> Translator: Industry 4.0 Research Institute
Source: Digital Stem Research Center
From February 20th to March 30th, 2019, the German government launched a blockchain strategic opinion solicitation activity, and the final submissions formed a 1048-page document. On September 18, 2019, the German Ministry of Economics and Energy and the Ministry of Finance jointly issued the "Blockchain-Strategie der Bundesregierung". The Industry 4.0 Research Institute translated the report. The full text of the Chinese is as follows:
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- Telegram announces the Grams Wallet Terms of Service, and the encrypted wallet will be integrated into the messaging app.
- Which block is the first benefit to the blockchain?
Blockchain technology is an integral part of the Internet
Blockchain technology is one of the most frequently discussed areas of innovation in today's digital transformation of business and society. Its features such as decentralization, reliability and fraud-free security open up a wide range of innovation opportunities for new applications and new types of collaboration. Since the first "Blockchain White Paper" was released ten years ago, blockchain technology and its economic paradigm have made great strides. Blockchain technology allows each conceivable type of asset, including material and non-material related assets, rights and debt relationships, to be represented by a pass, and their tradability and exchangeability can be simplified . It remains to be seen what impact this development will have on the world. Its application is especially suited to its potential to deliver credit in the digital space.
In order to clarify and tap the potential of blockchain technology and prevent potential risks of abuse, the German Federal Government (hereinafter referred to as the “Federal Government”) must take action. In particular, with regard to the federal government's climate protection and sustainable development goals, it is necessary to carefully weigh the potential and risks in each area. Therefore, the federal government has developed a comprehensive blockchain strategy in this regard, and has considered the relevance of blockchain technology. The strategy can set the framework for innovation based on blockchain technology. Due to the dynamic development of this technology, it is necessary to constantly review the framework conditions to ensure they remain updated.
The strategy described in this paper describes the federal government's overall view of blockchain technology, demonstrates the federal government's objectives and principles in blockchain technology, and proposes specific actions in five areas. The development of this strategy is based on a consultation and consultation process with a broad collection basis in the spring of 2019. 158 experts and representatives of the organization submitted their views, and a total of 6261 responses were received from the 31 questions we collected.
Beyond Bitcoin – the road to the economy
The development of blockchain technology is based on the vision of a decentralized distributed system that can take over from a central organizational unit and enable direct transactions between its given network participants.
The most famous but not the only application is the cryptocurrency, bitcoin. The rise in cryptocurrency market prices and the new financing model represented by “first-time token issuance” (ICOs) have increased public interest in blockchain technology. At the same time, the growth in bitcoin transactions has led to a significant increase in power consumption associated with it. Recently, applications outside the cryptocurrency environment are increasingly becoming the focus of attention. An active ecosystem of blockchain developers and service providers has emerged in Germany. This provides a very promising starting point for the German development of the Token Economy . The value, rights and debt relationships of each conceivable type associated with physical and non-material goods can be represented by a pass, and their tradability can be simplified. However, the economic expansion of blockchain technology will have climate-related impacts, and there is currently no reliable assessment, and ongoing research in this area is still highly necessary.
Expanding Germany's leading position
The federal government has set a goal to use the opportunities in blockchain technology to mobilize the potential areas that this technology can provide for digital transformation. Germany's emerging and innovative blockchain ecosystem will be maintained and will continue to grow. Germany will be an attractive base to develop blockchain application development and expand its investment scale. At the same time, large companies, SMEs and start-ups will be able to make informed decisions about the use of this technology in addition to public institutions, German federal state governments, civil society organizations and individual citizens.
To achieve this goal, we strive to ensure that blockchain-based applications are compatible with existing laws and prevent abuse. Our goal is to establish an investment and growth-oriented regulatory framework in which market behavior processes can operate without state intervention and the sustainability principles are fully safeguarded. The block-chain application provides clear added value for existing solutions, primarily a public management attribute that is user-friendly for individuals and companies, and in some cases can also serve as an application user; A prerequisite for adopting this technology is to ensure that doing so does not adversely affect the trust of safe and reliable behavior. This enhancement of basic technical capabilities will help establish digital sovereignty in Germany and Europe.
Principles for implementing blockchain strategies
Using this strategy, we will implement a regulatory policy that encourages investment, unlocks innovation, and ensures stability, thereby promoting inclusive growth. This is in full compliance with the federal government's sustainability goals.
We will use the following principles to guide our actions:
- Advancing innovation: The federal government is advancing digital innovation to enhance the competitiveness of Germany and Europe. Only through entrepreneurial innovation can the German economy continue to maintain its leading position; only through digital innovation can public institutions continue to perform their functions in the digital age. The use of blockchain technology will unlock greater economic potential and other innovation forces.
- Promoting investment: Establishing clear and stable framework conditions can create an attractive and safe environment for investment. In this way, the federal government can provide security for investments in digital technologies.
- Safeguarding stability: In terms of economic policy, the federal government's higher-level goal is to maintain the overall economic balance and maintain the stability of the financial system.
- Strengthening sustainability: The use of blockchain applications must meet federal government goals for sustainability and climate protection. The federal government recognizes that certain blockchain solutions have potential and risks in achieving these goals.
- Making fair competition possible: One of the federal government's focus is on creating a level playing field for all technologies. The guiding principle for this action is technical neutrality. Barriers to the development and application of existing technologies are being eliminated as long as they meet the basic objectives of the current law.
- Deepening the digital single market: Various developments in Germany have always been interrelated with developments throughout the EU. Only with a complete digital single market can Germany remain globally competitive on an existing basis.
- Expanding international cooperation: Germany can work closely with our European partners, the European Commission and other international institutions (such as the OECD) on blockchain technology.
- Integrating Stakeholders: For a fully developed strategy, it is necessary to fundamentally integrate the knowledge systems of developers and application users when building a framework. In conducting online recruitment, the federal government is committed to involving experts, businesses, and civil society organizations in the development of this strategy; and the federal government will continue this practice.
