept that originally had been emphasized in the paper from Bitcoin. It turns to another set of Blockchains, called private Blockchains, where others are acting as your agency on the Blockchain. Is it suitable or not? You can't answer to that. But it is a totally different paradigm or mind set.

We move from the original concept of total transparency in terms of being end user peer to peer to giving agency to someone else acting on your behalf. Which is, if you think about it, which is actually going back to the database system. It is another form of database, even slower database, maybe more secure database, but eventually it is not you who is in charge. That's the problem.

>> JORN ERBGUTH: Thank you. We have one question from the public? Can you get the Mike, please?

>> AUDIENCE: Good afternoon, everybody, I'm Loira and a crypt anarchist, nobody mentioned the idea behind cryptocurrencies and Blockchain and all the technologies. Crypt -- is responsible for Blockchain and we are see that government has some promise for the cryptoside.

I have a few questions. What do you think about surveillance from the government on the Blockchain model? Triggering ...

The second one is do you think, somebody mentioned the ecological impact of Bitcoin. I'm not sure who, but doesn't you think that if we have money produced and consume more energy than mining of cryptocurrencies? I will try to be short. So thank you very much.

>> JORN ERBGUTH: Thank you. Who wants to answer?

>> OLIVIER BRINGER: I think I have to answer. On the -- I cannot compare whether Blockchain uses more energy than centralized system. I just caught this figure which I find very, very telling. An idea that the distributed nature of Blockchain makes it more energy-hungry. So this is something we have to address. It doesn't mean, it is not something we cannot address. We need to address it, we need to research it, and we need to see if we can use -- for example, we are now thinking of deploying high performance computing. So very powerful computers in Europe can use that to make Blockchain more efficient. Maybe that is the solution.

And the first point was -- I lost track.

Surveillance, yes, that's more complicated. The Blockchain is encrypted, right?

>> No, no, most Blockchains are open, transparent and only the security is encrypted meaning that when you do Bitcoin transactions, for example, you are not at all anonymous and there exists a lot of tracking tools that actually do tracking of Bitcoin. However, there are other Blockchains that are anonymous or at least --

>> OLIVIER BRINGER: Quite anonymous. So probably then if indeed Blockchain has this transparency dimension, this is not in the technology that you are going to solve that. You need laws to avoid it. So you need governments to commit, not to -- this is a big issue and I don't want to now start a big discussion on that, but to make sure that governments do not monitor everything on the internet or on the Blockchain. So this will be my short answer, but I'm not sure if the technology is transparent and it is a key aspect of it, I guess we should keep it probably.

>> JORN ERBGUTH: Thank you. There has been another question? Please?

>> AUDIENCE: Thank you very much. I am certainly very intrigued by the opportunities which come with Blockchain, but the topic for this afternoon is competition to governments. I didn't hear much about competition to governments.

So I would put to you a question. There is the, does the money laundering directive of the European Union and at the same time with the help of Bitcoins you can totally circumvent it. So is there not a competition to governments? In this way you can use this for transactions in the dark net and what have you. And I would really like to hear more about these threats which also exist. And maybe a technical or practical question. It is very interesting that Georgia went ahead with the registry, but could you tell us about the cost? Because I think governments will be most persuaded if they can save money with that and not only if that is a stable and secure system. Thank you.

>> JORN ERBGUTH: Okay. Maybe I can make a comment on this? We had already foreseen a representative of Bitnation here and they go a step further. Not only they offer Blockchain as a tool for government, but as a tool to replace government functions. So there we have competition with government, but of course your question is valid. If you can circumvent government rules, then it is also a competition to a government. And so maybe you can answer the question how much does it cost? And why did you choose Bitcoin in the first place and not a different private Blockchain?

>> MARIAM TURASHVILI: Thank you for the question. So far we are not paying anything for these transactions because we are working together with the Bitfury Group and we have the memorandum and we are not paying for it. The price of the transactions are related to the price of Bitcoin or whatever currency you are using in Blockchain.

So as for being cost effective, right now as I told you, we have not changed our registration system. So time frames and the price for the citizens and for us is still the same. But in the future when we will start using the SmartContracts, of course it will be cost effective because human resources can be replaced and that can be a competition to government. Also the notary offices will not be be necessary. It also will be cost effective for the customers.

And this also will be a competition to governments, because the services of notaries will not be used that much.

I cannot talk much about the prices from cost effectiveness because we have still not changed our registration system.

>> JORN ERBGUTH: Walid, you want to comment?

>> WALID AL-SAQAF: Yes, about money laundering, this has been brought up. Think about it, the whole market capital Bitcoin, $130 billion. You know how much corruption there is using regular money on an annual bases? Can you estimate the global number? 1.5 trillion U.S. dollars. It is nothing in comparison to what is happening in real fiat money.

