Is GDPR Going To Be a Problem For Blockchain?


The European Union enacted the new personal data processing regulations defined as General Data Protection Regulation (GDPR) on May 25th, 2018. The goal of this affair is to provide residents of the EU with a wide range of rights allowing them to personally manage their data online. In particular, every resident of the EU now has a right to delete, change, or transfer their data to another resource at any time, as well as find out how and what they are used for.

GDPR, Blockchain

Technically, the GDPR politics cover a number of very important rights: Right of Access, Right to Rectification, Right to Data Portability, Right to Erasure, and others. The new document directly affects companies that process their users’ private data online. They must adhere to all updated rules and regulations. This provokes a reasonable question about the future of organizations, business activity of which is based on blockchain technology.

The thing is, the blockchain concept itself with its decentralization principles in some aspects goes against the GDPR politics. Are companies working with blockchain technology ‘formally threatened’ to be shut down? Let’s try to figure out if the situation is as serious as it may seem.


How GDPR Impacts Blockchain-Based Solutions: Benefits & Drawbacks


To put it simply and concisely, each new regulation has its good side and its bad side for businesses involving blockchain. Namely:




  • Image of guaranteed reliability for organizations employing blockchain. The users’ level of trust may be significantly boosted by the accessible ability to customize/erase their data if necessary; however it’s possible to undertake these manipulations only theoretically (as for now) since they are still very complex in the practice implementation in a distributed ledger. Appearance of such possibility could positively affect the company image as a whole, though, which means more corporate attractiveness and more customers.

  • Public guarantee of blockchain correspondence with user security politics. Not a single company legally providing services for clients from the EU can now use blockchain-based solutions contradicting the GDPR compliance. This means that all such software is approved by an independent party, which additionally guarantees the solution’s reliability.

  • Tangible improvements in cybersecurity. The regulations require organizations to adapt highly secure protection methods. The new security advantages are obvious considering that the GDPR is solely focused on providing a new level of security and confidentiality for people.

  • Efficient data management possibility. The adoption of new user data-related regulations requires organizations to audit and filter all the data they hold (theoretically valid possibility which hasn’t found practical implementation yet). Thus, to fully comply with new regulations, a thorough check of databases should be conducted. This check, in turn, can boost the practical efficiency of data management in a company a lot.



  • Complications in the technical realization of solutions based on distributed ledger technology. Now, establishments must make their blockchain implementations even more complex so that users will potentially be able to delete/customize data at will in future.

  • Reduction of transparency. GDPR makes it so that companies are obliged to enter only links and hash of user data that initially went through encryption into blockchain. Not the data itself. That’s because a known place where all data is stored would be yet another point of access for scammers (the more pathways leading towards potential data hacks there are, the more chances of it actually happening).

  • Blocking the progress. The new legislation might be considered as an over regulation that requires too much from the businesses. Many cybersecurity features also have to be implemented. The process of adaptation to new policies distracts companies from innovating and developing further.

  • Brand new expenses. In order to reach full compliance, a lot has to be done from the company side. Now you have to hire a security inspector that would monitor compliance. A new sufficient dedicated employee is expensive as is. Add to that the necessity to implement a good bunch of new security features and you get lots of new additional expenses preventing the companies from developing further in more useful aspects.


GDPR Compliance: How It Impacts The Company’s Investment Attractiveness


Despite the fact that the GDPR brings many shortcomings for many existing companies using blockchain, you shouldn’t hesitate whether you need to adhere to it or not. You definitely should and need to do it. Yes, it would require transforming the current blockchain infrastructure. Particularly, you’ll have to take time looking for a third-party database that couldn’t be accessed through the Internet and testing the updated solution (its security, especially).



Otherwise, if your company’s activity goes against the EU privacy laws, your chances to hold existing and attract new customers might decrease dramatically. So be ready to invest your time and money into transforming the already-implemented software structure of your company.


GDPR Compliance: Checklist



Here’s what you need to take care of in order for your blockchain-based solutions to fully comply with GDPR updates:

  • Analyze what type of information you gather and process. Define why exactly you need to process certain types of data. Perhaps, some personal data is unnecessary and you don’t need to create separate links and hash generation mechanisms for them;

  • Identify parties taking place in data exchange and storage. You’ll have to significantly customize the previous approach to requesting data from blockchain. Additionally, you’ll need a separate Database Management System located offline. You’ll also need to customize data transfer mechanisms because a number of nodes a client-side request must pass is now increased;

  • Document the way data is processed. The correspondence with GDPR must be documented. For that purpose, ask your developers to separately record all the customizations they implement in order to comply with the GDPR step by step. This will make it simpler to check the principles of your blockchain solution’s operation and to get a permit to legally work in the confines of the EU;

  • Hire security specialists. The potential of hacker attacks taking place is now increased (in major part due to the blockchain structure becoming more complex). You will certainly need a dedicated expert in your staff that would constantly monitor how securely the operations in your blockchain-based software are conducted as well as detect any abnormal behavior;

  • Update privacy terms & conditions in your solution. The info on any transformations that happened to your software must become publicly available for all your clients – both existing and potential ones. Analyze what exactly should be updated in your confidentiality politics and publicize the customizations.


The Bottom Line: What’s The Future of GDPR?


Summarizing everything up, the brand new GDPR and compliance with it isn’t a pleasant bonus to your company’s image, it is a necessary attribute. So if you don’t want to pay a fee or you wish to attract as many investors as possible to your ICO, you will certainly need to have your blockchain-based project complying with all the new regulations.



However, reaching the full compliance is a complex task which includes some blockchain modifications never before seen in work. We’d recommend saving all the info (personal users data, particularly) covered by new regulations in a separate database…if it isn’t too late. Otherwise, you can just rebuild everything from scratch – the thing Unicsoft can gladly help you with. We help to overcome all the complications with a project that would adhere to all the lawful policies of the EU.

We are the experts with great expertise in the field of building blockchain-based products for virtually any business niche. We make software that fully complies with the new GDPR and stays at the top-notch effectiveness at that. Fill out the contact form and very soon we’ll discuss all the important business talk.

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