Starting tomorrow, the General Data Protection Regulation (GDPR) comes into force in the European Union. According to experts, it will hit not only small Internet companies, but also startups using distributed registry technology.
The Regulation replaces the Directive in force since 1995 and is essentially its more severe and expanded version. The GDPR, which contains 99 articles, is characterized by strict conditions, huge fines and cross-border regulations.
The new document has a number of features. GDPR significantly expands the rights of ordinary users on the one hand and can pose a real threat to the use of blockchain technology on the other.
A direct threat is posed by a significant expansion of the rights of private users to move, limit the processing of their data, refuse to provide personal data and delete it.
According to the regulations, the company is obliged not only to delete all personal information at the first request of clients, but also to periodically empty storage facilities of “outdated” data, which over time loses its relevance. This legal requirement is incompatible with blockchain technology, which precludes such actions. It is on the immutability of information that the entire system of distributed registry technology is built. The EU's desire to protect the privacy of its citizens' data threatens the use of blockchain technology throughout its territory due to conceptual incompatibility with the essence and nature of the blockchain, in which data is stored extraterritorially in a distributed and open form.
In addition, the effect of the regulation is not limited to the European Union. This leads to the emergence of responsibility for compliance with its standards for all organizations dealing with the data of EU citizens. This means that all companies that work with EU member states (in particular, offer goods/services to EU citizens or monitor data within the EU) will be subject to it. Therefore, most blockchain startups are subject to this law. The law provides for a fine of 4% of the company's annual turnover or an amount not exceeding 20 million euros, and this fine can be applied to any resource using distributed ledger technology.
Many experts believe that the new regulations will change little in the current status quo in the global market for IT services for large companies.. It is much easier and cheaper for small Internet companies to shift the collection of personal data to the IT industry giants and pay for the information, relieving themselves of the responsibility and financial costs of complying with the new Regulations.
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