- Secure IT security and data protection: Only when the blockchain application meets the requirements of IT security and data protection laws and regulations, can risk be minimized, prevent technical abuse, and achieve high acceptance Level.
- Developing adaptation measures: As blockchain technology is rapidly evolving, the federal government may need to take further action in the future. In this context, as a strategy for sustainable development, the federal government's blockchain strategy should regularly review progress and organize revisions.
In addition, all of the initiatives mentioned in this strategy are funded from existing individual related programs or refinanced within the relevant programs. In addition, budget policy decisions in joint government agreements apply to any financing needs of this strategy.
Federal government blockchain agenda
By the end of 2021, the federal government will take measures in five areas to take advantage of the opportunities of blockchain technology to mobilize its potential. The following are priority initiatives for each active area:
(1) Guarantee stability and stimulate innovation: blockchain technology in the financial sector
• The federal government's goal is to open German law for electronic securities.
• The federal government will publish a draft legislation to regulate the public offering of certain cryptographic passes.
(2) Promote innovation to maturity: promote project and supervision sandbox
• The federal government is experimenting with a blockchain-based technology that connects energy facilities to public databases.
• The federal government is funding a higher education certificate verification test based on blockchain technology.
• The federal government will introduce sustainability-oriented requirements as an important decision criterion for implementing state-funded or government-sponsored blockchain projects.
(3) Make investment possible: clear and reliable framework conditions
• The federal government will conduct round-table discussions on blockchain and data protection issues.
(4) Application technology: digital public administration services
• The federal government is experimenting with digital identification based on blockchain technology and is evaluating other suitable applications.
(5) Dissemination of information: knowledge, network and cooperation
• The federal government will launch a series of dialogues on blockchain issues.
1. Guarantee stability and promote innovation: blockchain technology in the financial sector
In the financial sector, blockchain technology is the first to be practically applied to cryptocurrency bitcoin. As mentioned earlier, blockchain technology makes it possible to issue, transfer, store and trade digital assets (ie, cryptographic certificates).
So far, there is no provision in German legislation regarding the issuance of securities under the civil law base on the blockchain. Claims for assets must be included in legal documents (in writing). Research shows that many stakeholders view the labeling of assets (especially securities) as one of the key applications for the future of the blockchain. By reducing the demand for intermediaries, issuing securities on the blockchain can make the processing and settlement of securities transactions faster and safer.
In addition, some passes are available for investment and financing purposes, but they are not securities. The new financing form of blockchain technology that has emerged around the world around 2015, the so-called first-time token issuance financing, mainly represents the non-securities pass, neither granting equity nor the development of the issuer company. Nothing, such as through interest or dividends. Instead, most investors get so-called utility passes or cryptocurrencies through these first-time token issues.
The utility pass grants access to the digital platform developed by the issuer or access to the claims and services provided on those platforms. In this case, the main goal of many investors is not to obtain future use rights, but to expect the appreciation of the certificate.
The results of the consultation show that the applicability of these certificates in the financing of enterprises and projects has been questioned to some extent. However, the certificate is also considered to have high potential in the next five years. The establishment of a binding legislative framework to protect investors is seen as a prerequisite for positive development. It is worth noting that this framework should also establish legal safeguards to meet the legal implications of clearly demonstrating the design of a particular certificate.
1.1 The federal government's goal is to open legislation for electronic securities
The federal government's goal is to open German law in order to accommodate electronic securities. Certain current requirements for securities, such as those incorporated in legal documents (ie, in writing), should not be explicitly applied to electronic securities. Electronic securities should be regulated on a technology-neutral basis so that they can be issued in the blockchain in the future. In the first step, legislation should be open to electronic bonds. After further evaluation, it should be possible to follow up on the electronic equity and shares of the Open Investment Fund. On March 7, 2019, the federal government issued a key point document to initiate a consultation process on this topic.
1.2 The federal government will publish draft legislation to regulate the public offering of certain cryptographic certificates.
In the above-mentioned document “Online Processing of Electronic Securities and Encryption Passes” issued on March 7, 2019, the federal government disclosed the disclosure of the financial instrument market guidance 4 that does not constitute an investment or securities. The supervision of the issuance began further consultations. Most participants favoured a set of European coordinated regulatory approaches.
At the same time, the timely development of regulation is also considered to be crucial. Therefore, the consultation reached a broad consensus on the issue of state regulation during the transition period.
In this context, the federal government intends to publish a draft legislation on the regulation of the public offering of certain cryptographic passes this year. This will ensure that certain undefined cryptographic passes can only be issued if they are legally required and published by the Federal Financial Supervisory Authority (BaFin) approved prospectus. Through this measure, the federal government seeks to ensure that investors receive a high level of protection. It also creates legal certainty around the meaning of a specific pass design.
1.3 The federal government plans to create legal certainty for encryption exchanges and custodians
Many consultants have emphasized the need to develop regulations to address investor protection and anti-money laundering rules.
At the beginning of December 2018, the G20 agreed amendments had similar goals. In view of the fact that AML/CFT has the purpose of preventing cryptographers and those providing related services from involving money laundering, these relevant personnel should comply with the requirements of the AML/CFT national standards.
In Germany, an encrypted exchange converts encrypted assets into fiat currencies, or converts fiat money into a pass, which already requires permission from the Federal Financial Supervisory Authority. They must also comply with anti-money laundering (AML) compliance requirements. On July 31, 2019, the Cabinet approved the implementation of the fourth draft amendment to the Anti-Money Laundering Directive. The draft specifies the issuer of the issuer of the investment-use cryptographic asset and the provider of the encrypted wallet (ie, the provider that provides the private key service for storing, managing, or protecting a particular cryptographic asset). This draft legislation is not only aimed at effectively combating money laundering and terrorist financing, it also ensures that the growing popularity of large technology companies entering the market is expected to match the level of customer protection of encrypted assets.
1.4 At the level of Europe and the international community, the federal government is trying to find an effort to ensure that stable currency does not become a substitute for the national currency.
