by Joseph Young
Vinay Gupta, the release coordinator for Ethereum, recently gave a presentation to the European Parliament, one of the two legislative bodies of the European Union, to demonstrate the potential of Ethereum’s smart contract protocol in various industries and applications.
Currently, governments across the world are looking to adopt blockchain technology to automate systems and securely process financial transactions. Most notably, the Hong Kong Monetary Authority partnered with leading banks including HSBC to test the blockchain’s potential in trade finance and China Banknote Printing and Minting subordinate unit Royal Chinese Mint is utilizing the Ethereum protocol to digitize the Chinese yuan or renminbi (RMB).
One region that is falling behind in terms of blockchain development and implementation is Europe, the Eurozone to be specific. While some countries outside the Eurozone including Britain are actively investigating the potential of blockchain technology in various industries such as finance and insurance, countries within the EU are not necessarily allocating their resources to implement and integrate blockchain-based systems.
To encourage the adoption of blockchain and the Ethereum smart contract model, Ethereum release coordinator Vinay Gupta, who played a key role in releasing Ethereum to the public in July of 2015, presented a keynote discussion to an audience of European Parliament regulators and officials earlier in May.
During his talk, Gupta focused on two main components; the utilization of smart contracts to set up multiple systems that can interoperate with each other and the mechanical representations of law that would ultimately allow programs to automatically verify their compliance with existing EU laws and regulations.
In the first part of the presentation, Gupta dove into the potential of smart contracts to create two or more systems that can operate in an automated way. An example of such interoperable system would be grants or investment deals between the public and private sectors offered by the EU and the European Parliament. Companies would create smart contracts to denote their dedication to certain projects co-led by the government.
“The critical thing about the Ethereum model is that the smart contract allows you to build new applications that share the same underlying blockchain and this has two advantages: the cost of rolling out the application is much lower, and secondly, the applications can communicate with each other to form systems,” said Gupta.
In consideration of the above-mentioned smart contract model wherein organizations from the public and private sectors cooperate with each other, compliance with regulations and laws would be presented a major challenge to startups, especially in the finance industries. To streamline the process of complying with regulations and existing laws, Gupta suggested the idea of creating mechanical representations of laws that would enable programs to self-verify if they are compliant with EU regulations or not.
“The thing which would be most useful in all of this is if we had mechanical representations of law it would allow people to figure out whether what they wanted to do is compliant or not compliant very cheaply. This is an enormously powerful new growth area and the more work that could be done on creating software definitions of law that would allow people to automatically check when their programs are compliant, the better the future will be,” Gupta explained.
Since regulations and legal procedures cost companies millions of dollars on an annual basis, for startups and small enterprises in the private sector, Gupta stated that it would be incredibly beneficial, in the sense that it would allow companies to focus on product development and allocate their resources elsewhere.