Frequently asked questions
What is Blockchain?
Blockchain is a system that makes it possible to reliably exchange information or value between parties without the need for a third party such as a bank. Examples of blockchain applications are the conveyance of a house, applying for a mortgage, consumers trading energy or the exchange of cryptocurrency such as bitcoin.
How does it work?
Blockchain works on the basis of cryptography. Each block is recognizable thanks to its own unique 64-figure hash code, a type of DNA code. These hash codes are used to identify the transactions: to see what the transaction consists of, as well as identifying the parties involved in the transaction. In addition, hash codes guarantee that the content and sequence of the transactions cannot be manipulated. Each time information is changed, the hash code changes as well, not only in the block itself but also in subsequent blocks (i.e. across the entire chain). Any tampering with the information will therefore immediately come to light.
What can we do with blockchain and what are we going to notice as a result?
If the promises surrounding blockchain can be realised, every person in the Netherlands will be affected in some way. Many processes such as setting up a company, applying for a mortgage or individuals trading energy will become more efficient and that will save both paperwork and costs. One such example is the sharing of solar energy. If you have energy left over then you can trade this directly with your neighbours via a blockchain application, for example via a mobile phone or entirely automatically.
Another promise is self-sovereign identity that will give the user more control over his or her own data. You will be able to show the data needed for a certain transaction via an app on your phone. For example, a teenager who wants to purchase alcohol will only need to show the age data required and can keep other personal data hidden from view.
But blockchain is also interesting for sectors involving collaboration in chains. One such example is the transfer of cargo from a ship in a harbour. That involves many different parties. If blockchain can accelerate the transaction processes then considerable costs savings can be made.
Is blockchain used already?
Blockchain technology is still in its infancy. Companies and government bodies are using it on a small scale or are still working with prototypes because the infrastructure is not yet adequate. The Dutch Blockchain Coalition's role is to ensure that the infrastructure is reliable and secure, works well at the level of identities, and that education and training courses are set up in such a way that the Netherlands can eventually switch to applications on a large-scale.
What is the challenge that needs to be overcome to make blockchain a success?
The biggest challenge that needs to be overcome is making sure that the technology works properly at the level of identity. For each type of transaction, from applying for a mortgage to trading energy in the blockchain, it is important that the identity is correct. Is the person or organisation you are doing business with actually who they claim to be? The identities are currently not yet reliable enough. Several solutions are on the market or under development. The coalition is investigating these and is building and testing prototypes. Once things work well at this level, we can switch to application possibilities on a larger scale.
Does the current legislation permit introduction of blockchain?
It has been determined in the Smart Contracts Report written by legal experts of the coalition that the current legislation permits the use of blockchain in general but that for each specific application the legal requirements for the situation concerned need to be carefully examined. For example, the requirements of the General Data Protection Regulation must be satisfied if personal data forms part of the blockchain. If blockchain is used in the social domain then the legislation relevant to the social domain applies. The Dutch Youth Act, one of the laws in the social domain, contains rules about registration requirements and privacy, for example.
Why was the coalition established?
The ambition of the Dutch Blockchain Coalition (DBC) is to build a secure, reliable blockchain infrastructure in the Netherlands that meets the wishes of future users. The more reliable and secure the infrastructure, the sooner companies and government bodies are able to switch to large-scale blockchain applications and the Dutch economy and Dutch society can pluck the fruits of this.
The focus of the coalition lies in properly arranging the fundamental principles of blockchain. It follows an action agenda with three lines:
1. ensuring the technology works well
2. developing the conditions for blockchain, such as explaining and applying the legislation
3. realising a human capital agenda, in other words developing education and talent.
Who are the coalition members and why are they involved?
The coalition contains banks, insurers, blockchain companies, supervisory bodies, such as the Netherlands Authority for the Financial Markets and Royal Dutch Association of Civil-law Notaries, government ministries, legal organisations, knowledge institutions and universities. They are participating because they see the potential of blockchain and want to ensure that the fundamental principles are organised in a sound manner, not just for their own organisation but for society as a whole.
To what extent does the coalition work at the European or global level?
At the level of reliability of the blockchain system, the coalition is holding talks with the EU, and at a country level with Belgium, Luxembourg and Germany. Is important to realise coherency in the blockchain system and that we work towards standards that will be accepted at the European, or even better still worldwide, level.
Furthermore, Europe would like to play a leading role and the Netherlands would like to contribute to this. The coalition is also working together with other organisations such as the World Bank. Our experiences about what you can use blockchain for could benefit developing countries, for example.
The Netherlands is doing well with respect to its responsible progress approach, a focus on making the technology and the conditions associated with it robust. In doing so, due consideration is being given to the opportunities for innovation as well as public interests.
However in the area of application, other countries are progressing faster. In Estonia, for example, they have already made considerable progress with government services on the blockchain and in Switzerland they have made more progress with financial applications due to an attractive location climate.
Furthermore, blockchain is a collaborative instrument by definition and as consultation is an inherent part of Dutch culture, the Netherlands is in a good position to take advantage of this. A lot of collaboration is already taking place in field lab type environments such as BlockLab (Port of Rotterdam, Techruption in Heerlen (pensions), the Dutch Chamber of Commerce, Wageningen University & Research (food) and the University of Groningen (education in the kindpakket (child package)). There are many government pilots as well.
And the Netherlands is the only country in the world with a public-private coalition such as the Dutch Blockchain Coalition.