The blockchain is an effective technology for creating, transferring and transacting the right to pass, and a necessary prerequisite is the ability to synchronize legitimate transactions (delivered by payment). This requires a stable, blockchain-based payment method. Most traditional cryptocurrencies are unable to meet this requirement due to their high volatility. Some people who have been consulted by the federal government believe that the so-called "stabilized currency" is a possible solution to this problem. Stabilizing coins seek to ensure currency stability through support from national currencies or liquid assets. Some government consultants also discussed the issue of introducing a central bank digital currency based on blockchain. In principle, the European Electronic Money Act provides a regulatory system for the stabilization of coins. At the level of Europe and the international community, the federal government is trying to find an effort to ensure that stable currency does not become a substitute for the national currency. The federal government will further expand the existing dialogue with the Bundesbank on the central bank's digital currency to assess the current state of the game.
2. Promote innovation to maturity: advance project and regulatory sandbox
Outside of financial institutions, that is, in private companies, civil society organizations, and public institutions, blockchain-based solutions have never been applied. The federal government's goal is to cooperate with and support these measures without placing this competitive technology at a disadvantage.
As the federal government knows, the results of this online consultation have proved that it is effective to systematically establish a real-life laboratory in Germany and use it as a tool for economic policy and innovation policy. Especially for emerging technologies like blockchain, pilot projects and regulatory sandboxes provide an ideal opportunity to test the use of the technology and the regulatory approach in practice. This means the accumulation of comprehensive insights, including opportunities, risks and effects of technology, as well as legal constraints and adaptive needs. In the context of a “regulatory sandbox strategy”, the federal government will begin a competition for innovation by the end of the year to oversee the sandbox as a testing ground for innovation and regulatory arrangements; the competition welcomes specific ideas and projects from practical practices. provide support. We will also advance a range of other activities aimed at building networks and providing information and strengthening these regulatory sandboxes.
2.1 Federal Government funded research, development and demonstration of practice-oriented energy blockchain technology
The aforementioned online consultations highlight various application examples of blockchain technology in the energy sector, where these technologies generate added value, ranging from pricing and supplier conversion to the structure of production roles. Overall, the participants in the consultation believe that blockchain technology has significant potential for energy transformation. However, especially in the application of the energy industry, the overall efficiency must not be neglected, and energy efficiency cannot be ignored. The blockchain technology currently in use may consume a lot of power and resources. Therefore, it must be ensured that any positive impacts on transparency and process efficiency when scaling application examples are not compromised by significant negative impacts on climate and resource protection. However, to date we have not conducted a comprehensive survey of the experience gained in the market to assess whether the existing legal framework makes it possible to use the technology and what negative impact it will have. In this regulated environment, a universally valid statement cannot be made. On the contrary, learning from individual applications is very important. The federal government will continue to provide project funding. Various federal government projects are studying energy transformation opportunities offered by blockchain technology:
- The federal government's seventh energy research program is about digitization related to energy transformation. This includes making it easier for start-ups to participate in the program.
- Within the framework of Smart Service World II, blockchain applications in the energy industry are used for practical learning. Examples of these applications range from large blockchain virtual storage units for PV facility operators, energy transactions using blockchains, and point-to-point transactions based on blockchain.
- The Smart Energy SINTEG grant program uses five large display areas to test sample solutions for the digital energy industry.
- The “Ensuring New Network Structure” initiative in the “Copernic Project” also considers the blockchain technology used in energy transition. The outcomes of these projects will be assessed based on their positive and negative impacts and address the regulatory barriers that arise.
2.2 The federal government is piloting a connection between a blockchain-based energy facility and a public database
In May 2019, the federal government conducted a feasibility study "Blockchain-based energy facility registration and management – smart meter gateway." The results of the study will be announced by the end of this year. The recently released interim report is optimistic, and with the support of its positive results, the federal government has begun preparing to pilot the connection of blockchain-based energy facilities to public databases. The project phase is expected to begin in 2020, but will be subject to the final assessment of the feasibility study. This is the basis for first obtaining effective insights to infer action recommendations.
2.3 The federal government will establish a pilot laboratory across the technology sector for the energy industry
The next step in implementing blockchain technology in the energy sector is to test specific applications under realistic conditions. The federal government has combined existing funding measures to set up a pilot lab across the technology sector for the energy industry. We will work with participants in the energy industry, society, and public authorities to review and evaluate the system efficiency gains of selected applications. Particular attention is paid to the possible negative impacts, such as those related to energy efficiency, which should be noted so that an overall assessment can be made. In particular, researchers at the new technology lab are also working with other new technologies (such as artificial intelligence and big data); the goal is to study the impact and challenges of these technologies in terms of national economic, social, and regulatory arrangements, and The impact on social cohesion.
2.4 The federal government is fostering the establishment of a test environment for the development and application of secure digital business processes
The federal government is cultivating an "Industry 4.0 legal test bed." This involves setting up a test environment that enables companies to develop and test secure digital business processes. The focus is on the legal issues of negotiating and processing contracts between machines through so-called "smart contracts." The application as a typical example is in the technical implementation of logistics and production activities, in particular blockchain technology. The preliminary results of this four-year project are planned to be announced at the 2020 Digital Summit; next, in the relevant event rooms such as the Industry 4.0 platform and trade fairs, they will be directly displayed to the public and open to the public. In addition, from February 2020, the federal government will promote the development and application of platform-based, secure digital business processes called “Internet-based services for complex products, production processes, and facilities”; Service ( Projected Project) . The goal of these projects is to develop and test innovative services and business models that emerge from the entire value creation chain network. The program is designed to ensure dynamic networking between enterprises while protecting data security, integrity and data sovereignty. This will be achieved through a blockchain-based infrastructure to ensure a reliable exchange of information, but it remains to be developed.
