Blockchain technologies open up new perspectives for decentralized data processing. However, their special characteristics bring with them considerable challenges in terms of data protection law, which require careful examination in the context of the General Data Protection Regulation (GDPR) are required. The European Data Protection Board (EDPB) states in its current Guidelines an overview of the legal and technical challenges as well as recommendations for action.
What is a blockchain?
A blockchain is a distributed, consistent database that does not require a central instance. Transactions are stored in so-called blocks, linked together cryptographically and documented chronologically. This means that manipulation of stored data is practically impossible or only possible with considerable effort. Blockchains can be public or private and differ in particular as to whether all (permissionless) or only selected (permissioned) participants can validate transactions.
Above all, blockchain technology makes it possible to carry out transactions between different players directly, transparently and tamper-proof and to automate individual work processes - for example in payment transactions with cryptocurrencies.
Blockchain technologies open up new possibilities for decentralized data processing. The special characteristics of blockchain technology, such as decentralization, immutability and Transparency However, they pose considerable data protection challenges. These require careful examination as part of the GDPR. In its current Guidelines 02/2025, the EDPB emphasizes the need to fully guarantee the basic principles of data protection for blockchain solutions as well.
Data protection challenges
The special technical properties of blockchains are sometimes in conflict with the basic principles of GDPRespecially the Data minimizationthe Memory limitation and the Rights to Correction, Deletion and Contradiction.
Once stored, data can hardly be deleted or changed. This makes it particularly difficult to implement the right to Deletion (Art. 17 GDPR) and on Correction (Art. 16 GDPR). Compliance with transparency obligations (Art. 13, 14 GDPR) is complex, as the large number of parties involved makes it difficult to clearly assign responsibilities.
TOM recommendations for the use of blockchain
In order to effectively minimize data protection risks when using blockchain technologies, the European Data Protection Board recommends a series of technical and organizational measures:
First of all, it should be avoided if possible, personal data directly on the blockchain. Instead, data should be stored outside the blockchain as far as possible. Only cryptographic references such as hash values or commitments that can establish a link to the original information without disclosing it should be stored on the blockchain itself.
If the storage of personal data on the blockchain is unavoidable, modern encryption methods should be used. A strong Encryption ensures that only authorized parties can access the content. However, the EDPB expressly points out that even encrypted or hashed data can still be used as personal data and thus meet the full requirements of the GDPR are subject to.
Another key aspect is the implementation of data protection through technology design and data protection-friendly default settings (privacy by design and default). As early as the planning stage of a blockchain project, measures must be taken to ensure that personal data are fundamentally protected and are only processed to the extent required for the respective purpose. This includes, for example, the conscious decision to use a private, permissioned blockchain instead of a public blockchain, the clear restriction of access rights and the minimization of the amount of data processed.
Overall, the data protection-compliant design of blockchain technologies requires careful technical planning, close coordination between the parties involved and ongoing Documentation of the protective measures taken.
Responsibilities and governance
The decentralized structure of a blockchain does not release from the obligation to define clear responsibilities in accordance with Art. 4 No. 7 GDPR to be defined. In the case of permissioned blockchains in particular, a governance structure should be set up that clearly defines roles and responsibilities.
Clarifying roles can be more difficult with permissionless blockchains. Node operators (nodes) could, under certain circumstances, act as (co-)Responsible persons if they have a significant influence on the purposes and means of the organization. Processing have.
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Blockchain projects regularly require a Data protection impact assessment (DSFA) according to Art. 35 GDPR required. In particular, a DPIA must check
- whether the use of blockchain technology is necessary and proportionate,
- which data is stored on or outside the blockchain,
- what risks arise for the rights and freedoms of the data subjects,
- and how international data transfers are handled.
A DPIA should also consider alternative technical solutions and evaluate their risks on a comparative basis.
Rights of the data subjects
Blockchain applications must be designed in such a way that the rights of data subjects under the GDPR are fully safeguarded. This applies in particular to the right to information, access, Correction, Deletiondata portability and the right to object.
The right to information (Art. 13, 14 GDPR) requires that the persons concerned are informed before or at the latest at the time of the Processing be informed clearly and comprehensibly about data processing. This flow of information must also be guaranteed for blockchain applications - for example, when setting up wallets or before transferring data to a blockchain network. Central information platforms or user instructions within the applications can help here.
The right to information and data portability (Art. 15, 20 GDPR) means that Affected parties be able to request information about their personal data and, if necessary, its transfer in a structured and commonly used format. Even if the data is distributed across different nodes, a central point (e.g. the Responsible persons) and make this information available.
The rights to Correction and Deletion (Art. 16, 17 GDPR) pose a particular challenge in blockchain systems. The immutability of the blockchain is in conflict with the right to Correction or Deletion of data. The EDPB therefore recommends personal data outside the blockchain where possible. If a Deletion If this is desired, this can be done by removing the off-chain data so that the on-chain data no longer has any personal reference. Additional transactions can also be used to revoke or override incorrect entries.
The right to object (Art. 21 GDPR) must also be taken into account in the system architecture. Technical and organizational measures must provide for data processing to be carried out on legitimate grounds. Contradiction can be reversed.
Summary and recommendations
The EDSA recommends:
The use of blockchain technologies only if there is a clear Necessity and after careful consideration.
The preference for permissioned blockchains with controlled access structure.
Early consideration of data protection requirements in the context of Privacy by design and default.
Clear governance structures to define responsibilities.
Documentation of all decisions, especially regarding the data structure, Data Access Control and risk assessment.
Source: Guidelines 02/2025 on processing of personal data through blockchain technologies
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