EC Report Explores Application and Challenges of Blockchain Technology
The Joint Research Center of EC published a report exploring the challenges and impact of distributed ledger technologies. The report "Blockchain now and tomorrow" offers an in-depth and practical understanding of blockchain and how the technology can be used in various sectors in the future. The report helps policymakers and industry understand not only the latest trends in blockchain technology but how trust can be built between different stakeholders.
The report provides multidimensional insights into the state of blockchain technology by identifying ongoing and upcoming transformations in a range of sectors and setting out an anticipatory approach for further exploration. Moving beyond the hype and debunking some of its controversies, the report is intended to offer both an in-depth and practical understanding of blockchain and its possible applications. The report explains that blockchain technology is still at the embryonic stage and facing many challenges, such as performance and scalability, energy consumption, data privacy, integration with legacy infrastructures, or interoperability between different blockchains. Still, based on a limited set of proven use cases, blockchain often entails additional risks and barriers for firms, businesses, and organizations piloting it or interested in its deployment.
The report also highlights that policymakers and regulators need to progress in assessing whether existing policies and laws are fit for purpose or if new frameworks will be required. Pressing discussions include, for instance, the legal classification of tokens and coins, validity of smart contracts, applicable jurisdictions, consumer and investor protection, enforcement of anti-money laundering requirements, and data protection and privacy safeguards. Furthermore, the development of blockchain should be connected to existing digitization initiatives and programs to avoid overlaps and to maximize impact. Blockchains will be complementary or will work together with other key digital technologies, such as artificial intelligence, the "internet of things," data analytics, cloud computing, robotics, and additive manufacturing. As an emerging technology, blockchain requires the multiplication of use cases to test its added value in specific applications and sectors.
Further support and funding for pilots and experimentation spaces must bring together a range of stakeholders from universities, research centers, industry, small and medium enterprises, and start-ups. Blockchain is the technology behind bitcoin and other cryptocurrencies, but it has the potential to transform the ways to exchange a much wider range of assets. It could enable the secure transfer of money, contracts, land titles, data, services and other assets digitally, with few or no intermediaries. In February 2018, EC had launched the EU Blockchain Observatory and Forum with the support of the European Parliament to highlight key developments of the blockchain technology, promote European actors, and reinforce European engagement with multiple stakeholders involved in blockchain activities.
Related Links
- Press Release
- Report
- Overview of Joint Research Center (PDF)
- Blockchain Factsheet
- EU Blockchain Observatory and Forum
Keywords: International, Europe, EU, Banking, Securities, Insurance, Fintech, Regtech, Blockchain, Distributed Ledger Technology, EC
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