2.5 Federal Government supports innovative blockchain solutions in developing countries
Founded in 2018, Gesellschaft für Internationale Zusammenarbeit GmbH is an international development company whose blockchain laboratory uses blockchains and related technologies to implement the UN Sustainable Development Agenda 2030. (UN 2030 Agenda for Sustainable Development) has fully realized the potential of transformation. The federal government is working to expand the laboratory approach to create framework conditions for the use of blockchains in developing countries and to support innovative blockchain solutions in scenarios such as pilot activities. The pilot project is a close collaboration between private companies, public regulatory agencies and government agencies. The develoPPP program developed through laboratory methods can be used to support the concept validation phase and the first pilot phase, up to scale. Therefore, this approach allows policy makers, local talent, and private companies to build their own test labs so that everyone can work together to develop a solution.
Blockchain technology is often associated with energy and the large consumption of raw materials. One of the key factors is the consensus mechanism for proof of workload, which does require huge computing power. Our online consultation confirmed the inefficiency of this process and pointed out that there are many more effective consensus mechanisms. It has been suggested that countries must consider the criteria for establishing sustainability when applying and funding blockchain technology.
2.6 The federal government's sustainability-oriented requirements are an important decision-making criterion for implementing state-funded or state-sponsored blockchain projects
In particular, given the climate protection goals, the federal government will support the use and further development of sustainable energy-efficient blockchain applications. Therefore, in the area of blockchains, the federal government will make sustainable development requirements an important decision criterion before implementing state-funded or state-initiated projects. The federal government will use the opinions of experts to examine the aspects that must be considered and to what extent a simple, flexible and transparent assessment method can be established. Such standards can also be an example of countries other than Germany.
2.7 The federal government is exploring national funding for environmentally sustainable blockchain applications
Until mid-2020, the federal government will continue to explore how to provide government-funded possibilities for environmentally sustainable blockchain applications and blockchain applications that help protect the environment, climate, and nature, under the European National Assistance Act.
We found many applications during the consultation process. Among them, the blockchain-based solution shows high potential. Common industries include energy, logistics, and supply chains, as well as verifications such as health care or education/training certificates. In the innovation competition organized by the federal government, it may reward the innovative application of blockchain in the healthcare field and implement further support measures with the winners. When selecting a funding project, the key point is that the technology solution meets the principles of sustainability, usability, and transparency, with the goal of influencing the new technology to generate added value in society. In addition, priority will be given to solutions that enable networking and knowledge transfer between private companies, civil society organizations and relevant parties in public institutions.
2.8 The federal government is studying whether the use of blockchain technology promotes and promotes transparency in supply chains and value chains
In many ways, blockchain technology makes it possible to increase the transparency, efficiency and security of the value creation chain. The federal government aims to promote blockchain technical support for the supply chain and value creation chain. In particular, funds will be provided to projects designed to demonstrate product sustainability and set standards. The federal government is studying whether blockchain technology can be used and promoted, first ensuring environmental sustainability of the supply chain, social sustainability, as well as colleges and security, and secondly contributing to the technology of the product cycle. The “Industry 4.0 Dynamic Value Creation Network Collaboration” financing program reviews the importance and applicability of blockchain-based approaches in industrial environments, with a focus on collaboration between companies through smart contracts and the transfer of process data. Blockchain technology is also applied to collaborative projects in the Collaborative Integration Management Platform in Value Creation Networks. In the “Resource Recycling Business – Innovative Product Recycling” funded project, the alliance-based project DIBICHAIN will study the digital description of the product life cycle of the blockchain technology in the aircraft manufacturing process and its technical application. In a pilot project, the federal government is assessing how the blockchain contributes; this can be achieved through transparent, complete and trustworthy information in the supply chain, making sustainable consumption decisions more convenient and secure, such as Food production and processing supply chain. Similarly, in the global value creation chain, the federal government will test whether such documents can bring higher profits to producers at the beginning of the product cycle.
2.9 The federal government is funding relevant research and development to use the effective governance structure of blockchain technology in the logistics industry.
In the context of the “Innovation for Future Production, Service and Work” initiative, and the “Development of Services through Digitalization” ongoing funding program, funds will be used to research and develop effective governance structures. In particular, the blockchain application finds practical applications in other areas such as the Marine Logistics (“Sofia” project), involving process sequencing and smart contract-based approaches. Based on the basic report DLT (Blockchain) Opportunities and Challenges in Mobile and Logistics, the federal government supports end-to-end digital descriptions of cargo movements and shipping documents. In addition, the federal government is funding a coalition-based project “blockchain-based transparent, efficient, and credible non-regulated product value creation chain management framework”. A blockchain-based supply chain transparency and quality assurance system is currently being developed for end-to-end monitoring to demonstrate the process status, location and current state of the product. The blockchain-based project “avoids risk in the temperature-controlled supply chain through blockchain technology” will develop a supply chain risk management approach; this will use blockchain to improve the active management of risk in temperature-controlled logistics.
The alliance-based project "Distributed Energy Trading Platform Based on Blockchain" is developing a methodology for the energy market platform supported by the blockchain.
2.10 The federal government will develop and fund blockchain applications dedicated to consumer protection
In addition, the federal government believes that blockchain technology has potential to protect consumers. Its transparency gives people the opportunity to check whether products or services comply with laws and regulations, such as whether the product transportation conditions are applicable. Because the system is distributed, users can be more independent of the core platform, which can strengthen user sovereignty. In contrast, consumer protection is facing challenges based on blockchain technology applications, such as token sales, claims that are not authorized by the central government, and compliance with general data protection regulations. The federal government's goal is to make blockchain-based procedures also help implement and protect laws and regulations to protect consumer rights. To achieve this goal, the federal government will develop and fund blockchain applications that help consumers protect, such as the food industry chain.
