Data Privacy Considerations for Blockchain Technology

Abstract

Blockchain technology has been gaining global attention and popularity in the financial sector since the Bitcoin revolution. It refers generally to distributed ledger technology (DLT), “a digital record of transactions or movement of any data that is shared instantaneously across a network of participants.” Yet with a new global data privacy governance model ushered by the European Union in May 2018, many have raised concerns about whether blockchain will survive the scrutiny and the extraterritorial effect of the EU General Data Protection Regulations. The data privacy concerns are not unwarranted. Blockchain technology is premised on a distributed peer-to-peer persistent ledger, which third party intermediaries are not required to guarantee the transaction. By nature, data on blockchain is perpetually stored, immutable, and transparent to network users. Apparently, these seem to be at odds with data privacy compliance which requires the identification of responsibility on specific data controller and processor, the update or erasure of data, and protection of privacy and rights of individuals. All in all, is blockchain technology inherently incompatible with data privacy requirements? This presentation examines the data privacy considerations for blockchain technology, discussing models and examples from open permissionless, private permissioned and hybrid blockchain. With current technological advancement, I argue that off-chain personal data storage is the only solution that can balance the promise of efficiency and security that blockchain brings and the requirement of data privacy protection.