In the early days of the internet, people could browse the web and access information anonymously, visiting any website without needing to create an account or provide any personal information. However, the internet’s evolution has made it increasingly difficult to remain anonymous.
Major companies like Facebook and Google have built their businesses around collecting data about their users and selling it to advertisers. Check out the Blockchain Value Season 1, Episode 1 podcast Enterprise Blockchain — Is Your Company Missing Out? with Adrienne Garcia.
In recent years, growing concern about online privacy has led to the development of new technologies (such as blockchain) that offer a higher level of privacy. Interest in blockchain continues to grow among the increasing number of privacy-conscious individuals.
1. The EU’s GDPR And Drafting Of The EU EPrivacy Regulation
The European Union has been a leader in online privacy protection. In 2018, the EU implemented the General Data Protection Regulation (GDPR), which requires companies to get explicit consent from users before collecting, using, or sharing their data. Companies that violate the GDPR can be fined up to 4% of their annual revenue.
Thus far, the GDPR has been somewhat successful in protecting the online privacy of EU citizens. The EU is currently working on a new regulation called the ePrivacy Regulation.
The ePrivacy Regulation will supplement the GDPR, providing additional protections for electronic communications.
2. US Trends And The CCPA
While the United States has been slower to adopt laws protecting online privacy, this is starting to change. In 2018, California passed the California Consumer Privacy Act (CCPA), requiring companies to disclose what personal information they collect and to give consumers the right to delete their data.
The CCPA does not specifically mention blockchain, but the law does apply to companies that use blockchain technology. For instance, a company that uses blockchain to store customer data would have to disclose that to customers; customers would also have the right to request that their data be deleted from the blockchain.
The CCPA is just one example of a trend toward greater privacy protection in the United States. Other states are in the process of passing (or are considering) similar laws in the future.
3. Anonymity, Pseudonymity, And Privacy Law Applicability
Anonymity is, quite simply, the state of being anonymous. An anonymous person does not share their name or any other identifying information. Pseudonymity describes the act of using a pseudonym (a nontrue name that can be used to protect someone’s identity).
Privacy laws like the GDPR and the CCPA only apply to people who can be identified. This means that anonymity and pseudonymity can be used to avoid these laws.
In fact, anonymity is one of the main reasons people use blockchain, as it allows people to transact without revealing their identities. This means that blockchain can be used to circumvent privacy laws.
However, there are some situations where privacy laws still apply to blockchain transactions. For example, if a person uses their real name when they sign up for a blockchain-based service, then their real name will be stored on the blockchain. This means that privacy laws will still apply to this person.
4. Data Controller And Data Processor Identification
Data controllers are responsible for ensuring that personal data is collected and used in accordance with the law. Data processors are responsible for processing personal data on behalf of data controllers. The GDPR and the ePrivacy Regulation apply to both data controllers and data processors.
5. Location, Location, Location … And Then More
While the GDPR and the ePrivacy Regulation only apply to companies that are based in the EU, they will also apply to companies that process the personal data of EU citizens. This means that companies that are based in the United States but collect or use the personal data of EU citizens will need to comply with both the GDPR and the ePrivacy Regulation.
Blockchain and privacy are two very important topics. Companies and their counsel need to be aware of these issues when collecting or using personal data on blockchain.
Olga V. Mack is the CEO of Parley Pro, a next-generation contract management company that has pioneered online negotiation technology. Olga embraces legal innovation and had dedicated her career to improving and shaping the future of law. She is convinced that the legal profession will emerge even stronger, more resilient, and more inclusive than before by embracing technology. Olga is also an award-winning general counsel, operations professional, startup advisor, public speaker, adjunct professor, and entrepreneur. She founded the Women Serve on Boards movement that advocates for women to participate on corporate boards of Fortune 500 companies. She authored Get on Board: Earning Your Ticket to a Corporate Board Seat and Fundamentals of Smart Contract Security. You can follow Olga on Twitter @olgavmack.
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