Blockchain Bill of Rights
Politics,  Regulation

World Economic Forum unveils ‘Blockchain Bill of Rights’—will it work?

Achieving consensus in a fragmented landscape isn’t easy. Despite the proposal getting several significant signatories, plenty of hurdles remain

Blockchain Bill of Rights
Sheila Warren, WEF Head of Blockchain (Photo: WEF)

The blockchain industry is a fragmented one—with countless projects forging their own way as they try to find compelling use cases for this technology.

But now, the World Economic Forum’s Global Blockchain Council is attempting to ratify some universal standards in a so-called “Blockchain Bill of Rights.”

A total of 16 principles have been set out by the nonprofit in four categories: Transparency & Accessibility, Accountability & Governance, Privacy & Security, and Agency & Interoperability.

Together, these 16 Presidio Principles have a basic goal: To “preserve and protect user rights” in a decentralized future, according to a WEF release.

Putting the world to rights

Under the WEF’s plans, applications built on top of blockchain-based systems would aim to preserve a set of rights for all participants. Some of them include:

·  Ensuring users know how a service is operated, and its potential risks

·  Protecting data in accordance with internationally recognized technical security standards

·  Limiting data collection to only that which is essential

·  Giving users the freedom to create, manage, and independently store cryptographic keys

The 16 Presidio Principles of the Blockchain Bill of Rights aim to “preserve and protect user rights.” (Photo: WEF)

All of this seems pretty reasonable on the face of it—and serves as a warning to controversial projects such as Facebook’s Libra that standards will need to be upheld despite the current Wild West of regulation.

One of the principles may prove to be a difficult sticking point for some blockchain platforms, not least because they allow information to be recorded immutably, meaning they cannot be altered thereafter. Under the WEF’s principles, participants would be given the freedom to “rectify demonstrably false, inaccurate, or incomplete data when necessary.”

It could also be argued that the entire raft of principles goes against the notion of creating an ecosystem of fully decentralized blockchains and applications—ones without middlemen. Some critics may argue that this could herald the start of layers being added in the industry, undermining the very reason that the likes of Bitcoin was established in the first place.

Open standards

Sheila Warren, the head of blockchain and data policy at the WEF, said its proposals have been developed by embracing the differences that exist in the blockchain community—not by ignoring them.

“Our Global Blockchain Council membership reflects varying ideological perspectives on what blockchain technology is appropriate for and where it is going, ranging from bitcoin maximalists to enterprise service providers,” Warren said in the May 22 release.

“This highly opinionated group came together and agreed that the blockchain community needed the foundational principles we are presenting today.”

Besides, standards and regulations are coming, and if the industry doesn’t help set them, they will be set for it.

“As open sourced and decentralized systems keep moving forward, we have seen how challenging it can be to build guidelines that apply to different and evolving blockchain projects, and that help teams work to solve problems together,” said Aya Miyaguchi, executive director of the Ethereum Foundation. “I believe that the Principles will provide a high-level framework that can really help these critical conversations continue throughout the lifespan of the technology.”

This is even an issue regarding the need to give actual legal definitions to terms as simple as “blockchain” and “cryptocurrency,” according to a 2019 study by the University of Cambridge. 

“There is no standard usage of terminology across regulators and a variety of terms have been used to refer to cryptoassets in official statements,” according to the “Global Cryptoasset Regulatory Landscape” study. This confusion of “terminology and classification… challenge regulators’ ability to robustly define their regulatory perimeter and implement regulations,” it said.

In the U.S., the Commerce Department is scheduled to send Congress proposed definitions by July.

Plenty of signatories

­­­Despite the potential pitfalls, it seems the “Blockchain Bill of Rights” has enjoyed substantial traction so far.

ConsenSys, Hyperledger, the Ethereum Foundation, Deloitte, CoinShares, and the Electric Coin Company (the developer of privacy coin Zcash,) and Colombia’s government are reportedly among the eclectic parties that have signed the document thus far.

WEF said that support from a plethora of blockchain-focused organizations with divergent perspectives shows the “critical need for a values-based document like this to ensure that the technology remains true to its roots as the application layer starts to scale.”

Ultimately, there’s a lot we don’t know. Will the WEF’s “Bill of Rights” have a lasting legacy, or will they be a flash in the pan? Will more organizations sign on the dotted line? And will there be an independent body enforcing these principles, and penalizing the most egregious violations of these principles… breaches that will undoubtedly emerge in the fullness of time?

Well, we’ve put all of these questions to the World Economic Forum—and we’ll let you know when we get a comment.

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Connor Sephton is a journalist with an interest in cryptocurrencies, personal finance, and financial inclusion—as well as the challenges the crypto industry faces in achieving mainstream adoption. He owns cryptocurrencies.