Governing risks and benefits of distributed ledger technology applications

Medical, insurance, and institutional applications: Focus on cybersecurity and privacy

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The objective of this workshop was to discuss how to create appropriate governance and regulatory context conditions for Distributed Ledger Technologies DLTs (using blockchain technologies to distribute ledgers and trust), through improved understanding of the risks and opportunities related to their implementation in selected sectors.

With the support of Swiss Re, this invitation-only multidisciplinary expert workshop convened 30 experts from research, technology, industry, policy, regulation and insurance who are interested in collaborative and multidisciplinary approaches to improve the risk management, innovative capacity and applications of DLTs.

Some of the main questions discussed were:

  • To what extent can we trust that DLTs will address cybersecurity and data protection issues, and how?
  • What are the pros and cons of the various distributed ledger / blockchain technologies, for application in the medical and health sector, in insurance and in institutional governance?
  • Is there a knowledge or communication gap between those who develop the technologies and those who implement and use them?
  • What do organisations need to know when making decisions about engaging in DLTs?
  • Can DLTs contribute towards building societal trust in institutions?

Highlights – Key considerations from the workshop included (s. Workshop highlights for download below for more details):

  1. There are various types of blockchain technologies, each with their own promises and pitfalls, and all of which are not yet technologically mature. It is necessary to differentiate between permission-less (public, bottom up), and permissioned (private, top down) blockchains, and the various technical details within each type.
  2. Blockchain technologies may enable remedies for existing inefficiency and governance problems in some contexts, and they have the potential to be a transformative technology. However, disintermediation through DLTs might pose serious threats to many established industries and institutions.
  3. With built-in cryptography, blockchain technology can improve privacy and security, but neither is a given. Those who develop blockchain-based applications are advised to consider basic security properties: data integrity, confidentiality, and availability. However, they may have to make trade-offs, at least with the current state of technology. Eventually, for the technology to be trustworthy today it may be that what matters most is the transparency and accountability that it facilitates.
  4. Law can be supported by the technology, and the potential changes that DLTs can bring to how regulations are implemented and contracts are executed are underestimated. Yet, for applications that are regulated, the technology must be supported and authorised by the law.
  5. Distributing trust among the nodes in the system in order to create digital trust to substitute or complement trust in central institutions can work in some cases. The distributed trust logic can also help us start thinking about new ways of doing things in a decentralised world. Nonetheless, it will not and should not be expected to replace trust between individuals and organisations or proximity to people.

Downloads

Workshop highlights

Policy brief (forthcoming)