Hello everyone, and welcome to the second episode of The Blockchain lawyer, a podcast about Blockchain, other distributed technologies that hopefully will change the world, and laws and politics, that hopefully drive them to do so. My name is Dennis Hillemann, and I am glad you found a way here. So I just came back from an OECD event in Paris. I love Paris, a great town, always happy to visit and to see. The event was on the global Blockchain policy forum. So it was a forum, a conference about Blockchain technologies, cryptocurrencies, and the effects that they might have on the economy. It was an existing event. There were a lot of high politicians around, the French ministers for economy and health (the first speech), but also many central bankers. There were many discussions on the future of Blockchain and the policymaking.
Libra was everywhere
Of course, also on the cryptocurrencies and the present topic of Facebook´s Libra. I will get into Libra and cryptocurrencies in this podcast as well in the future. Today I want to focus a little bit more on the broader picture of Blockchain and Blockchain in a constitutional context and why apps and startups could do a lot of good in the future of the internet for all of us. I was part of a panel. At the OECD global Blockchain policy forum, I was part of a panel – data ownership and privacy secured by Blockchain. It was an excellent event. It was on the first day, and I had a lot of fun and many interesting conversations after it.
Is there data ownership?
The title could be a little tricky, and it could be asked whether the title is correct because data ownership is maybe not the right way to call it. You cannot own personal data as such. You cannot own your legs or arms because if you own something, you can give it away. For example, by personal data, you cannot transfer it in the same way as transferring a car or coins that you own. Personal data has always related to the person as much as the arm or soul. Data ownership for a title is something that I would put in the context of the whole event. Of course, there were many discussions about this complex at the event, and in a panel about GDPR issues.
I will get into this issue in a new podcast too. Today I am going to give my explanations to the constitutional aspects of Blockchain and to the aspect – how Blockchain technology could help boost our constitutional liberties. Again, I think that this point is hard to take into account while talking about policy-making for Blockchain. Therefore, I want to talk about this aspect today during this podcast.
I am in the working group DINSPEC-4997 standard. It is dedicated to the Blockchain standards and the possibility of privacy by design on Blockchain with Blockchain technology. So, we are tackling a lot of EU GDPR issues in this working group. All participants of the group made a good impression, a great impression on me. They taught me a lot. I learned so much, and I am always thrilled to see how other people approach for Blockchain technology. My part in the panel was to give a broader picture of policy-making today and to answer what Blockchain can mean for all of us when it comes to our constitutional liberties. It might sound very high; let me elaborate on this issue a little bit.
What is Blockchain?
Let us have a look. What is Blockchain? I talked about it in the first episode of The Blockchain Lawyer podcast. I explained what Blockchain is and what Blockchain is probably not, it is a tool, but it is not the solution for everything. Blockchain is a decentralized ledger technology to make it a little bit simpler and handier. It is a decentralized database, and four key elements make Blockchain so interesting for all of us. First, Blockchain is decentralized. Blockchains are managed by a network of nodes rather than by a central authority and fully decentralized. It prevents any entity from having full control over the network. It is very important. Keep it in mind for today when we are talking about constitution and Blockchain because the control of one entity over the network is, from my point of view, today a problem for the internet.
So, Blockchain´s one key element is decentralization. A second key element of Blockchain is technology. It is transparent. Transactions on the Blockchain are constantly being recorded and stored on the Blockchain across all the nodes. It means that all participants can view all transactions on the network in real-time. The third key element of Blockchain is immutability. Blockchains are designed to enable permanent recordkeeping so that stored data cannot be altered after addition. It makes the network extremely stable and reliable as a record-keeping system. And the fourth element of the Blockchain technology is security. It is hard to change or destroy Blockchains because of its distributed nature. For example, if someone hacked into one computer of the network and altered the information there, but not the network of nodes on the Blockchain. However, I highlighted, especially in the first episode, the ability of Blockchain technology to keep data secure, to prevent hacking of data and alteration of data.