2.11 The federal government is funding the validation application of higher education diplomas based on blockchain technology
As part of the federal government's “Safe Digital Education Space” program, it is united with the strengths of the state government and many of the headquarters organizations of the Chamber of Commerce; this program will examine and fund the use of blockchain solutions with positive results. The Certificate of Verification Skills (inquiries, ECT credits, etc.) was originally applied to the International Student Transfer and Vocational Training Certificate, related to the final exam scores and further studies. In addition, we plan to develop and test end-to-end digital verification skills certificates and job performance certificates (“digital certificates”) before the start of the spring of 2020, attributable to the ongoing “Europass II” project of the European Commission, which is currently underway. .
3. Make investment possible: clear and reliable framework conditions
The federal government's goal is to develop framework conditions that provide adequate security for investment. Reliable framework conditions allow companies and organizations to fully assess whether it is worthwhile to invest in blockchain technology. A clear and technically neutral legal framework should also be included in the framework of reliable frameworks. At the technical level, reliable framework conditions are created on the basis of standards, the possibility of certification, and compliance with IT security requirements. These conditions must always be evaluated from the perspective of environmental sustainability, which the federal government supports and supports.
A. Legal framework conditions
According to the principle of technology neutrality, the legal framework must not favour or disadvantage the blockchain technology in relation to other technologies. In addition to capital market regulations, the consulting process primarily involves corporate law, data protection, and consumer protection issues, especially the compatibility of blockchains with the General Data Protection Regulations (GDPR), which is often a recurring issue. From the federal government's point of view, blockchain technology does not need to change GDPR; instead, blockchain technology needs to shape the development and use of blockchain solutions in a way that meets the requirements of composite data protection. In any area of uncertainty, consumer protection and data protection needs must be met. In these cases, existing technical solutions (hash values, anonymization, zero-knowledge proofs, etc.) should be used as the default design principles and privacy practices. In addition to consumer protection and data protection issues, the consulting process also addresses corporate law issues. The first issue is the enforceability of laws and regulations in the blockchain structure, especially for transnational applications.
3.1 The federal government will organize a round-table discussion on blockchain and data protection issues
The round table on the implementation of the requirements of the General Data Protection Regulations has evolved into an established form of dialogue between the business community and data protection agencies. Therefore, in the first half of 2020, a round table will be devoted to the issue of data protection laws related to block technology. To this end, the discussions at the round table will be expanded to include representatives from the user community and civil society organizations from all walks of life, especially those from Internet policy. The event will serve as a research event on the current state of blockchain data protection. From a data protection perspective, the format used by blockchain technology demonstrates its positive nature in data protection compliance and the use of blockchain usage examples that clarify compliance with data protection laws. In this context, the following questions must be considered: What data stored in the blockchain constitutes personal data? How to protect the right of users to delete data when using blockchain technology? How does the central coordinating body ensure that anyone has access to information about their data?
The round table serves as a form of information exchange to constantly review emerging realities and to maximize the path to highlight the solution. The result of this work is to apply the existing guidelines used by data protection agencies to the full practice of the blockchain environment; where applicable, to the recommendations of other guidelines to be used by data protection agencies. . In contrast to the implementation and use of these recommendations, monitoring from the perspective of data protection laws in this regard is entirely the responsibility of an independent data protection agency. In addition, the round table provides participants with the opportunity to interact further and discuss in depth the issues related to data protection laws and their solutions in the actual blockchain time, including the development of legal standards or certifications for data protection.
The outlook is that any open questions about the data protection laws of blockchain applications should be addressed as follows: if the explanation is not clear, efforts should be made to work with relevant data protection agencies to establish clarity; Blockchain applications for data protection requirements.
3.2 Federal government review applies blockchain technology within the scope of providing evidence
The federal government will examine whether it is possible to formally recognize the irreversibility of the blockchain, to what extent it can identify irreversibility, and whether hash values can be applied to provide evidence of stored data and documentation to prove its immutability. In addition, the federal government is first studying how to provide protected data based on blockchain technology applications to courts or counterpart official verification agencies, how to use such data as evidence; and secondly to investigate whether it is possible to guarantee tradability according to legal requirements. In particular, the concept of ensuring long-term security of data must be provided, even after the encryption algorithm originally used by the data has expired in terms of security applicability.
3.3 The federal government will observe and examine blockchain applications in the art creation industry
For the management of copyrighted content, the development of blockchain-based concepts and their solutions has potential. Because blockchain-based programs can also play a role in copyright protection and paid use. This must take into account the freedom of use prescribed by law. This requirement is particularly applicable to complex works involving many people, such as making movies; it is also suitable for the music industry. In this context, the federal government will observe and review blockchain applications for copyrighted content. In particular, it is studied whether and to what extent the blockchain-based procedures help to simplify the freedom of use permitted by law.
3.4 By the end of 2020, the federal government will review the possibility and opportunity of applying blockchain technology in corporate law and cooperative organization law.
It is conceivable that the use of blockchain technology can greatly simplify the process of corporate law, for example in equity management (processing of shares, utilization of shareholders' equity, etc.). This may also apply to the issue of using member rights in a partner company/organization. There are still many issues that remain unresolved in this regard, especially with regard to the necessary technical prerequisites and the application of specific opportunities. Therefore, the application of blockchain technology in company law needs to be reviewed by entrusting external reports.
3.5 The federal government will consider the legal framework conditions for new cooperation
Online consultations show that blockchain technology will make it possible to create new forms of cooperation, even between competitors. In most cases, networks based on blockchain technology are made up of companies or organizations. Blockchain technology and smart contracts also make new forms of collaboration possible. These new forms are characterized by the default of responsible central institutions and the implementation of decision-making processes based on smart contracts (DAO, decentralized autonomous organizations). The federal government supports the development of such digital innovations and will focus on the legal framework conditions applicable to such structures.
3.6 The federal government will review the applicability, flexibility and potential of international arbitration institutions
Cross-border blockchain networks present new challenges from a legal perspective, such as the question of which legal system to apply in the area of blockchain technology. Parties often do not understand each other, if traditional negotiation methods are used to reach consensus and resolve disputes. It will make the process extremely complicated and may unfairly assign some of the benefits involved.
