Why the World Economic Forum Is Creating a Blockchain ‘Bill of Rights’

Sheila Warren is the Head of Blockchain and Distributed Ledger Technology at the World Economic Forum. Sumedha Deshmukh is a Project Specialist on the Blockchain and Distributed Ledger Technology team at the World Economic Forum. The opinions expressed here are their own.

If the last few years have taught us one thing, it’s this: users are not magically protected as technology evolves. Rather, user protection is something that occurs as the result of intention, commitment and deliberate design. Without this dedication from the outset, the trajectory of a technology’s development can, and often does, carry significant and far-reaching consequences.

As blockchain pursuits move from buzzword to business case, the technology is fast-approaching an inflection point. With $12.4 billion in projected spending by 2022 and high-profile announcements from actors like Facebook, central banks and global mining and metals companies, the decisions made by builders today will have ripple effects on significant swaths of the population for years to come.

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In fact, blockchain has already experienced the consequences of not designing with the rights of users in mind.

In 2017 and 2018, the sudden rise and subsequent fall of initial coin offerings (ICO) provided a case study of what can go wrong with instances of fraud, unsustainable business models and significant losses to non-savvy consumers. For example, one 2018 study identified more than 80 percent of ICOs conducted in 2017 as scams.

This potential for misuse caught the attention of legislators and policymakers, but in many instances, it was too late. If blockchain is truly looking to scale in its next phase, repeating these mistakes is not an option.

What’s at stake?

This new wave of development offers an opportunity to correct course. However, if organizations in a rush to act first don’t learn from the past, the technology faces several existential threats:

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Risks to users. The world has learned the hard way that bottom-line protections for users need to be considered at the outset of product design, especially when it comes to data. Blockchain’s properties as a foundational technology make these considerations particularly important, given the harm and follow-on effects that can come from potential breaches.

Potential for transformational change can be undermined. Those with sophisticated knowledge may have the opportunity to exploit their advantages – whether to intentionally harm consumers or to suppress the market through anti-competitive actions. This behavior weakens the very premise of decentralization, which was initiated to provide censorship-resistance, privacy and a level playing field for entrants.