In fact, Bitcoin is very useful, as mentioned earlier from the representative of Bitfury in tracking certain amounts. Certain transactions have been easily detected and this is because Bitcoin is pseudonymous, you can address a -- track address to address. If you know a particular address belongs to a particular individual that is a sign that you can knock on their doorstep.

Another thing to note, that the government's use of Blockchain for aid delivery, for transactions within government agencies will enhance transparency and eliminate a lot of this corruption.

So I think that we need to flip it on its head. Instead of seeing the negatives in this technology, we look into the positives that can revolutionize and improve transparency within government transactions. Maybe that's why I think it needs to be referred to as a priority.

>> JORN ERBGUTH: Thank you. Okay. Do we still have time for the more discussion? You want to ...

>> AUDIENCE: Thank you. Just one short clarification. I would like to ask Mr. Bringer. You mentioned the observatory. Okay. So is it open? Can anyone join? Is there a place for researchers around Europe? Or NGOs, who is doing that kind of work? Thank you.

>> OLIVIER BRINGER: I must say, I think it is closed now, but I will need to check. I can give the information later.

>> WALID AL-SAQAF: Actually, it is open as a Forum. You can login as a form, I believe.

>> JORN ERBGUTH: There is a selection process and the selection process is closed, but I have been told there will be another selection process, as there might be another selection process next year.

>> AUDIENCE: Thank you.

>> JORN ERBGUTH: Another question, please.

>> AUDIENCE: Thank you for the interesting discussion and all the insights. Here is the question. Starting 2008 the anarchists were the guys who created all this. And step-by-step with the events just developed, nowadays we see big whales, like governments, big financial institutions who want their stake.

What I really clearly see, the government wants of course, all of them want development. First of all why they try to regulator whatever, they want their share in terms of taxes. They want to keep control of the economies. And this is another topic and maybe others, too. The big whales from the financial industries, if can, want their share of income in terms of their businesses. They want to make money.

So the question is do you see this as a threat or do you see it as an age of flowing events? What I actually see is this -- this is a surplus of the money of the big whales. Do you see this as a threat? Or as a kind of natural flow of events? Thank you.

>> JORN ERBGUTH: You are the closest one to the financial sector, Olga.

>> OLGA DUKA: Yes, that is an interesting question.

Because it seems that -- well, I have been a witness to several industries producing innovations for the last ten years like robotics or aerospace and defense. And I was born in an IT engineering family. I have seen the internet starting way before it was well-known.

And the thing is that all innovations grow in a circle. People invent something and then it starts to adopt and then governments taking and businesses taking, it's quite natural.

What is interesting right now, I think, we are living on the cross-section of huge global trends which we haven't been before and we have never seen before in the history. Emerging technologies, new cities, smart cities, connected societies, life long education. And we have a lot of questions we have never actually figured out before. And this is probably the most interesting part. And which is why we will have to be in a dialogue. Not like someone invented it and people are taking it on a different road. It is let's start talking because -- can actually find common ground with finance guys or startups. They eventually invent something to make it available for people.

>> JORN ERBGUTH: Thank you. We are here also concerned about human rights. And maybe we can ask some of the key participants, do you think Blockchain is an opportunity for human rights or threat to human rights? Maybe Elena?

>> ELENA YURKINA: Hello, everybody. It is working?

So I have an experience working as a lawyer in the European Court of Human Rights. From this point of view I would like to share with you my considerations and one of the biggest concerns as I see it now is storage of personal data in Blockchain because there is a huge problem, one of the human rights is the right to have his on are her personal data to be deleted from registers.

And I am not sure if this is possible at all. And there is some cases of the European court related to databases in France which store information about criminals, their fingerprints and DNA samples. Out of four cases I'm aware of against France, in those cases France lost because of the requirement of the particular storage of the data was not taken into account. And because there was in some cases it was not the possibility to delete the data after the expiration of this case. From a human rights point of view this is one of the concerns related to Blockchain. Thank you.

>> JORN ERBGUTH: Do you want to comment on it? I think our time is almost up. Maybe if everybody can have one sentence only statement to conclude?

>> WALID AL-SAQAF: I would like to say that as a human rights includes aspects that Blockchain empowers, for example, aspects of transparency, I would like to know my right as a citizen to know how funds are received by the government are used, for example. My right in protecting my viewpoint and expressing it, expressing my opinion which is one aspect that Blockchains allow which is freedom of expression. And equality because on a public Blockchain, everyone is equal in terms of ability to participate. And permission. It means that everyone's right is protected. You don't have a Minister able to do it --

>> JORN ERBGUTH: One sentence, please.

>> WALID AL-SAQAF: So these aspects show that there is premise. I would like to note if governments would like to use this opportunity, they need to forget their legacy ways of thinking and introduce new ways of thought.