3.7 The federal government is studying alternatives for authentication in official authorization procedures
Blockchain technology can only be fully effective if it can describe the process completely digitally. Therefore, the identification of natural or legal persons within the scope of official authorization has so far required the parties to appear in person. Currently, the federal government is studying whether the main security requirements for vehicle authorization for use with roads can reduce the level of trust from “high” to “substantial” in the authentication process.
B. Standards and certificates
Online consultations show that there is a strong willingness to provide standards, certifications and specifications for information on blockchains. If there is a standardized interface, it is easier for companies to gain market access and the security of investment is improved. If the norms and standards can be applied at the level of Europe and the international community, the synergy will have even greater influence. Users and developers need interoperable standards—these are the foundations for connecting various blockchain applications, especially when using smart contracts, activating automated trading is highly complex and needs to be more transparent. The layman in technical terms cannot understand that smart contracts have indeed achieved some technical implementation. This has prompted people to demand that blockchain technology be obligated to provide intelligent contract content information that is easily understood by the general public, which will further promote the expansion of the user community and the basis of the technology. Online consultations also show that such contracts should be certified by official authorities, especially in terms of technical traceability through open source solutions, and standards and interfaces should be publicly documented to ensure various applications and IT systems. It is interoperable. This reduces the reliance on proprietary interfaces and proprietary formats provided by software vendors. Therefore, open source solutions help to develop digital sovereignty.
3.8 Federal government begins to establish smart contract register in the energy industry
Especially in the energy sector, smart contracts offer great potential for automation and efficiency. This makes it even more important to convert contractual relationships into digital languages or to convert them into digitized code. As a result, the federal government will soon begin to create a register that lists the latest contract status of the energy sector, enabling smart contracts to be registered and systematized. We will work with dena (German Energy Agency) and representatives of the scientific, business and social communities to exchange views on whether or not to convert content items into smart contracts without considering which code to use. The goal is to create a public platform with free access with the help of dena, whose content can be viewed, evaluated, discussed and commented on a permanent basis, as they can reference back-referenced similar reference instances. The smart contract register for the energy industry should serve as an example for other business units and as the basis for designing and establishing other registers.
3.9 The federal government will explore the possibility of introducing a certification process recognized by smart contracts
A smart contract usually does technically describe what the supplier confirms, and providing a certificate of conformity to confirm the content can increase the general acceptance of smart contracts and allow the public to trust them. For users without a specific technical background, one difficulty is to check the actual content of the smart contract as opposed to what is presented. So far, there is no specific certification process in the blockchain/smart contract area. The federal government will explore the possibility of introducing certification procedures, and developers and technology providers can use these certifications on a voluntary basis to increase trust in the use of blockchain technology and smart contracts.
3.10 The federal government plans to commission a study to outline the technical processes for digital identification, certification, and verification of equipment.
In order to unlock the full potential of blockchain technology in the IoT environment, it is essential that devices be clearly identified. Programs must be built in a consistent, interoperable, and secure manner to embed appropriate principles and requirements (such as confidentiality, integrity, and availability) when designing a device's secure digital identity. In particular, the determination of the specification can make it possible. The federal government believes that this development of technology solutions is the main task of the industry. To support this, the federal government is planning a study outlining a number of technical procedures for digital identification, authentication, and verification; the purpose of the research is to assign these programs to specific applications in actual operations.
3.11 The federal government actively participates in the development of international standards and supports the use of open interfaces.
Uniform specifications and standards are critical to the compatibility of various blockchain applications. Open source licenses dominate the blockchain application; in combination, it increases application transparency and trust, making investments more secure. Various international organizations are studying the issue of developing joint standards for blockchain technology. Accordingly, the German Industrial Standards Organization (DIN), as the representative of the German National Standards Development Organization and the Federal Republic in various ISO working groups, is participating in ISO/TC 307 “Blockchain and Distributed Accounting Technology”, covering areas such as Topics such as interoperability and IT security for blockchain applications; DIN also participated in the “Smart Contracts and Applications” working group, which aims to validate parties and execute smart contracts. Regarding environmental sustainability in the blockchain sector, the federal government will assess the development and establishment of European or international sustainability standards and their certification procedures.
The federal government welcomes start-ups, SMEs, privately-initiated social organizations, and developers to participate in opportunities for blockchain technology creation, such as within the framework of citizen science/municipal technology. To sustain these engagement opportunities, the federal government is committed to ensuring that blockchain application solutions have an open, interoperable interface to connect with other (blockchain) applications. The premise is that doing so will not limit data protection and data security. Providing interoperable interfaces and using free software and hardware licenses in a suitable development environment when applying for research and development projects are all positive factors for positive evaluation.
3.12 The federal government is actively taking steps to open the discipline system junctions of the healthcare industry
In principle, the interfaces used in healthcare are also open to future technologies, such as blockchains. Therefore, continue to consider the use of future technologies to align data security and IT security requirements for health data. The federal government also enables applications in the innovative healthcare industry to access remote information processing infrastructure.
The federal government always uses technology neutrality as a prerequisite when building information security regulations and requirements. In this regard, we believe that “information security” is a comprehensive task that must penetrate the entire life cycle of technology from the beginning and ensure its security from the design stage. In online consultation, the call for information security that must be applied to blockchain technology is also high. The federal government will take this into account when further developing regulations and requirements for information security. In May 2019, the Federal Information Security Agency (BSI) released an analysis of blockchain technology from the perspective of information security, namely, "Building Blockchains Safely: Concepts, Requirements, and Assessments." It involves data security, long-term security, and common attacks. In addition, this document discusses the legal requirements that affect the design of blockchain applications.
3.13 The federal government is analyzing blockchain technology from the perspective of information security
BSI is using its expertise to support the secure development and operation of blockchain technology. In terms of basic security, it has been pointed out in the aforementioned document “Building Blockchains Safely: Concepts, Requirements and Assessments” that the developer and potential users have laid a good foundation to enable them to fully evaluate blockchain solutions. Opportunities and risks, and information security (ie “design security”) is considered from the outset. The federal government will consider adopting these recommendations when implementing its measures. With the development of blockchain technology, BSI will continue to update its analysis.