So why am I bringing it up? If you have listened to the first episode of my podcast, you should already know the reason. Therefore, I want to have a look at Facebook, and I pick out Facebook or one of the four giant players in the internet world, at least the Western internet world. Facebook, Apple, Amazon, and Google dominate today the Western internet. If you look at Facebook and the systems of social media created by Facebook, you see an effect like a natural effect. What Facebook is and how Facebook works? Facebook is different from Blockchain. Blockchain is decentralized. Facebook is, of course, a very centralized system. Whenever you put data on the Facebook platform or Instagram or even on WhatsApp, it is stored on the Facebook system, and access to a system follows trough registration on Facebook.
Facebook is a very centralized solution, which, of course, makes sense with its business model. The second point is that Blockchain is made for transparency, and we all have observed the whole Cambridge analytics scandal with Facebook, and we all know how it is. For example, when you sign up on Facebook or any other social media app, you are probably aware that you need it. You should read a very long privacy notice. I am sure you all know what I am talking about now. When you sign up into a new app or get a new program, it has obvious huge privacy. Notice this, and let us be honest! Maybe, the only ones who read the privacy notice are probably lawyers who are paid for the preparation of these privacy notices. We should probably be aware of what Facebook does with our data because of a privacy note, which is written by Facebook.
What else? On the other hand, if you are honest, you do not know. You do not know what is happening with your data because you have not read the privacy notice at all, or you do not keep track of what is happening with your data. So I do not think that the full data use on the internet today by the big firms, is fully transparent as it is by the Blockchain technology. I would doubt if we could say that Facebook or any other of the major players offer similar transparency as a Blockchain. Also, of course, the Facebook system can be immutable. If you have racist or criminal content, someone must erase this content. Facebook does it, of course. By this level, Facebook is not, of course, an immutable system at all.
The fourth thing refers back to the logic of Cambridge analytics. We all know the whole leakage of data over the internet. I doubt that Facebook is as secure as the Blockchain solution based on the centralized nature of Facebook because hackers could get access to it. So, about the key, to make things simple and to keep it short. I think that the major players of today are different from the Blockchain system. It does not refer only to Facebook, but also to the other platforms, and also to Google as well. It also refers to players like Twitter or YouTube. I do not think that we should judge it in a bad way because it is a system of the internet. It is the internet of networks. Probably most of you are aware of the so-called network effect. The platforms offer a network to communicate and to do business. At the moment, when more and more people join a network, this network can not become more powerful with the data because so many people that we know want to communicate with participants of this network. We naturally join networks as well. It is, of course, the reason why platforms like Twitter or Facebook or Instagram are today so successful (because of this network effect). It is fine. It is just the reality of the networks today.
The basic idea of the Internet
We should remember. It is the idea of the internet as such. If you are really idealistic and look at the internet. For what was it created? It was created for people to communicate with each other. It is from my point of view meant as an expression of freedom and ability to get in touch with everybody in the whole world and to do business with anyone in the whole world. Facebook or Google do not destroy this idea. Not at all. I mean, Facebook probably offered so many people to reach the others they would have never reached through other solutions. These networks have gained so much power today that they could rule today the running of the internet more and more. For example, if you look at Facebook. The algorithms include a lot of influencers and comments to the posts.
I listen to podcasts. They are highlighting that even if people follow you on Facebook, if they are a member of your Facebook group today, you cannot be sure anymore that they will read your content. In the end, the algorithm decides what you get to see and what you do not get to see. It is scary. If the algorithm decides today what I get to see, even if I want to follow someone, even if I want to be part of one group, it is dangerous because it makes today networks really powerful through deciding what you learn and how you get in contact with others. Let me go back to the Blockchain. I think Blockchain technology can help this development. This development could be turned around again. If we accept that Blockchain technology can contribute so much. It could ride over the internet. Michael K. Spencer wrote about it.
