On the Compliance of Blockchain Technology with Data Protection Regulations

The personal data protection regulations were designed to control the use of personal data in traditional transactional systems, in which typically a centralized organization is responsible of the data processing. However, the blockchain technology relies on a non-traditional architecture and operational behavior that fail to address crucial requirements of data privacy. In this paper we present a detailed analysis of the European and Uruguayan data protection regulations and discuss the weaknesses and strengths of solutions built using blockchain technology regarding the security and privacy requirements established by those regulations. We also put forward the use of off-chain technology to help enforcing mechanisms that make it possible to construct privacy compliant blockchain-based solutions.