Immutability vs. Right to Erasure: GDPR Article 17 requires the ability to delete personal data, but blockchain records are permanent, making erasure impossible.
Transparency vs. Confidentiality: Public blockchains allow all participants to see transaction data, challenging privacy requirements.
Data Minimization: Blockchain requires data replication across nodes, which can conflict with principles of keeping data only where necessary.
Controller/Processor Definition: In decentralized networks, identifying a single "data controller" responsible for compliance is difficult.
Privacy-Enhancing Solutions
Off-Chain Storage: Personal data is stored off-chain, while only a cryptographic hash (a digital fingerprint) is stored on the blockchain, allowing the off-chain data to be deleted.
Encryption and Hashing: Personal data can be encrypted or hashed before being added, though if keys are compromised, the data may be exposed.
Private/Permissioned Blockchains: Limiting access to known, verified entities reduces exposure compared to public, anonymous chains.
Zero-Knowledge Proofs: Allowing verification of information (e.g., age, solvency) without revealing the underlying, identifiable data.
Regulatory Landscape
GDPR (Europe): Requires "privacy by design and by default" (Article 25), heavily impacting how blockchain developers must structure systems.
NDPA (Nigeria): Establishes strict guidelines on data processing, forcing a re-evaluation of how blockchain's decentralized nature handles personal data.
Guidance: Data protection authorities (such as the EDPB) emphasize that blockchain must comply with data protection principles.
For compliance, organizations should conduct a Data Protection Impact Assessment (DPIA) before adopting blockchain, ensuring that personal data is not unnecessarily stored on an immutable ledger.