I really liked his article on medium. He wrote a great article. I think the internet is broken because Google, Facebook, and Amazon dominate it so much. Blockchain technology could contribute making the internet a freer place for every one of us, a place where we can communicate again with each other more open. I think Blockchain technology can help us all a lot. I want that policy-makers feel about this issue when we all talk about Blockchain. Of course, Blockchain has many risks. With cryptocurrencies, you can do a lot of fraud, also many bad things. Criminals can use cryptocurrencies to move money easily. You all probably watched „How to sell drugs online fast“ on Netflix.
Great show for cryptocurrencies, but of course, it is about bad things. I want to line it out as a bad development. Criminals are coming anyhow. Criminals will always find a way for themselves. Of course, Blockchain technology has to be regulated in a way. It has to be strong to prevent crimes. At this point, I want to line out that Blockchain technology is based on transparency. I am wondering if criminals really want to do so much with Blockchain. I want to highlight it. It does not depend on Blockchain technology. It is not created to make bad things possible. It can make so many good things possible by internet issues. But I just told you because let us look at something.
Our constitutional ideas<<
Let us look at our constitutional ideas, our constitution from Germany, and ideas from other Western democratic countries. They are from a time without the internet. If you look at the constitutional rights, the liberties expressed in them. They are liberties to empower people. They give us the right to free speech. They give us the right to gather each other. They give us the right to practice our religion. They give us the right to work as whatever we want. In general, they are all about empowering process. They give all of us the right to do the best from possibilities. Constitution looks at us as social beings.
For example, I can go outside and hold a speech on the street about politics, social issues, economics, whatever I want. Probably most people would think about what he is doing there, but it is okay. Maybe someone stands there, listens to me, and thinks: this person has some good ideas. Our constitutions want it. They want us to communicate with each other. They want us to do business with each other. They were created to empower us to make the best of these possibilities, also, for the benefits for the whole society. Our liberties are the most important issue for the constitution-makers of today. It is important to grant liberties but also to set some borders.
When people would do positive things with these liberties, they would create jobs for businesses. They would form political parties to work for democracy. They would gather on the streets and protest against development that is not good for society. Social liberties are part of communication. Now let us take a step back and look at the internet of today and the ability to communicate. A lot of business, even many politics as we know are done today on the internet. They are done through intermediaries and platforms like Facebook. Let us go back to my idea by standing on the street and telling a speech right now. I go outside and hold a statement. If we put this on Facebook content, I would keep this speech on Facebook.
If my statement is transported to someone, to be listened to by anybody, the algorithms of Facebook decides. If my speech is on Facebook tomorrow, still Facebook, in the end, decides and if my speech is spread all over the internet, even though I maybe did not want it. It is also decided by Facebook. Then you can post it to all the other platforms. Can I get access with my goods and services to Amazon? Amazon decides. If my tweets on Twitter are interesting, then my tweets on Twitter become popular. The algorithms of Twitter play a great role. You are probably aware today that Twitter does not only block the use but also makes the posts invisible. How is it if we put it in a constitution context? This is a question dedicated not only to the freedom of speech but also to the freedom of being reached.
Can my content actually reach people? I think that it is also an issue for development. The constitutional liberties that we all want to use for the best of our societies. These constitutional liberties are, at least on the internet, endangered, limited, or better to say controlled by big companies, by Facebook, Google, and Amazon. It is in the constitutional liberty context. Let us look at the business context. For example, if I want to open up a startup if I want to do business on the internet. You ask yourself, really – can you do this without Google, Facebook, or Amazon? Of course, you can say – well. I can put up a shop system on the internet. I can put up my website. How do you attract people to your website?
You will probably use Google Ads at some point. You will probably use Facebook to make advertisements because of big traffic. Communication is being done on these platforms; you just cannot avoid them. If you then think a little, and you know that 99% of all companies in the European Union are small and medium-sized companies. 99% then ask also, is it right that big companies and their whole business, how their whole business at least is more and more dependent on the algorithm set and controlled by Facebook and by Facebook, Amazon, or Google? Is that what we want? Is that what the makers of our constitution really wanted for us? I personally do not think so, and I want to tell everyone involved in making policies, you should not only think about the risks. Blockchain and cryptocurrencies are not created for our societies to help criminals in the wrong ways.
