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EU hates cryptocurrency and likes blockchain – for all the wrong reasons

EU is bullish on blockchain, bearish on cryptocurrencies

europe, cryptocurrency, regulation, think tank, eu

The European Commission – the executive arm of the European Union – is a supporter of the common “blockchain, not Bitcoin” adage, it seems.

At a blockchain roundtable session earlier this week, the Commission announced a new distributed ledger initiative that aims to transform the digital services space. Not only that, a number of banking giants, including Spain-based BBVA, are already part of the project.

Along with “industry leaders” and “innovative startups,” the Commission also discussed ways to support the development of the distributed ledgers and create the “right conditions” for the technology to flourish.

The initiative, called “International Association for Trusted Blockchain Applications,” is expected to kick off early next year.

“Blockchain, not Bitcoin”

One thing was clear though: while the Commission certainly believes there are some excellent use cases for blockchain – like transparency, traceability, and security – it doesn’t seem to think much of cryptocurrencies.

“What makes this association special is its focus on promoting trust in blockchain technology among public authorities and citizens,” Director-General for communications networks, content, and technology, Roberto Viola, said. “It will also be able to communicate with citizens about blockchain, a technology which should not be associated with obscure cryptocurrencies but with transparency traceability and a secure environment.”

Considering the Commission’s past aversion to permissionless blockchains, it is not all that surprising the agency denounces cryptocurrencies. With so much fraud going on in the industry, there are many reasons to shy away from supporting cryptocurrencies.

But for what it’s worth, it seems the Commission’s enthusiasm for blockchain is somewhat misplaced too.

For all the transparency and trust chatter, statements from BBVA suggest that the European Commission is currently experimenting with permissioned blockchains. Unlike permissionless blockchains (like Bitcoin’s), permissioned blockchains are open only to select partners – a big no-go for blockchain purists.

Also referred to as private blockchains, permissioned implementations of the technology tend to be less resistant to centralization and more susceptible to tampering.

Of course, immutability and censorship-resistance are two of the main tenets of the technology, as envisioned by its mysterious creator Satoshi Nakamoto. But those aspects don’t seem to matter to the European Commission.

Not that the Commission has a choice either: with GDPR now in effect, the only way to remain compliant with European law is to bet on permissioned blockchains – or suffer the consequences of denouncing the technology altogether.

But in the eyes of the original cypherpunks, none of those two alternatives will ever come close to a truly permissionless and censorship-resistant global network, like they wanted Bitcoin to be.

Published November 23, 2018 — 12:04 UTC