EU Parliament Report Recognizes the Bitcoin Blockchain’s ‘Dominance’

The European Parliament published an “in-depth analysis” on Tuesday on blockchain technology, focusing on “how Bitcoin’s dominance of the blockchain field could affect wider development of the technology and other applications of distributed ledgers”, its authors wrote. The 28-page report entitled ‘How blockchain technology could change our lives’ was put together by the European Parliamentary

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The European Parliament published an “in-depth analysis” on Tuesday on blockchain technology, focusing on “how Bitcoin’s dominance of the blockchain field could affect wider development of the technology and other applications of distributed ledgers”, its authors wrote. The 28-page report entitled ‘How blockchain technology could change our lives’ was put together by the European Parliamentary Research Service (EPRS).

Also read: Europe Committed to Tightening Digital Currency Rules by End of 2017 

Blockchains: Bitcoin’s vs Government’s

The purpose of the report is to assist the Members and staff of the Parliament “in their EU Parliament Report Recognizes the Bitcoin Blockchain’s 'Dominance'parliamentary work”. However, opinions expressed in it are of the authors alone. Two out of three authors, Philip Boucher and Mihalis Kritikos, are from the European Parliament’s Scientific Foresight Unit. The third, Susana Nascimento, is from the European Commission’s Foresight, Behavioural Insights and Design for Policy Unit.

The paper covers both the public and private sector’s use of blockchain technology and highlights the differences between the two. It explains that bitcoin and other cryptocurrencies “could spearhead a process of decentralisation whereby the institutions that traditionally govern finances – including governments and banks – become less powerful”.

However, the authors also noted that “these same governments and banks are currently driving blockchain research and development in directions that suit their own purposes. These blockchains may prove less decentralised and transparent than others”. Citing use cases beyond the financial system, the report suggests that:

Bitcoin et al provide a wide user base, fertile spaces for experimentation and ‘fuel’ to propel new ideas forward. Even if Bitcoin does not revolutionise the financial system, it might well pave the way for other implementations that could offer serious benefits for supply chains and government services, for example.

Proof of Existence is no Patent Protection

The report went on to discuss blockchain proof of existence, citing that these low-cost services can make the current patent systems more efficient.EU Parliament Report Recognizes the Bitcoin Blockchain’s 'Dominance'

However, the authors warn: “It must be made clear that proof of existence via a blockchain (or, indeed, any other means) cannot be interpreted as equivalent to patent protection”.

They also explain that “For proof of existence provided by third parties, such as those that make use of the existing Bitcoin blockchain, to be accepted as a legitimate means for keeping records, they would have to be recognised as such by the appropriate enforcement bodies”.

Piggybacking Bitcoin Preferred

While claiming how transactions in Europe are usually already fast, cheap and secure, the report authors say users of blockchain applications see additional benefits in its transparency and immutability. They noted:

Indeed, since other applications can ‘piggyback’ the Bitcoin blockchain, the biggest impacts of Bitcoin may be found outside the currency domain. Transactions of any kind are usually faster and cheaper for the user when completed via a blockchain, and they also benefit from the protocol’s security.

Blockchain-enabled e-voting (BEV) is an example of a blockchain application in the report. BEV would allow voters to log and verify records that are transparent and distributed among users. The authors suggest that a cheap and easy way to develop BEV is to EU Parliament Report Recognizes the Bitcoin Blockchain’s 'Dominance'“’piggyback’ a more established blockchain, such as Bitcoin”.

The report also describes a greater social awareness of the blockchain’s usefulness, which it says coincides with a loss of trust in governments and the banking system. It states: “Indeed, there is a growing trend towards less trust in financial and governance institutions and greater social expectations of accountability and responsibility. The popularity of blockchain technology may also reflect an emerging social trend to prioritise transparency over anonymity”.

What do you think of this EU Parliament report? Let us know in the comments section below.


