Blockchain and Brexit: How Adoption Could Help With UK-EU Relations

Blockchain has one new supporter: the UK finance minister Philip Hammond.

Quizzed at the Conservative Party conference on how the UK government might solve Brexit's UK-Irish border issue, he suggested that blockchain technology may be a solution.

He didn't go into any further detail, but in raising distributed ledger technology as one way of facilitating 'frictionless' movement between Northern Ireland and the Republic of Ireland, he sparked hope that blockchain could help ensure seamless post-Brexit trade between the UK and the EU, and all without requiring Britain to be part of the European Economic Area or the Customs Union.

"In my assessment there is zero chance that blockchain technology will help deliver a 'frictionless' border between Northern and the Republic of Ireland," Vili Lehdonvirta tells Cointelegraph.

"Blockchain has become this magical buzzword that people like Philip Hammond who don't know what they're talking about are pinning all kinds of hopes and dreams on. I think the onus is on the proponents to explain how blockchain tech could possibly help here. For starters, we would need to know what exactly is meant by"blockchain" here.

Scaling is still currently the nemesis of Bitcoin and other proof-of-work blockchains, and while improvements have been made in recent months, it's still hard to imagine a Bitcoin-style blockchain coping with the immense daily traffic the Irish border experiences.

"The Northern Ireland issue is sadly not one that will likely ever be solved via technology, it's strictly a political issue at this stage. Even if a blockchain customs border were something that could be developed in the next 5 years, which would be able to handle all customs matters perfectly, a border in either Ireland or between Northern Ireland and the rest of the UK would still be impossible to sell to Ireland and Northern Ireland. A border, whether soft or hard, is still a border, which would require policing, so as to prevent fraud and smuggling. Such an arrangement, whether in Ireland or in the sea, would be rejected by both sides of the Irish Island."

"In other words, to use blockchain properly, it's not enough to maintain a record of the origin of an item. You have to have a complete record of all transactions involving the item, including inspections. This means adding to the blockchain at every link in the supply chain."

A blockchain could tell you that an orange has come from, say, Spain, and that it hasn't been tampered with or swapped as it made its way across the supply chain, but it can't guarantee on its own that the person who first registered it on that blockchain was being truthful about its Spanish provenance.

"If we're looking at public blockchains, a blockchain is only as good as the data you put in it, and to come to an agreement on what data is put in, we need to coordinate people to begin with. Blockchains are regularly sold as ways to coordinate diverse groups of people, however this coordination is a people issue, not a technology issue. Once you can coordinate people, there is almost always a better technology to use than a blockchain."