The place to be: Blockchain innovation in Europe

You can find the full minutes of the workshop here.

Video from the workshop is available here.

The grand, stately city hall in Vienna's city centre may stand as an elegant reminder of Europe's long history, but on May 22 it also hosted a look into Europe's future as the site of the EU Blockchain Observatory and Forum's first workshop.

Under the Motto "Blockchain innovation in Europe”, the Observatory and Forum invited members of its two Working Groups as well as selected thought leaders to examine the state of the blockchain industry in Europe, explore Europe's strengths but also uncover and suggest remedies for its weaknesses.

This matters. As Workshop participants heard, the European Commission has identified blockchain as a key breakthrough technology and is supporting it on many fronts, with the EU Blockchain Observatory and Forum currently playing a central role in this effort.

Conceived as both a watchtower through which to study, analyse and map the blockchain ecosystem in Europe, and a lighthouse from which to glean wisdom and share it widely with both the general public and policymakers, the Observatory and Forum is meant to be a way for the EU to analyse the state of the blockchain industry in the Union and to hear directly from the community about its needs and concerns.

By looking first at blockchain innovation in Europe, the Observatory and Forum sought to provide a tour d’horizon of the current state of the blockchain industry in the Union and so provide some orientation for the two-year journey to come.

Below we’ve summarized some of the highlights of the discussion.

A solid foundation, but much work to do

The good news about blockchain in Europe is that the Union has a solid foundation upon which to build.

There is a great deal of interest in the technology from many quarters, from governments and non-profits to banks and large corporates to the rapidly growing European blockchain startup scene.

Europe boasts a vibrant blockchain ecosystem as well, with a number of important industry coalitions, a full calendar of world-class conferences and events, and very active local communities (there are for instance over 300 blockchain-related Meetups in the EU).

The European academic community is quite active as well, with a number of universities developing blockchain curricula and carrying out important research – the latter supported among other things by significant EU funding through Horizon 2020 and other initiatives.

Judged by metrics like Github commits and proposals, Europe's engineers are fully engaged in with blockchain and have a strong voice in how it is being developed. Europe is also strong in blockchain's underlying technologies, like cryptography, and related ones, like AI.

That said, blockchain in Europe faces challenges as well.

While there is a great deal of activity, these are early days and Europe still has no large-scale deployed projects, though this is true of most other regions as well. There is also a high mortality rate for blockchain projects: only 8% of blockchain-related projects on Github are actively maintained (on par, it must be said, with fail rates in other fields).

There is also clear need for legal and regulatory clarification. Right now Europe lacks basic standards for important issues like token classification or cryptocurrency-related KYC/AML procedures. Other important building blocks, for example standards for digital identities, are missing as well.

Another concern is how GDPR would affect blockchain development, with issues like the right to be forgotten seemingly incompatible with blockchain's principles of data immutability and transaction transparency.

While Europe is in good shape in terms of research funding, startups still struggle to find backing. Compared to jurisdictions like the US, seed funding for blockchain projects in Europe is particularly hard to come by.

Initial coin offerings (ICOs), of course, offer a potential alternative. But citing among other things concerns about the lack of know-your-customer and anti-money laundering standards, European banks have been wary to date of accepting funds from projects that have raised capital in this way – a major hurdle if Europe wants to establish a sustainable blockchain industry.

Media perception of the ecosystem is an issue as well, with much mainstream media focused on cryptocurrency volatility and ICO scandals, not the underlying blockchain technology.

Last but by no means least, projects in Europe – as most everywhere else – are struggling to find blockchain talent. To grow this industry, Europe needs to train more blockchain developers, and find ways to lure global talent to European projects.

Word on the street

Yet despite these challenges, when it comes to the state of blockchain innovation in Europe the word on the street – represented at the workshop through three "testimonials" from members of the European blockchain community – is rather positive.

Europe is innovating in platforms. The workshop heard about Alastria, for instance, a new blockchain platform being built by a broad private consortium in Spain. One of the only efforts at the moment to build a national blockchain infrastructure, with its unique, public-permissioned approach, Alastria is interesting both in terms of its technology and approach.

Europe is also innovating in research. The Workshop heard about a project at Trinity College Dublin to create a pan-European self-sovereign digital identity platform through the issuance of public key certifications to all EU citizens. Stored on a blockchain, such identities could be used to solve any number of important problems, from creating a de facto single sign-on for the Internet to reducing spam, developing verified social media accounts, strengthening and streamlining know-your-customer processes, or building transparent, secure and easy-to-use e-voting systems.

Perhaps most promising was the testimonial of the CEO of a European blockchain-based peer-to-peer lending platform. As an entrepreneur, he said, he greatly appreciated how open European regulators and officials were to the technology. He was also quite confident about the European blockchain scene, going so far as to say that "all the action is in Europe now."

For workshop participants it was both a vote of confidence, and a call to action to keep the momentum going.