Blockchain and the limits of a ‘ledgered sovereignty’

Blockchain and the limits of a ‘ledgered sovereignty’

European crypto-enthusiasm at the crossroad of integration and distribution

Blockchain and the wonders of distribution

Blockchain technologies are expected to revolutionize international cooperation by distributing political authority to a wider spectrum of actors beyond the nation-state. Their transformative potential resides in the peculiar network architecture they contribute to generate. With no central authority, network nodes – the so-called ‘ledgers’ - hold in fact a share of responsibility with regards to the storage of data and portions of the network itself. As ledgers are formed through ‘distributed consensus’, they organize themselves in purely ‘core-less’ systems, this way facilitating distribution of power and autonomy across the network.

Through the allocation of authority to autonomous ledgers, blockchain-based networks extend political responsibility and agency beyond the conventional sites of the nation-state and the individual subject of law. By doing so, distributed network architectures offer trustworthy, faster, and most secure forms of information and data exchange - of unique relevance for policy applications in the context of data and cyber security governance. Thanks to blockchain’s potential to distribute authority and responsibility, very different actors, and for very different reasons, look favourably at the transition towards what can be identified as ledgered sovereignty. But are blockchain technologies really leading the transition towards more distributed and democratic models of sovereignty?

European crypto-enthusiasm and the GDPR

The potential distribution of authority unsurprisingly appeals to those actors who are interested in the acquisition of wider political autonomy: tech utopianists, transnational corporations, diplomats, anarcho-capitalists, and more. Somewhat more surprisingly, European institutions have recently joined the legion of these ‘crypto-enthusiasts’ by embarking on the mission of creating a ‘digital single market’ as well as delivering EU-wide cross-border public services using blockchain technology. In 2018, with the aim of ‘putting Europe at the forefront of blockchain innovation and uptake’, the European Commission launched the European Blockchain Partnership tasked with building an European Blockchain Services Infrastructure (EBSI). In 2020, EBSI plans to implement a network of distributed blockchain nodes across Europe in order to support public and private applications focused on selected use cases, such as data and cyber security governance.

The recent European race towards ledgered sovereignty raised a number of concerns related to how blockchain architectures contradict the European integrative efforts to promote data protection. A recent EU study in fact highlights the extent to which blockchain technologies are incompatible with the 2018 General Data Protection Regulation (GDPR). First, contrary to the very essence of distributed network architectures, the GDPR operates on the assumption that at each data point corresponds one legal subject. This is very problematic in the context of ledgered sovereignty where responsibility and accountability are shared and distributed across ledgers. Second, the GDPR purports to promote data protection, privacy rights, and trustworthy information sharing by subjecting data to a number of legal requirements and compliance to these by eventually enforcing modification or erasure to comply with its legal requirements (such as with regards to Article 16 and Article 17). In contrast, distributed networks are designed in ways that render data modification and erasure somewhat impossible.

From integration to distribution?

At a first glance, EC’s promotion of a ledgered sovereignty of data through cross-border infrastructures appears to be consistent with the European foundational mission of political integration. On the other hand, distribution and integration are two very different approaches to governance and thus require profound scrutiny with regards to their compatibility. Besides technical and legislative facets, the tension between blockchain developments and the GDPR reveals a broader issue related to the mainstreaming of ‘ledgered sovereignty’, one that goes beyond integration vis-à-vis distribution. With transnational corporations currently occupying a dominant position in the world of ledgers, it is important to take into account that there is more to sovereignty and democracy than autonomy from a central authority. Whether blockchain technologies will lead to a distributed and democratized sovereignty ultimately depends on how these technologies and infrastructures will be used in light of existing power structures, and beyond their undebatable, yet theoretical, potential. That is to say that political autonomy and the redistribution of power do not reside in the technology itself, but in its use and regulatory schemes. As debates on blockchain development and regulation are ongoing at the European level, it is of timely importance to highlight the possible democratic shortcomings associated to the various applications of such technologies. In this light, initiatives such as the EU Blockchain Observatory and Forum are of vital importance for promoting democratic and plural normative schemes regarding the potential transition towards a ‘ledgered sovereignty’.