3.14 The federal government is funding the development of innovative cryptographic algorithms and protocols
In the "Autonomy and Security in the Digital World" information security framework research program, the federal government is funding the development of innovative cryptographic algorithms and protocols in the field of post-quantum cryptography, as well as programs for simple password exchange (encryption agility). These algorithms and protocols can also be applied to blockchain technology in the appropriate development environment. Encryption agility is also important for blockchain applications.
4. Technology Applications: Digital Public Management Services
A: Personal digital identification
Personal digital identity, as an important foundation for digital networks, needs to be consistent with industry practices as they enable communication, data exchange and transactions. When building these digital identifiers, different purposes, such as practicality and user friendliness, need to be considered, but data protection, abuse avoidance, and information autonomy should also be considered.
The consultation process in this report shows that blockchain technology includes the potential for further development of digital identification. Private market players believe they use blockchain technology to provide digital identity. At the same time, digital identity functionalization includes prerequisites for blockchain applications. However, the consultation process also clarifies the central manager or regulator of the government's perceived personal digital identity. It is necessary to check the rationality of the blockchain-based process, including birthday registration, marriage and death; registration of the citizen's place of residence, identity card; and management of foreigners.
4.1 The possibility of the federal government making digital identification available and considering the application of blockchain applications
The federal government makes the logo available and continues to develop, keeping users friendly and ensuring the highest level of security (eg, new ID technologies such as eID). In addition, in different public management processes, the federal government should check to some extent whether it accepts the digital identity of the private sector, including public management processes or corresponding legal transactions.
4.2 Federal government pilot blockchain-based digital identification and evaluation of appropriate applications
The federal government pilots digital tags based on blockchain. It will check whether the blockchain-based digital signatures provide added value compared to existing solutions and whether they can be structured to some extent to meet the requirements of the data protection law. Other suitable applications should also be evaluated based on the above principles. As a matter of principle, federal government representatives identify the safety principles and technical neutral requirements.
4.3 In funded projects, the federal government will test the interconnection of systems that provide security for personal digital identification.
Digital signage solutions have been on the market for some time. There is no solution to prove yourself in various scenarios. With the blockchain-based self-sovereign digital identification application, a more advanced solution is under development. In the innovative competition for digital signage protection, the federal government plans to provide interoperability testing of different technologies (centralized or decentralized) and providers in regional displays.
B: Trust service
The eIDAS Management Regulations issued by the European Union introduces an EU-wide, single digital trust service. This makes it possible to conduct viable electronic transactions in different countries. The online consultation results of this report also confirm that the eIDAS Management Regulations provide trust in digital business processes, which also makes access to public resources possible. At the same time, the need for eIDAS infrastructure has emerged, and it needs to be linked to the concept of self-sovereignty. The central operator provided by the eIDAS Management Regulations is considered an obstacle to blockchain technology.
4.4 The federal government is considering testing the blockchain operation to ensure that information based on electronic trust services is available for persistence
The federal government is striving to provide a regenerative goal of trust services on a blockchain basis from a technical perspective. This can be done through a test run of the blockchain. Further areas of application can be integrated into this operation within a given public authority.
By the same token, the federal government is aiming to promote some unknown electronic trust services that exist in the public sector, individuals and businesses. A website should be set up to show how the simulation process that requires trusted transactions can be reorganized into a digital process.
At the EU level, based on the EU Blockchain Initiative, the federal government should join the goal of building a self-sovereign digital identity. The eIDAS Management Regulations will play a vital role.
C: Blockchain infrastructure in each state
Blockchain technology is characterized by decentralized technical facilities, on the basis of which a large number of different applications can be provided. This report online consultation highlights the need for blockchain applications for public infrastructure implementation. Blockchain infrastructure must support enterprises or organizations to develop specific applications. In contrast, other participants believe that state governments should not join the blockchain infrastructure, they believe that the state government can run some nodes. National infrastructure activities are closely related to setting interconnection standards, and also mean the hope of establishing a government structure for decentralized networks.
There is also a need for infrastructure, a decentralized public key infrastructure that will secure the secure exchange of authentication.
The federal government welcomes the establishment of blockchain infrastructure at the municipal level, whereby the use of blockchain technology to provide administrative services is an option.
4.5 Federal government participates in the construction of the EU blockchain service infrastructure
The European Blockchain Services Infrastructure (EBSI ) is progressing through the European Blockchain Partnership . Germany is the hospital of the partnership. The first applications will be deployed on EBSI in early 2020. These applications include certification exchanges and registrations based on blockchain EU audit courts. The most exciting thing is that the infrastructure will also be open to the private sector. The federal government will ensure that Germany actively participates in the work of EBSI.
D: Public Management Project
In the consultation process of this project, a large number of blockchain technologies that can be applied to public management are mentioned. Focus on potential efficiency gains through horizontal and vertical management level data exchange simplifications, reduced data duplication, lower transaction costs, and more. There are also expectations for transparency, participation and traceability of public management processes.
However, the federal government has not used the application of blockchain solutions as the end of public management processes and existing public registration services. Instead, the need for blockchain technology applications should be reviewed and considered to be meaningful. For example, when public registrants can fill in content through existing methods (especially land registration, company registration, birthday registration, marriage and death, etc.), blockchain applications are not necessary. More promising blockchain applications include digital original document verification, such as certificates and letters of recommendation, for car-owned or decentralized storage.
In addition to the public domain, e-government blockchain display projects can have a positive effect on Germany; their private sector develops benchmarks for application and is also a source of valuable experience. The assistance and synergy of these behaviors can guarantee interconnection at the EU level, Germany level and regional level.
