Originally associated with cryptocurrencies, blockchain and distributed ledger technology (DLT) are in fact very versatile and can be usefully applied to the social economy. However, it is important to regulate them properly and gear them to benefits for all, allowing everyone to participate, says the EESC in a report tabled at its July plenary.

While large-scale use of these technologies is linked to the spread of cryptocurrencies, especially Bitcoin, they also have social, cultural, political and economic potential, stresses the EESC.

We can draw parallels with the invention of the printing press , says rapporteur Giuseppe Guerini. As we know, the first book to be printed was a bible. Now, imagine if people had equated the printing press with a means capable of printing only bibles - that would have been inaccurate, because printing technology revolutionised life in Europe .

The EESC has drawn up a long list of possible applications for blockchain and DLT that can be of great interest to social economy enterprises, including:

tracing donations and fundraising . Donors would be able to follow the flow and destination of money donated to NGOs. NGOs on the other hand could report in detail on each expenditure stream, ensuring that money invested is actually used for its intended purpose;

. Donors would be able to follow the flow and destination of money donated to NGOs. NGOs on the other hand could report in detail on each expenditure stream, ensuring that money invested is actually used for its intended purpose; improving the governance of social economy organisations, making consultation of members and voting more secure and traceable , facilitating participation even where members are spread out geographically or too numerous to hold traditional general meetings;

, facilitating participation even where members are spread out geographically or too numerous to hold traditional general meetings; authenticating activities carried out at a distance by associations and cooperatives working in education and training or entertainment, or staging artistic and intellectual productions;

carried out at a distance by associations and cooperatives working in education and training or entertainment, or staging artistic and intellectual productions; certificating skills , ensuring the security of qualifications and diplomas in digital format;

, ensuring the security of qualifications and diplomas in digital format; making intellectual property rights and copyright clearer and more certain , establishing "smart contracts" for the transfer of content;

, establishing "smart contracts" for the transfer of content; offering secure telemedicine and e-care systems . A huge number of social economy organisations are involved in health care and social assistance located in close proximity to the people needing them, including in decentralised areas where this application could have a considerable impact on people's quality of life;

. A huge number of social economy organisations are involved in health care and social assistance located in close proximity to the people needing them, including in decentralised areas where this application could have a considerable impact on people's quality of life; making agricultural products fully traceable and identifiable, preventing fraud and counterfeiting. Many agricultural cooperatives regard this application with great interest.

Nevertheless, the huge potential of the new digital technologies, coupled with the considerable investment required, also exposes blockchain technology to the risk of concentration - of data and technological networks being subject to speculation and hoarding in the hands of the few players or countries able to make large investments, warns the EESC.

We don't want to see a digital divide that creates more inequality and injustice. We don't want to see a new elite emerging, of people who are familiar with the new technologies and end up excluding others from the economy and the market , says the rapporteur.

It is important that there be public measures to support the development of these technologies in a participatory and accessible way. And the involvement of civil society is imperative to make sure that the democratic potential is not lost, stresses the EESC.

EU regulation makes sense because this technology uses chains that can be created irrespective of national borders. So the EU needs to be involved in this sector and coordinate efforts, argues the EESC. The large investments required call for coordinated, structured European action.

Background

Blockchain technology is an IT protocol dating back to the 1990s, whose development is linked to cryptocurrencies. It is both a code and a public register in which all transactions between participants in a network are recorded one after the other, with a high degree of transparency and in a way that cannot be altered. Each participant is a link in the chain, helping to validate and store the data that is being exchanged. This should make the data processing secure and help build mutual trust between blockchain participants. Blockchain is therefore an attractive tool for redefining security in digital transactions.

In 2018, the European Commission proposed to develop a European Blockchain Partnership, triggering the creation of the EU Blockchain Observatory and Forum, which has already published a number of thematic reports.

The EESC is currently working on a report on Blockchain and the single market, due to be finalised in October 2019.

Read the EESC's opinion entitled Blockchain and distributed ledger technology as an ideal infrastructure for the social economy