At first glance, the features which form part of Blockchain technology may be difficult to reconcile with certain data protection aspects and, in particular, with the framework established under the upcoming General Data Protection Regulation (‘GDPR’).

Current data protection legislation (including the GDPR) seemingly focus on centralised systems, where identifiable entities are responsible for the processing of personal data. Conversely, Blockchain was created in order for parties to by-pass centralised systems in a decentralised and more secure way.

This distinction is important especially when considering the ways in which Blockchain participants will be classified under the GDPR.  For example, it is unclear if a ‘controller’, the entity that determines the purposes and means of the processing, may be said to exist in a Blockchain system.

Under the GDPR, data subjects are also granted a number of rights which are seemingly in tension with the Blockchain’s immutable characteristics; most notably the right to be forgotten. Regulators would have to consider how Blockchain databases could permit the alteration or removal of data at the data subject’s justifiable request.

Furthermore, the GDPR introduces the notion of ‘data protection by design’ which means that any Blockchain database developed must not fail on data protection and minimisation principles.

The difficulties posed by existing data protection laws are more clearly evident in regard to public Blockchains.  In a private Blockchain certain issues may be overcome by appointing an administrator with overall oversight.

Effectively, this might possibly result in the creation of Blockchain databases that drift away from the decentralised nature of the Blockchain as originally contemplated by its pseudonymous creator.

This article forms part of a weekly series called ‘Unravelling Blockchain’, contributed by Camilleri Preziosi Advocates, which explores Blockchain’s unique features and expands upon the technology’s legal implications across various commercial and corporate sectors. For a more detailed commentary, please visit http://www.camilleripreziosi.com/.

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