Blockchain technology is becoming more widespread within the digital sphere, yet there are still limited regulations surrounding its use. Implementing rules and regulations could, in fact, increated its global adoption.
To many, an unregulated industry is daunting. It seems, naturally, to be a dangerous one. Perhaps this theory is founded in some fact. There have been instances of criminal activity on the blockchain over the last few years, as with any technology, which is difficult to attribute to any one person or organisation.
What regulations do we need to encourage adoption?
Blockchain technology demands regulation in three critical areas:
- Interoperability standards
Interoperability means that the platform can exchange data with other platforms, regardless of blockchain protocol. This will be a vital part of standardization. That’s because, without interoperability, the future of blockchain will grind to a halt.
This is what Consensys calls “blockchain balkanization” – when the blockchain industry becomes a series of unconnected systems that are fundamentally siloed from one another.
The industry cannot limit itself to one blockchain platform or protocol, even if it were technologically possible, and risk halting innovation in the blockchain sector. In addition, there are a variety of platforms suited for different industries and solutions. There is no “one fixes all” solution.
Our blockchain-enabled platform STAMP, for example, is interoperable with other platforms, because we know that no company wants to be restricted. This also allows interoperability with other software, such as legacy software, to allow the exchange of data between one and the other.
Limited, but comprehensive, surveillance
Many of those in blockchain sector are apprehensive of regulatory surveillance. That’s because blockchain is inherently based upon trust, and upon anonymity. To some degree, surveillance takes away this anonymity. Yet it seems like a necessary evil.
While you want to be able to make transactions based on unquestionable trust, you don’t want to allow criminals to abuse blockchain for their own gain. There’s a degree of surveillance that is both private and safe.
This is what the blockchain sector inherently needs.
We want blockchain technology to be absolutely private, and to protect our data, while also not allowing criminal activity to occur. Unfortunately, this isn’t necessarily possible.
Because blockchain technology is decentralised and immutable, it allows trust between parties and removes expensive intermediaries from the transaction. However, this also means that any information put on the blockchain is there forever. This poses potential criminal risks, in defamation and posting of violent material, as have been recorded in the past.
In this case, regulation, compliance and surveillance can allow for a safer digital community, and encourage adoption within the wider sector. Our information is still private – it’s merely that there is allowance for limited surveillance and regulation, too.
Blockchain standardization will fuel adoption. Those with little trust in the tech can be reassured that it’s monitored and safe. Regulation will be a necessity for the technology to become mainstream.
Our platform STAMP is blockchain-enabled, interoperable and complies with RMI’s blockchain standards. To find out more about STAMP, click here.