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The EU hates cryptocurrency and loves blockchain – for all the wrong reasons

The European Commission – the executive arm of the European Union – is a supporter of the common adage "blockchain, not Bitcoin", apparently.

At a session of blockchain round tables at the beginning of this week, the Commission announced a new distributed ledger initiative that aims to transform the digital service space. Not only that, a number of banking giants, including BBVA based in Spain, are already part of the project.

Together with "industry leaders" and "innovative startups", the Commission has also discussed ways to support the development of distributed registries and create the "right conditions" for technology to flourish.

The initiative, called "International association for reliable blockchain applications, " it should start at the beginning of next year.

"Blockchain, not Bitcoin"

One thing was clear: while the Commission certainly believes that there are some excellent use cases for transparency, traceability and blockchain security – it does not seem to think much about cryptocurrencies.

"What makes this association special is its focus on fostering trust in blockchain technology between public authorities and citizens," said the director general for communication networks, content and technology, Roberto Viola. "It will also be able to communicate with the citizens on the blockchain, a technology that should not be associated with obscure cryptocurrencies but with traceability of transparency and a safe environment."

Considering the past aversion of the Commission to blockchain without authorization, it is not so surprising that the agency denounces cryptocurrencies. With so many frauds going on in the industry, there are many reasons to avoid supporting cryptocurrencies.

But for what it's worth, it seems that the enthusiasm of the Commission for the blockchain is a bit misplaced.

For all the chatter about trust and transparency, the BBVA statements suggest that the European Commission is currently experimenting with the authorized blockchains. Unlike non-licensed blockchains (like Bitcoin), authorized blockchains are only open to selected partners – a big no-go for purists blockchain.

Also indicated as private blockchain, authorized implementations of technology tend to be less resistant to centralization and more susceptible to tampering.

Naturally, immutability and resistance to censorship are two of the fundamental principles of technology, as foreseen by its mysterious creator Satoshi Nakamoto. But these aspects do not seem to matter to the European Commission.

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

But in the eyes of the original cypherpunks, neither of these two alternatives will ever approach a truly global network without permission and resistant to censorship, as Bitcoin wanted to be.

Published November 23, 2018 at 12:04 UTC

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