Listen: How Could Blockchain Technology Transform Our Economy? – Technology

In the fourth episode of the ‘Ganado Meets Tech’
podcast, Ganado Advocates’ IP/TMT partner Paul Micallef Grimaud met with
the Director of the Centre for Distributed Ledger Technologies
(DLT) at the University of Malta and Chairman of the Malta Digital
Innovation Authority, Dr. Joshua Ellul, and with Dr. Max Ganado, a lawyer synonymous
with a number of legislative projects that helped develop
Malta’s main sectors over the past years – from Shipping,
Financial Services, Aviation, Trusts, and, most recently,
Innovative Technologies. Together they discussed the impact Digital
Ledger Technology (DLT) is having on economic sectors, its risks,
benefits and the regulatory approach to this technology.

DLT, or as it is more commonly known, blockchain, is a protocol
that enables a transaction or system between two people to persist
without the need for any third party authorisation or interference,
for example a bank or authority – thus the concept of
decentralisation. The authenticity of the data stored on the system
is guaranteed through the use of keys and cryptographic signatures
and the peer-to-peer authentication system. As DLT continues to
gain ground in common day applications, it is expected that central
banks will soon be adopting blockchain technology (albeit not
decentralised) through the issuance of digital currencies.

In Ganado’s eyes, it was evident from the start that this
technology had many more commonalities to public registers that are
central to regulated spheres, such as land, shares in companies,
ships and aircrafts and, at the same time, could provide innovative
solutions to the issues encountered in more conventional,
centrally-controlled, registration systems that could be subject to
manipulation and bad faith actions. The immediacy and accuracy of
the blockchain peer-to-peer system provides solutions to issues
such as that of two notaries attempting to register two sales of
the same piece of land by the same vendor.

Ellul is of the opinion that, despite ongoing development and
advances, the technology as well as the tools to instil trust in it
are still at a nascent stage. This “trust” element is,
unsurprisingly, a running theme throughout debates on emerging
technologies, as is the need to educate society at large, including
legislators, on the significance of these innovative solutions. As
Ganado puts it, we do not only have an “economic battle
but a battle of fundamental importance in terms of the continuity
of our legal systems in relation to the technology which is
emerging and if we do not think about it we are going to have major
problems going forward.” Ellul echoes this view, stating
that for the consumer to be adequately protected “both law
and technology need to meet somewhere and this is the challenge we
are seeing around the world.“

Carrying on from the first episode of Ganado Meets
Tech, where the Information and data Protection Commissioner
admitted that blockchain is one of the biggest challenges to the
data protection legal framework, there seems to be a clear conflict
of philosophies between the GDPR and blockchain. For starters, the
GDPR is aimed at regulating the actions of the data controller,
whilst DLTs are databases with no unitary actor in control of the
data being appended onto the system. This issue is less accentuated
with permissioned or controlled DLT systems. Another fundamental
debate is whether data typically stored on a distributed ledger,
such as public keys and transactional data, qualify as personal
data for the purposes of the GDPR. Although the data has been
hashed or encrypted, this does not necessarily mean that the data
subject cannot be identified by applying reasonably accessible
measures. This means that such data likely does qualify as personal
data for GDPR purposes. Another clash rests in the data
subjects’ rights to modification and erasure of personal data
under Articles 16 and 17 of the GDPR, whereas blockchain technology
is intended to render the modification and erasure of data onerous
in order to ensure data integrity. Similar challenges arise with
the concepts of data minimisation and purpose limitation under the
GDPR.

Despite obvious challenges, regulation remains key to this form
of technology, which in itself can provide invaluable solutions to
regulation. Ellul is of the opinion that the technology is a tool
capable of far more efficient processes than those which we are
traditionally accustomed to in the fight against criminal activity.
Blockchain offers a means of identifying fraud through transparency
which counteracts criminal activity. Ganado adds that the amount of
data coupled with the pace of development in technology is so huge
that that “no amount of human beings sitting at desks will
ever be able to deal with it.” This is where regulators
need to use technology to assist them in overcoming the mismatch
between the lack of human resources and the vast amount of
information that needs to be vetted. RegTech is indeed the solution
to many issues faced by regulators today.

Embedding trust in the technology to encourage its take-up in
providing innovative solutions is what prompted the birth of the
Malta Digital Innovation Authority (MDIA). The MDIA is not tasked
with telling people what to do but rather with carrying out a
qualitative assessment of the technology for the purposes of
certification on a voluntary basis. The assessment is aimed at
ensuring that the technology does not cause loss to third parties
and that it does not breach mandatory laws.

According to Ganado, law and technology can, together reach a
common goal – that of “guiding the way an economy or a
society develops towards a law-abiding reality.” The
challenge lawyers face today is finding a way of modifying the
approach of law to a situation whilst respecting the demands and
developments of technology. Ultimately, technology can moderate
human behaviour by making it impossible for transactional fraud to
occur. Creative thinking should lead to technology being used to
find solutions to issues that have been around for centuries. This
is the goal that sector leaders should seek to achieve.

This article was first published in the Times of
Malta.

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