Peteris Zilgalvis, the head of the digital innovation and blockchain unit at the European Commission was recently interviewed by The Banker, subsidiary of the Financial Times news outlet. During the interview, he highlighted the concise benefits and challenges of the distributed ledger technology (DLT).
According to Zilgalvis, the blockchain technology provides a powerful framework for data sharing. He said it presents an excellent solution for situations where different stakeholders need to collaborate, but are unable to share a single database due to competition or legal reasons.
The European Commission official admitted that the blockchain technology is not the solution to every problem. However, he added that there are several applications such as document certification, self-sovereign identities, and regulatory reporting, where blockchain provides about 30% to 80% efficiency.
The distributed nature of blockchain is particularly useful in the services of the European Commission. Specifically, it provides a means of coordinating data between member countries, without necessarily sending it to a central point.
The European Blockchain Services Infrastructure (EBSI) also leverages on the distributed nature of blockchain. A notable potential use of the EBSI is connecting European banks in terms of their regulatory reporting. This can be done through sharing of client data in their anti-money laundering efforts.
According to Zilgalvis, most of the challenges facing the blockchain are more of political than technological. He noted that banks are unwilling to adopt the technology due to concerns about competition and user privacy regulations.
However, he claims the best use cases for blockchain are where enterprises are many. On the technology aspect, Zilgalvis noted scaling, consensus mechanism, and privacy, as the major challenges facing the blockchain.
The official added that crypto is regulated through the same principles as any other currency. He said any future changes will be very much done in a pro-innovation spirit. Zilgalvis said it will be easier for the European Commission and the EBSI to use the Euro in their blockchain infrastructure rather than any other digital currency.
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