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            november 15, 2019

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GDPR could complicate efforts to use blockchain in the global supply chain


The capability of blockchain technology to enhance efficiency and security within the supply chain is increasingly drawing the attention of global supply chain service providers.
Blockchain-based applications have enormous potential to transform transportation and logistics operations in the United States and worldwide, reported AJOT.
Last month at Transparency 18 in Atlanta, 40 companies demonstrated to supply chain stakeholders from around the world how software using blockchain could enhance supply chain efficiency.
In addition to private stakeholders, government agencies, such as customs authorities, have expressed interest in using blockchain technology as a foundational element for more robust trusted trader programmes and improved risk management systems.
However, many of the companies involved in global supply chain services are also subject to the European Union's (EU) General Data Protection Regulation (GDPR). One unintended consequence of the GDPR, which became enforceable on May 25, is that it creates serious legal uncertainties for companies that are developing and/or considering whether to implement potential blockchain applications for the supply chain.
The GDPR regulates the collection, processing, transfer and retaining of personal data relating to individuals in the EU by an individual, company or organisation. "Personal data" is defined very broadly in the GDPR to include any information relating to an identified or identifiable living individual, which includes names, surnames and email addresses.
Perhaps most importantly with regard to the use of blockchain, the GDPR gives users: the right to request that personal data is rectified, the right to restrict processing of personal data, the right to move their personal data from one company to another, and the right to delete their personal data.
The blockchain is an elastic shared record that may be distributed across numerous computers to help ensure that the record remains unmodified.
In contrast, the GDPR provides that individuals must be able to request, among other things, the correction and deletion of their personal data. For a blockchain that involves personal data, this poses a problem.
Reconciling the impracticality of changing the blockchain with the GDPR's individual rights requirements is a puzzle that will need to be solved in order for organisations to make use of blockchain technology and comply with the GDPR.
Given the large number of individuals and the amount of paperwork involved in shipping cargo between countries, blockchain appears ideally suited for use in the supply chain.
By creating a record that is designed to be immutable, blockchain-based applications could, for example: make it more difficult to ship counterfeit products; divert shipments from their intended destinations; and simplify efforts to determine a shipment's location at any given time and the cause of any delay or damage.
However, to the extent that such records contain personal data protected by the GDPR, the use of such blockchain-based applications may create unintended compliance complications.

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