POA Network x LTO Network: Making Blockchains GDPR Compliant
Blockchain technology has been in the echo-chamber for a long time, and one could argue it’s still there. Dozens of new projects emerge every month, but only a handful of them make it to the real world. This is due to current environments simply being incompatible with blockchain technology, which at its core aims to remove intermediaries and operate in a more decentralized peer to peer (P2P) manner.
Adoption always comes slowly in early stages, especially with an emerging technology that poses a real threat to existing bureaucratic regimes, such as blockchain. Therefore, to help us get into the adoption phase, blockchain needs to prove itself as a reliable technology for simple processes. But first, we must do what we can to ensure blockchain technology is legally compliant.
Recent news have increased the public’s knowledge on data regulation. To summarize, the General Data Protection Regulation (GDPR), which came into effect on May 25 earlier this year, made it a lot harder for European organizations or any company that has European clients to use public blockchains, stagnating adoption.
Due to these legal developments, we would like to announce a much needed partnership between POA Network and LTO Network that focuses on resolving this roadblock. As a Dutch-based company that’s been operating for 4 years by delivering technology solutions catering within the legal and regulation realm, Dutch blockchain LTO Network is one of the few parties that could combine blockchain and GDPR. You can read about GDPR and its implications on blockchain from a LTO Network point of view in this article.
LTO Network has been developing their own product based on Finite State Machine logic, called Live Contracts which is comprised of both a private chain layer for security +privacy and a public chain layer for anchoring blocks.
The below visual displays the current state of different blockchain companies and technologies when it comes to navigating the balance between Private Data vs Public Data and Consortium Use vs Community Use:
This partnership with LTO Network sees to achieving a GDPR compliant blockchain for POA Network. After this deliverable, we aim to present this case to the correct authorities and make the case for it to be legal for European clients to adopt secure public blockchains. Discussions have already begun on whether we will be creating a separate blockchain OR a GDPR compliant DApp that sits on top of the POA Network. This partnership allows POA Network to distinguish itself from other blockchains by navigating from the bottom right of Figure 1 into the left side making it more appealing for organizations to adopt.
In order to be GDPR compliant, the nodes that store data need to be identified and acknowledge that they are GDPR compliant in a legal and liable manner. You need to be able to pinpoint the exact parties/nodes that are storing specific data. How could you go about it in a public blockchain environment? Here are some ideas:
- A node keeps the data private, and when another node is elected to make a block, it can get a copy of this data from the previous GDPR compliant node
- You can do this by incorporating yes/no answers in a form of Zero Knowledge-proofs
- Possible to have 2 parts of a smart contract on Ethereum (Public and Private)
These are just some initial ideas which POA Network and LTO Network will focus on exploring together. Our aim is to open up many possibilities on the path towards wider blockchain adoption!
Additionally, there is one more exciting part about this partnership… We won’t yet reveal what it will be, but it relates to one of the most exciting technological developments done by POA Network for blockchain technology as a whole. The details will be announced closer to the end of the summer. Keep an eye on the social channels to hear more news!
About POA Network
The purpose of POA Network is to create a “sandbox” universe where Ethereum community can access without suffering from unpredictable transaction cost and volatile mining fees (gas) therefore benefiting from the improved scalability. POA Network is designed to be an open, public, permissioned blockchain based on the Ethereum protocol. To reach consensus on a global state, it uses a Proof-of-Authority consensus algorithm. A list of validators is managed by a smart contract with governance by validators. Validators on POA network are required to have an active notary public license within the United States. A concerned third party can cross-validate validator’s identities using open data sources and ensure that each validator is a good actor with no criminal records.
About LTO Network
LTO Network is a blockchain platform for decentralized workflows represented in so-called Live Contracts. Decentralized processes combine the use of private ledger, for legal compliance and data privacy, and public ledger, for secure verification via anchoring, making the solution fully GDPR compliant. The unique solution allows enterprises and governments to orchestrate interorganizational workflows in a transparent way.