The EU plans to launch an observatory and forum looking into blockchain and distributed ledger technology (DLT) in an attempt to understand the place for European public authorities to “encourage development and up-take of these technologies and to formulate related policy recommendations.”
Blockchain is the term used to refer to the technology that makes electronic currencies such as Bitcoin work. However, although blockchain is commonly associated with Bitcoin, it has many other applications. As Colin Thompson describes, “Blockchain is to Bitcoin what internet is to email”. The technology has a number of benefits, such as its elusiveness to hacking in comparison to a traditional database centrally administered by a bank or government. Blockchain is, in broad terms, a shared digital ledger (using DLT) that records information that can help facilitate the exchange of things such as assets. This has led to the emergence of crypto-currencies such as Bitcoin, which many believe has the potential to revolutionise the way business is conducted. It has particularly appealed to those fearful of monetary devaluation as the technology produces “blocks” which can only be mined once using complex mathematical algorithms, meaning a fixed amount is in circulation at any one time.
The European Parliament has mandated that the European Commission implements a Pilot project, to which the Commission will set up an EU Blockchain Observatory. Given the growing importance of blockchain technology, the EU is interested in its future. The Observatory would serve as a facility for “technical expertise and regulatory capacity” on blockchain-related issues. The estimated cost of the project is €500,000 over the span of 2 years.
You can read Colin Thompson's explanation of blockchain and Bitcoin here.