Distributed Ledger Systems are used in applications like cryptocurrencies stated Bahaa Abdul Hussein. Distributed ledgers ensure greater security and higher transparency in transactions, which explain its growing popularity. A key issue that comes up is of data protection and privacy. It is a critical issue since financial data of users is being stored on the ledgers. We look at various aspects involved.

A distributed ledger technology like Blockchain stores transaction data in the form of blocks of data in the form of a chain. The records are immutable meaning they cannot be altered or deleted. It thus ensures higher security. It is a decentralized system where data is not stored on a single server but on multiple nodes. While encryption is used, the transactions are transparent. All users can see transactions that have occurred.

An issue that comes up is related to privacy and data protection. With countries across the world coming out with stringent laws related to privacy, distributed ledger systems need to address this issue. The EU has come out with the General Data Protection Regulation (GDPR). The US has various state-specific laws that deal with data protection and privacy. These norms have very clear e-privacy requirements that must be addressed.

There are issues related to blockchain that affect privacy.

  • Issues exist related to anonymity of users and also pseudonymity (users using a pseudonym). It is an essential feature of distributed ledgers. It remains to be seen how data privacy laws would be applicable in such a situation.
  • Laws stipulate identification of data controllers and data processors. Identifying these elements in blockchain is an issue that needs to be resolved.
  • Territorial considerations need to be kept in mind as per laws. This is an issue because the distributed network is spread across the world.
  • Individual rights need to be kept in mind while ensuring transparency.
  • Cross border data transfer is an issue in EU laws and this needs to be addressed.

A proper approach is needed to ensure blockchain and other distributed ledger systems comply with privacy and data protection laws. Non-compliance may lead to serious problems in the future.

Conclusion

Data privacy and protection are critical issues in today’s world. To protect the rights of users, countries and global organizations like the EU have come out with stringent norms. Distributed ledger systems would also need to comply with such laws. Thank you for your interest in Bahaa Abdul Hussein. For more information, please visit www.bahaaabdulhussein.com.