Images courtesy of Shutterstock and European Parliament


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Danish Police Surveil the Blockchain to Make Arrests

Danish law enforcement have arrested drug traffickers after an investigation that included surveilling the blockchain, according to the regional publication Berlingske. The Danish police’s cyber crime unit NC3 claim they have made arrests based on criminal activity tracked via bitcoin transactions.  Law enforcement officials are indeed working with blockchain surveillance software globally, and even warning

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Danish law enforcement have arrested drug traffickers after an investigation that included surveilling the blockchain, according to the regional publication Berlingske. The Danish police’s cyber crime unit NC3 claim they have made arrests based on criminal activity tracked via bitcoin transactions. 

Law enforcement officials are indeed working with blockchain surveillance software globally, and even warning against the use of digital currency mixers.

Also read: Basel Institute: “Take Action Against Digital Currency Mixers/Tumblers”

Danish Cyber Crime Unit Analyzes Blockchain to Prosecute Drug Traffickers

Authorities Are Prosecuting Criminals With Bitcoin Transactions
The headquarters of the Danish police’s cyber crime unit NC3.

The chief of the Danish cyber crime unit, Kim Aarenstrup, has revealed authorities in the region created a tracking system that analyzes bitcoin transactions. Aarenstrup details the tool has helped police with two narcotics convictions. One arrest took place in January when Danish police arrested a young man for purchasing ketamine, cocaine, and amphetamines on darknet marketplaces. (DNM)

“Bitcoin — and virtual currency in general — is used a lot for trafficking in weapons and drugs, ransom cases and extortion cases,” Aarenstrup said. “It has become a heavily used tool for criminals. — We are pretty much unique in the world at this point because they’re not really any others who have managed to use these trails as evidence.”

The Danish prosecutor who worked on the convictions, Jesper Klyve, explained their blockchain analysis worked because the drug traffickers had correlated bitcoin transactions. Many services that offer bitcoin purchasing platforms follow strict KYC policies and buyers typically have to verify their identification.

Aarenstrup told the press the new blockchain surveillance system was “ground-breaking.”

Blockchain Surveillance Rising

Authorities Are Prosecuting Criminals With Bitcoin Transactions
Last year, Chainalysis raised $1.6M from European investors and partnered with Europol.

The Danish cyber crime unit is not the only agency utilizing blockchain surveillance software to capture criminals. There are four known startups using bitcoin transaction analysis tools and collaborating with law enforcement worldwide. Companies utilizing blockchain surveillance software include Elliptic, Chainalysis, Numisight, and Skry. Both Elliptic and Chainalysis have been working with law enforcement agencies like the FBI, Interpol, Europol and KYC/AML platform providers.

Last summer, Chainalysis detailed that the company was working with global authorities to combat ransomware. Michael Gronager, CEO and co-founder of Chainalysis, said at the time, “Expect to see some arrests soon as law enforcement agencies wrap up their investigations into several ransomware operations.”

In January, the Basel Institute on Governance, Europol, Interpol, and officials from Qatar warned against the use of bitcoin transaction mixers.

“All countries are advised to take action against digital currency mixers/tumblers,” they explained.

Bitcoin Anonymizing Tools Increasingly Popular

Alongside the rise of startups and law enforcement deploying blockchain surveillance, software developers are also creating privacy-centric transaction tools and concepts for Bitcoin. Ideas like Tumblebit, Schnorr signatures, confidential transactions, and other protocols are being developed. There are also in-production mixing services like Joinmarket, and anonymizing wallets like Samourai.

The privacy activists behind the Samourai wallet recently introduced features like Ricochet, and reusable payment codes. Samourai rebukes warnings made by bureaucrats and law enforcement against privacy-enhancing tools. In a recent blog post called “The Bureaucrats Are Coming”, the privacy-centric wallet developers explain they are ready to fight the state.  

Samourai will not cower to these ivory tower elites — We will actively work to destroy the effectiveness of any legislation or policy that is produced.

What do you think about law enforcement officials tracking bitcoin transactions? Let us know in the comments below.


Images courtesy of Shutterstock, Danish Cyber Crime Unit, and Chainalysis.


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