4.6 The federal government will launch, promote and support demonstration projects using blockchain technology, for example in the field of public services
In a single case, the federal government will launch, promote and support demonstration projects using blockchain technology, especially in the public service sector. The choice of accelerated blockchain project applications includes the establishment of a competence center for public service blockchain applications. The Federal Office of Immigration and Refugees (BAMF) pilots the AnkER blockchain project in Dresden to provide communications and collaboration processes in the refugee process, designed to work across departments. For example, the blockchain-based public management platform TruBudget has been applied in Burkina Faso and is also being used in some developing countries. The open source project used by Kreditanstalt fur Wiederaufbau uses a blockchain feature that makes transparent, secure and traceable donations that were previously difficult to achieve.
4.7 The federal government examines a possible application from the traditional need to fill out forms
Public Management Services As part of the Online Access Act , the federal government is examining applications at the national level, which may fill out the requirements from the form; this scenario is outside the scope of the Public Administration Procedures Act . The application of blockchain technology in public management services can cover individual needs for public management services. The federal government can achieve this through blockchain technology. In this way, the federal government can reduce the burden of written communications, including written communication needs between the public service and the individual and public services, such as international student exchanges or educational qualifications. For the basic trust of communication security and confidentiality, data and IT architecture, using blockchain technology, can reduce the complexity of construction, while existing standards, conventions and interfaces can achieve end-to-end encryption.
4.8 The federal government is investigating and testing the development, funding and use of pass-through verifiability in relevant application areas.
Digital verification passes will be deployed into certificates and public documents to enable digital verification documents, such as job performance references and others, in such a way that potential value can be brought to the management process, simplifying and accelerating the citizen and public administration jobs. The federal government will examine the development, funding, and application of security verification certificates. As part of the Secure Education Spaces program, the federal government and educational partners collaborate under the EU project Europass framework. This includes a pilot test of “Digital Signing Credits”, a reference verification of end-to-end capabilities and job performance (2019-2020). Based on this, the use of electronic signatures can guarantee the trust and privacy of data. Blockchain technology is a highly viable approach that deserves attention. This will test the flexibility of the blockchain.
4.9 The federal government is implementing pilot projects that determine the efficiency and transparency of customs clearance values for third-country e-commerce
In collaboration with private companies, the federal government is examining the efficiency and transparency of the customs clearance value of e-commerce in third countries, which use blockchain technology. For this purpose, Africa’s first pilot project is under construction and will inherit the third country’s customs department and serve as an international pioneer in the trade supply chain.
4.10 The federal government will examine the blockchain applications held by cars
The federal government is considering setting up a project that will examine the connection of car data based on blockchain-based systems, which will be done from the perspective of management using car data. This project spans 6 years.
5. Distributed Information: Knowledge, Network, and Collaboration
Blockchain is a younger but highly complex technology. Especially for SMEs, complex application cases appear in areas where technology is specifically applied. This is why many people support the exchange of opinions between SMEs, start-ups, large companies and other related organizations when the project is online. Establishing a network of seminars highlights best practices and application possibilities for blockchain technology.
Comprehensive technical understanding is the premise of developing blockchain technology. The federal government recognizes the need for experts in the blockchain field, and the federal government welcomes the regional government's " Education in the Digitized World" strategy to determine goals and actions. The federal government is promoting the certification of professional talents required for digitization in various regions, and it also helps regional governments to qualify for teaching resources. The basic digital competence center serves as the basis for achieving the goals of teaching resources.
5.1 The federal government will hold a dialogue on the blockchain technology series
A series of dialogues will promote the exchange of blockchain technical perspectives, opening up more diverse working groups and online consulting activities among politicians, businesses, society and experts. In this series of conversations, topic-based blockchain techniques will be discussed.
5.2 Federal Government promotes information interaction based on the Digital Hub Program and the SME 4.0 Competency Center
The federal government's digital hub program is to promote entrepreneurial networks within large and medium-sized enterprises, while including participants in the digital ecosystem. This includes start-ups for the development and application of blockchain technology. Not only that, the SME 4.0 Competency Center (for medium-sized companies) seeks to spread the development practices of innovative technologies and SMEs. The SME 4.0 Competency Center brings blockchain technology into service content as a technological innovation and drive to drive new business processes and business models.
5.3 Federal Government provides support for collaboration models based on application relevance
In the funding project framework, the federal government supports collaboration between customers and digital platforms, as well as application-related blockchain enterprises. Not only that, the blockchain is also deployed in specific applications for non-university research institutions, leveraging support from federal and local governments. This includes scientific applications (applications of the Max Planck Society ), in part through collaboration with companies such as Fraunhofer Blockchain Labs . By including "new sources of new knowledge" in its vision, the federal government has strengthened the cross-sectoral collaboration of "high-tech strategy 2025" to ensure that opportunities for open innovation are seized. By increasing the amount of funding, the federal government will significantly increase the number of new open collaborations, including academic alliances and research institutions.
5.4 The federal government will expand existing open data plans to capture the opportunities of open data applications
Blockchain solutions can provide substantial value added by meeting secure data access requirements as required by law. The development of such a solution relies on the acquisition of data. However, especially for small businesses, this data acquisition is still difficult. The federal government will expand its existing open data program. In addition, the federal government will increase the re-use of open data, mainly based on EU Directive (EU) 2019/1024 open data and public sector information reuse regulations. Based on this, the federal government welcomes the inclusive opening of EU high-value data, which can specify specific implementation actions.
State-level research data infrastructure will spur research data collaboration and improve data accessibility, and open access and open data form part of research and innovation.
The energy industry generates a lot of data. In particular, producer data and consumption data can be applied to third parties (research, business, and society). Additional data required by third parties may also be considered for supply under the GDPR regulations. As part of the overall plan, a pilot project is currently being developed to validate a data platform to analyze commercial applications, which provide carbon dioxide content in specific areas.
5.5 The federal government is reviewing the technical assessment of blockchain applications
The federal government is reviewing the association and continuation technology assessment options (starting in 2021), including scenario studies and feasibility studies, which are related to applications provided through blockchain technology (eg, energy consumption in energy relations, UN 2030) The sustainability of the objectives of the agenda framework).