Is The GDPR A Double-Edged Sword?

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Shutterstock photo With less than three weeks to go until the GDPR takes effect in Europe, Gabriele Giancola, Co-founder and CEO of blockchain-powered loyalty ecosystem, qiibee , questions what the future holds for blockchain companies under new EU law. With the fallout from the Cambridge Analytica and Facebook data privacy scandal sending shockwaves around the…

Shutterstock photo With less than three weeks to go until the GDPR takes effect in Europe, Gabriele Giancola, Co-founder and CEO of blockchain-powered loyalty ecosystem, qiibee , questions what the future holds for blockchain companies under new EU law.
With the fallout from the Cambridge Analytica and Facebook data privacy scandal sending shockwaves around the world and subsequently putting ethics and regulation under the spotlight, the looming General Data Protection Regulation (GDPR) seems perfectly timed.
Europe’s long-planned privacy rules, which come into effect on May 25, apply to any company, including online businesses, that processes, manages or stores the data of European citizens.
The GDPR will set a new, unprecedented global standard for data protection and, with its effects set to run far beyond Europe, a perpetual cloud of doubt is lingering over just what the implications of the GDPR will be for blockchain companies.

Regulating data
Today, there is an insatiable appetite to consume increasing amounts of data with sometimes little to no regard for the consequences of how that data is being harvested and used. It’s a double-edged sword so to speak.

On one hand, data can provide potentially significant insights into consumer habits, trends and behaviors. By gaining an understanding into how your customers think and feel, data can be the key to better marketing. However, as we have seen recently, potential breaches are always a concern and, now more than ever, your data can be easily manipulated.
In light of recent events, we have seen how data can be used in unscrupulous ways but, even before this, consumers have been paying more and more attention to data privacy, particularly their own personal data and how it is being handled.
With that in mind, new regulation like the GDPR is a very welcome move.
However, are companies themselves looking for such regulation? I don’t think so.

From a marketing point of view, the new data regulations will restrict the amount of information companies can collect on European consumers, which may pose a problem for companies that have over-relied on data-driven advertising in particular.
However, more pressing than that is the struggle many companies will face to get to grips with the new policy.

Implementing and adhering to the new data regulations have, and will continue to be, time-consuming for brands, but something they cannot afford to take a shortcut on. If they do, they run the risk of forking out a maximum fine of up to 4% of their company’s annual turnover or $20 million – whichever is larger.
So where does blockchain fit into this?
Presently, most blockchain-powered startups and businesses are incompatible with GDPR for the simple reason that under the new legislation, individuals have the power to exercise their ‘right to be forgotten’, which means that they can access their data and choose to delete or edit information about themselves.
If you are on the blockchain, you simply cannot delete this information because it is in the distributed ledger.
So, how can blockchain companies function within the framework of the GDPR? Well, it’s complicated and the answer, I think, is both yes and no. I would say that in general yes, they can work, but it’s more so that they can live with the framework beside them as opposed to within them.
If we look at the GDPR’s clause on the accessibility and erasibility of data, we can see that it will definitely impact the storage of personal data on a blockchain level because both present problems – you can’t erase your data and everybody can access the public blockchain.

The whole idea around GDPR is giving users more control over their data. However, blockchain technology presents a completely different type of storing data – one which GDPR doesn’t include in their framework.
For a company like qiibee , the GDPR is not something we have to dwell on too much. Take Facebook for example, and any other brands that are storing customers’ data, ensuring they are GDPR compliant will be a lot more difficult.

At qiibee, we’re not storing personal data of customers, all we’re storing is the transaction connected to a reward or to a redemption of tokens.
Regulating cryptocurrencies
Like the GDPR, there are pros and cons as to why cryptocurrencies should come under increased scrutiny.
While regulators in countries such as China, South Korea and Russia are cracking down on cryptocurrencies, other countries, most notably the UK, have chosen to embrace the world of digital assets and introduce a crypto assets task force.
The introduction of this task force is a forward-thinking move which demonstrates the UK’s willingness to work closely with the crypto community, as opposed to clamping down on it.
Likewise, Switzerland, which is home to the ‘Crypto Valley’, has adopted a more open attitude to regulation – a crucial move if we are to find a happy medium where healthy regulation is implemented and adhered to, but where innovation and creativity are also allowed to flourish.
While Switzerland is applying increased pressure on blockchain companies to comply with regulation, I think the Swiss are adopting a longer-term view which is bound to benefit both sides, as I believe blockchain technology is going to change our lives in the future in the same way the internet transformed the world.
I believe regulations are here to help build and shape this industry moving forward.

I don’t believe they are here to make things harder for us, but rather they are here to help protect against illegitimate companies while allowing for the widespread use of the technology across various industries.
While blockchain technology and the GDPR may appear to be somewhat incompatible, I do believe blockchain technology is still attractive despite the introduction of the GDPR and will not turn people off adopting blockchain technology – at least it shouldn’t anyway.
There are a lot of questions that you have to answer first before you can use a blockchain and the introduction of the GDPR is just another consideration. It should not be a core challenge for blockchain companies, rather just one extra thing to clarify beforehand.
I think Europe is attempting to move with the times and, in this case, a pioneering new technology like blockchain, but one thing is for sure, the law of the land moves slowly and cutting-edge technology like blockchain is simply moving too fast for regulators. In essence, the GDPR might be out of date before it’s even gotten off the ground.
More about qiibee and Gabriele Giancola
qiibee, the decentralized, blockchain-based loyalty ecosystem provides a loyalty platform and developer interface on which every loyalty application can be tokenized. qiibee’s vision is to bridge the gap between today’s loyalty systems and cutting-edge blockchain technology.

qiibee started its journey in the loyalty market with a multi-branded, multi-activity loyalty program which brands could use to reward their customers for activities such as shopping, or creating and engaging with content. Founded in 2015 by Gabriele and Gianluca Giancola, the qiibee prototype was launched in late-2016 with 100,000 active customers in Switzerland, making up approximately 1% of all internet users in the Alpine nation.

Gabriele holds a Masters in Business Management from the University of St. Gallen in Switzerland.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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