I want you to look at Blockchain. I want you to look at cryptocurrencies from a different angle too. It could empower people to make the best out of themselves. To get in direct contact again over the internet with others and also to know that Blockchain technology with its great benefits of being transparent, neutral, immutable, and decentralized without intermediaries in between. These great benefits from Blockchain technology could help us all with the words of Michael K. Spencer – they could help to fix the internet. I do not think that all people like the situation really as it is, at least most people would not like it to know.
So much communication, so much business is controlled by only a handful of companies, four companies controlling so much, at least in the Western world. Then you think again, 99% of all companies in Europe are small and medium-sized companies, also applying and doing the business in the internet field where four giant companies are controlling so much. So please, whenever you think about the policy-making of today, please embrace Blockchain technology. Please embrace cryptocurrency technology as a factor that could help us all to make the internet a place where our constitutional liberties, where the ideas of the fathers of a constitution in Western democracies could actually be lift out with the help of Blockchain technology to create a different internet than it is today. Let us go into examples, and of course, since I was in a panel by an event in Paris, I want to talk about Elastos and Blockstack.
Both are working on creating digital ideas, decentralized ideas for people, also for digital assets on the internet. They are especially working on digital IDs. I want to show this to you and an example like if you are a movie fan and I am totally one, you probably owned a lot of DVDs and Blue Rays. I own so many until my wife got them out of the house for good reasons. Come on, guys, be honest, you own too much, you are never going to watch that in a lifetime anymore. Then I also started like buying movies on Amazon, why? It is convenient. If you have an Amazon fire stick or just like an Amazon app on your TV, you have this huge catalog of movies, and if there is one new movie out, you can just buy and do not download it and stream it right away.
So, you think you bought a movie online, and you own it, but actually do you really own it? Who has ownership of that? Can you transfer that movie to your friend? No. Why? It is linked to your account on Amazon. So if you bought, for example, the last Avengers movie on Amazon, when you can watch it through your Amazon account, but you can not t transfer it to a friend, you can not transfer it to your child that is miles away. You can‘t sell it. If something bad happens to Amazon? If it comes into a scandal? If it goes bankrupt? What happens to your ownership of the movie? It is gone because the movie and the whole platform go away. You do not get access to the movie anymore; perhaps it will be some kind of solution. Actually it could happen.
What happened with other platforms in the past? If you bought the movie on Amazon that you own the movie or is not like rather a part of the rental and the same applies there, but you bought over the internet and where you may be just like using in cloud storage. Do you really own it? Music, I bought a lot of music an Apple. Like do I actually own it? What happens to that music? If Apple does not function somehow if Apple goes bankrupt or shut down by the government, what happens to my music? Is my music still there? So this is the approach of Elastos, like each piece of music, each piece of movie, each copy, a digital copy of a movie gets a digital ID. If you have an ID, a decentralized ID on the Blockchain, and an identification on the Blockchain, then it is only linked to you.
You can own digital things; you can own the digital ID of that movie. If you watched the movie, you watched the Avengers movie, when you can give it to your friend, you can give to your friend, you can transfer it to a friend, and you do not need to go through your Amazon account or anything. You give away the digital property of the movie. Digital property of music. When you were young, when you were younger, you bought movies and probably gifted them to your friends or sold them to your friends. Now on the internet, you should not be able to do so anymore. You should always be linked with your own to Amazon or some other platform.
I do not think that our constitution really wanted it. As I said, our constitution was about direct communication and business between people. I think that a solution like Elastos is also good. For example, if you create a movie, write a book, created a piece of music, you probably do not need to go to Amazon anymore to sell it. You can sell it directly from your website and people can buy it directly from your website, and own it. We all would still probably need marketplaces even for these digital things, but maybe these platforms can be decentralized as well.