>> JORN ERBGUTH: Thank you. Olga, please, one sentence?

>> OLGA DUKA: The data, privacy data belonging to people which is I think a basic human right and the ability to monitor the government's expenses and take on -- I think the basic democracy and human rights and people living in a common society. So yes.

>> JORN ERBGUTH: Okay. Mariam?

>> MARIAM TURASHVILI: Ownership rights is one of the fundamental human rights. And that is what we are trying to protect with using this new technology. Also the information about the owner, about the property itself, about public law restrictions and so on, according to Georgian legislation is stored on our website and is public. It is never deleted. On Blockchain or not, it stays there. I think we are having a higher level of security with the Blockchain of the human rights.

>> JORN ERBGUTH: Thank you. Nestor?

>> NESTOR DUBNEVYCH: I agree with colleagues about the personal data and about the ownership rights. But also I think that mon more important question is protection of rights of cryptocurrency holders. It is a huge question and I think that the simple regulation is very important for solving this issue also.

>> JORN ERBGUTH: Okay, thank you. Olivier?

>> OLIVIER BRINGER: So Blockchain is definitely redefining, going to redefine the internet. I think it is a good development that we see. I mean, giving back control to the users, allowing more peer to peer transaction, I think that is, in a secure way, that is a positive position and we should encourage it.

The governments have an opportunity to be a bit innovative. Instead of regulating and then starting using the technology, they have the opportunity to test the technology themselves, to implement the technologies and to use this knowledge to see what needs to be done in terms of regulation.

So I hope we will follow this route.

>> JORN ERBGUTH: Okay. Thank you very much for the will panel.

Now we will have, as usual for the sessions we will have the rapporteur putting it together for eternity so we can document it. Please, come to the stage.

>> RAPPORTEUR: Yes, he is going to do that for me. It is going to be easier.

>> JORN ERBGUTH: Take a seat.

>> RAPPORTEUR: It is challenging to summarize this rich panel. I drafted six bullet points. I start with the very general statement. The Blockchain technology promises this lies trust which is independent from governments, public authorities and traditional business institutions.

One of the purposes of the European Commission is to build a internet that citizens can trust. One key technology for that is the Blockchain. It will allow more direct and less expensive interactions.

The Commission started with cryptocurrency in the financial sector and extended its action to public administration, logistics, healthcare. And the Commission has funded projects to ensure and improve the architecture of Blockchain.

Georgia implemented Blockchain technology for public registries, but also to register land, business, entrepreneurial and non-entrepreneurial legal entities among others. Blockchain technology can have great social impact. It can improve the detection of fake news or even preserve property rights. Internet is very instrumental to develop Blockchains because of its transparency and decentralization. Also Blockchain gives agency to third parties and changes our current governance paradigm. Governments should use more Blockchain technologies. Governments tend to over regulate and should be cautious about regulating disruptive technologies, to not do it in the wrong way.

Blockchain will replace human resources and can compete with governments, but it can also improve transparency to government transactions.

And finally, regarding human rights, personal data should be able to be erased and Blockchain technology can threat that. On the other hand, Blockchain enables more transparency and participation which are important human rights values.

>> JORN ERBGUTH: Thank you. Do you agree? Do you want to have a last comment?

>> WALID AL-SAQAF: There is one, it might be a misunderstanding. When it said that Blockchains bring or give agency to third parties. In fact, Blockchains remove the agency of third parties and eliminate that because it is peer to peer.

I would have loved to have a resolution or say a recommendation of not regulating before fully understanding and implementing and testing the technology. That is one thing.

>> JORN ERBGUTH: I think that we have agreement on take as well. I think it is a very open approach of the European Commission to discuss first and then regulate, in a very open way.

>> MARIAM TURASHVILI: We use it for property registry, land and property both. And the business registry comes next.

>> RAPPORTEUR: Okay.

>> JORN ERBGUTH: Okay. Thank you very much. This concludes this session. It was a pleasure to be here. It was a pleasure to have you, distinguished panelists here. Thank you very much. And give them a big applause.

(Applause.)

>> Thank you very much, Jorn. This was a very interesting last Plenary.

This text is based on live transcription. Communication Access Realtime Translation (CART), captioning, and/or live transcription are provided in order to facilitate communication accessibility and may not be a totally verbatim record of the proceedings. This text is not to be distributed or used in any way that may violate copyright law.

Blockchain – a competition to governments? – PL 04 2018

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Blockchain – a competition to governments? – PL 04 2018

Session teaser

Keywords

List of proposals

Session description

Format

Further reading

People

Suggested questions

Current discussion, conference calls, schedules and minutes

Messages

Video record

Transcript

Navigation menu

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