Table of Contents
- Bill To Boost Innovation
- The Kill Switch Conundrum
- Growing Concerns
- Can Dusk Network Make Compliance With The Data Act Easier?
The EU Data Act is an attempt to give people more power over what can be done with their data and how it can be used.
However, the act has come under criticism thanks to what many see as a flawed approach, the introduction of a kill switch
Bill To Boost Innovation
The European Parliament passed the EU Data Act on the 14th of March. The bill, according to supporters, is intended to significantly boost innovation by removing barriers that prevent access to industrial data. The data act proposes establishing clear rules to fairly share data generated by connected products or services such as “Industrial Machines” and “The Internet of Things.” In a statement, the European Parliament noted that the act would help encourage better use of resources to train algorithms and lower prices for device repairs.
One of the provisions of the act requires that smart contracts be made alterable.
The Kill Switch Conundrum
Because the act aims to protect trade secrets and unlawful data transfers, it stipulates specific requirements for smart contracts, including introducing a kill switch for safe termination and interruption. The EU’s desire to introduce a kill switch and pause functionality comes from the need to protect users from risks associated with smart contracts; experts were quick to raise concerns. Introducing a kill switch and pause functionality is the EU’s way of mitigating any risk that could arise from any catastrophic failure within the larger financial system. It also ensures that the integration of smart contracts does not pose a threat to the stability of the larger financial system.
However, blockchain experts have identified a number of problems with the legislation. Chief among these were concerns that focused on trust and decentralization. According to experts, the introduction of a kill switch compromises immutability and also introduces a single point of failure. This is because there needs to be someone or an entity required to govern the use of the kill switch. Others contended that the act endangers smart contracts to an unimaginable degree.
As such, there are three options when it comes to control over the kill switch and pause functionality. These are single-user control, multi-signature control, and decentralized autonomous organizations. However, each approach to control the kill switch and pause functionality has its own tradeoffs, especially regarding trust and speed. It is crucial to strike a balance between these factors to ensure that kill switch and pause functionalities can protect users without stifling innovation or decentralization.
Can Dusk Network Make Compliance With The Data Act Easier?
Zero-knowledge proof-enabled infrastructures such as Dusk Network could play a crucial role in making compliance with the EU Data Act easier. It can do this by enabling selective disclosure, better privacy, and visibility. As such, Dusk Network can ensure that any off-chain modifications are legitimate while also protecting sensitive data. How can this be made possible? Dusk Network leverages selective disclosure, making it possible to minimize the exposure of any sensitive information and allowing only specific parties to access data within a smart contract.
The network uses zero-knowledge proofs to ensure that trade secrets remain confidential. At the same time, it can also provide the necessary transparency to be compliant with regulatory authorities. Such an approach ensures the security of sensitive information contained within smart contracts. Dusk Network’s built-for-compliance smart contracts help to introduce clear roles for auditors and other stakeholders. This allows them to view parts and sections of smart contracts that are inaccessible to others. Furthermore, these roles can be extended to include functions that will enable the pausing of smart contracts.
Using zero-knowledge proofs and selective disclosure by the Dusk Network can also help significantly reduce the risk of fraud. It does this by only allowing authorized parties to view and modify data, minimizing the potential for manipulation, unauthorized access, and tampering. This helps maintain the integrity of smart contracts and secure the overall ecosystem.
To sum things up, Dusk Network can help address the challenges posed by the Data Act and ensure better compliance through verifiable computation, selective privacy, visibility, and built-for-compliance smart contracts.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.