In the future, they can be linked totally to additional ideas, and we do not actually need to buy on Amazon or eBay, or Twitter or whatever. They can be on other different platforms, and they need fewer data. Then data is not stored anymore in a centralized way. I am not sure yet. We will see which business models will arise; it will be much easier to do digital business on the internet without an intermediary – between making money from your goods, your services, or rules for the selling process. Let us have a look at Blockstack. Blockstack is a decentralized computer network, an ecosystem that puts users in control positions of identity and data.
I do not want to go into details. There are many various explanations of it. They are much better. They are working on a decentralized identity. They want to put you in the ability to have an ID on the internet that is 100% linked only to you and nobody else. I think that this is a cool idea because it makes communication on the internet much better because this ID on the internet is 100% sure and many things go much easier. For example, let me give you a very quick example. I had to register for the OECD event, and I got a ticket online. I got a ticket but had a barcode that was all fine, but it was all digitized where it was all modern.
If you come to the event, you have to show the ticket. Sometimes you have also to show an ID. We have a photo that proves absolutely your personality. It is the way of our lives. It includes many expressions. We have got these digital solutions that could give us tickets to events for the train. We can have these tickets also on a smartphone. When it goes about proving our identity, it was still a paper solution. So, all these ticket solutions are linked to paper documents. It is difficult to understand, but this is our world. Maybe we will have a decentralized ID, and this ID will be 100% certain for all of us.
It could allow us to have better access to our data and different applications. When you register into a new app, a new platform, you always have to register in a different way, with different usernames and different passwords. It is, of course, a hassle. I am sure that everyone knows the problem by losing ID or password in a system. If you have a digital idea, and it can link the app to a digital ID, you do not need any more centralized solutions like a centralized database with your ID and your personal data. In this way, you decide with this decentralized identity, how much personal data you want to share with a platform, and you can make sure that only necessary personal data can be transferred to a platform.
If we go back to the basic idea of Blockchain, transparency of data. It will be transparent, and everything on the Blockchain will be immutable. You can keep track on processes with your data. It is a perfect idea also for Blockstack with a decentralized identity. From a practical point of view, if you want to transfer cryptocurrencies, for instance, I have done it. You and the recipient of your cryptocurrency and you both need a wallet. The wallet address is very complicated. It is a long number. It is mixed with letters in it, and nobody can actually remember the wallet address exactly. We all have to write it down. We all have to have it in paper form. If you want to have security by transferring Bitcoin or other cryptocurrencies to a friend, you need to know his wallet as well.
You want to transfer the Bitcoin to help your friend exactly with the written amount. If you make one mistake, your Bitcoins could go INTO Nirvana. If we have got a decentralized ID, it could maybe change this situation because the ID could be like Dennis ID. It is the dream of Blockstack. Then we have an ID with the technological support on the Blockchain, Dennis ID. If you want to send me something, you just have to type Dennis ID as a recipient, not a long wallet address. The same happens in my situation. If I want to send something from my wallet to somebody, I have to type in the line Dennis ID to identify my personality and, of course, then ID of the recipient. I think that with this solution, Blockstack has the possibility to make cryptocurrencies much more user-friendly and the transfer of money via Internet much more comfortable.
It is just like one part of this idea. The whole idea of decentralized identity by Microsoft is actually being created not only for a Blockchain solution. Sometimes you read digital IDs as well. This idea is a very good one. Let us look back to the constitutional point. What were and are our constitutions about? They empower us. They are about direct communication and direct businesses. Unfortunately, there are many intermediaries today on the internet. The big companies that own marketplaces, run the social media systems, know all about you. They could put you in danger because they control how and when you can use these liberties.
If we empower solutions like Blockstack, then we can be asked how to overcome these hurdles to destroy the control of big companies on the internet. It is, for me, an expression of constitutional liberties. I hope that policymakers remember it whatever they do. They should remember. Blockchain is not only a risk, but Blockchain is also and will be a great possibility too. We can live our constitutional freedoms also in a modern internet world. Thank you for listening. I hope you had great fun, and we will look into more Blockchain-related issues in the next episodes. Hope to hear from you again. Bye-bye.