Incentive-based regulation - Blockchain opens up a new era of European integration

in blockchain •  2 months ago

"A la contrainte, je veux privilégier l'incitation"
Emmanuel Macron, French President

European dialectics

Advancing the European project often involves "harmonizing" 27 (or more) different ways to doing essentially the same thing.

Getting so many countries to adopt a common way of tackling issues which were previously seen as national has many advantages. Among these, it opens the possibility of creating effective tools which can then be used by everybody (rather than having every country invest in its own tool).

Yet at the same time it is a challenge, as national pride and vested interests often get in the way. For every given issue, one typically sees more than one country jockeying to have its own way of solving it be adopted as "the common European way", so that national politicians can claim success and national tool producers can start selling the same tool to all the other countries.
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The Council of the EU (where National Governments send their Ministers) is where decisions are being taken
Like in practically all human endeavors, centralized decision-making, uniformity, standardization are the most effective and efficient way to progress in political undertakings. As people in the "cryptoverse" are keenly aware, centralization and uniformity do have some major drawbacks nonetheless:

  • uniformisation stifles creativity, but moreover
  • centralization greatly increases the risk of abuse (by those who are the recipients of centralized power)

Corollary

Joint progress can only be achieved by maintaining a dynamic equilibrium between centralized, uniform, standardized decision making and a certain degree of dissent, diversity and nonconformism.

European Regulations

Policies are notoriously difficult to get right. Depending on the "national psyche", some policies work well in some countries but not in others, the clearest example being the general level of taxation (France and the Nordic countries can cope with a far higher level than most other countries).

When it comes to regulations though, the benefit of a uniform approach usually far outweighs the risks and most people agree with this. Yet that doesn't make the "European nut" any easier to crack.

Take mandatory reporting: it would be hard to argue in favor of enforcing 27 different reporting formats, the benefit of having one harmonized format is obvious. Hence one of the main work area of the European Commission is to harmonize reporting across the Continent.

Most of the time, the work doesn't start from scratch but instead from a situation where each country has its own reporting format, which the target economic actors fill in and submit to a "National Database". The result is a Europe of National Databases containing information about similar things in autonomous data structures, designed with no regard to what "the neighbors" were doing.
holygrail2.PNG

Why Blockchain can boost European regulatory harmonization

The typical modus operandi of the Commission when it tackles pan-European regulatory harmonization is summarized in the picture below: an "agency" is set up and asked with merging the 27 different reporting formats into a comprehensive one (while minding semantics) and, often, bringing the data "under one roof" in order to facilitate reuse and reduce administrative burden for the economic actors.

2andY1.PNG

Unfortunately, the result of this approach falls short of expectations more often than we would like. The reason for this is ... human nature. Always and everywhere, regulators are centers of power, and places where power accumulates attract actors wanting to leverage it for generating money.

While every country may theoretically agree that regulatory harmonization is desirable, the embarrassing truth is that, in each and every country, powerful interests spontaneously assemble around the regulatory processes and institutions and devise ways of harnessing those processes for commercial profit. The resulting attitude of the Member States is similar to that of Saint Augustine praying "Lord, make me chaste, but not yet!"

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source

How to get your children to eat their vegetables

In the end, what the Commission needs to have the Member States do is not unlike what parents are confronted with when rearing children. How do you get someone from your family to do something which is good for them and good for the whole family?

  • You can appeal to their own "family spirit" and a shared understanding of good and bad
  • You can try to mandate and threaten some kind of punishment in case they don't comply
  • You can entice them with something they like
  • Any combination of the above

vegetables.PNG

"Vegetables are good for you" - the cargo ship "Reporting Formalities Directive" example

The Reporting Formalities Directive (RFD) was issued in 2007 as a tool to establish a simplified reporting environment for ships – aimed at reducing administrative burden for shipping by coordinated and harmonized reporting.

The specific objectives of EU action back then (a Directive recommending a non-binding common format):

  • Harmonize reporting procedures, interfaces and data formats
  • Provide a single entry point
  • Facilitate data sharing/reuse for the application of the "reporting only once" principle

Ten years later, the 2017 REFIT evaluation concluded that "the RFD is inadequately effective and efficient".
Polled, 55% of shipping operators found that the "administrative burden has increased rather than decreased"!
"The inadequacy of voluntary harmonisation measures has been shown in the past. The existing non-binding guidelines [...] have not improved the situation"

RFD.PNG

A few selected quotes from the "Impact Analysis" document:
"Recipients of cargo or ship information are reluctant to share data since the legal framework – as regards aspects of data control, confidentiality, liability and access rights – is perceived as unclear."

"Operational National Single [Reporting] Windows are still under implementation in 8 of the 23 maritime MS. Where NSW are implemented, there are not always national procedures, national technical standards, or an actual single entry point for reporting.

Ultimately, Member States have not had sufficiently hard incentives to establish their National Single Windows in a harmonized way"

"No vegetables, no dessert!" - the European Electronic Access Point example

The "Transparency Directive" mandated data sharing among national authorities called "Officially Appointed Mechanisms" (OAMs) and the subsequent "Commission Delegated Regulation 2016/1437" went into much detail specifying how this should be implemented. This is European regulatory harmonization at its finest, "Thodore Roosevelt style" ("Speak softly and carry a big stick")

eeap.PNG
However, the envisaged implementation ran into robust opposition as it appeared to threaten the business models of the national OAMs. Click on the short video below to see the animation

Two years after the EEAP was supposed to be live, the implementation project has not even started ...

Enter the Blockchain: "If you eat your vegetables, you get double cake!"

The "Impact Analysis" of the Reporting Formalities Directive quoted above estimates (Annex 6) that the reporting burden costs shipping operators about 176 million euro per year. One can assume that truly reducing that burden has a monetary value for shipping companies and that they would be willing to share some of the gains from increased efficiency with the Port Authorities. There should be possible to devise a win-win mechanism, especially with the availability of an European agency acting as "trusted third party", .

Blockchain systems make implementing "economic mechanisms" (a.k.a. incentive-schemes) cheap, fast and secure. In the short animation below, we depict a simple one that could be implemented using the steem-based "EU blockchain" (the name of the ports used in the animation are just examples)

Note that the "EBE" coin is fully backed by euros and thus closer to the recently launched "JPM coin" of JP Morgan Chase than a "cryptocurrency". That doesn't make it any less useful for the problem at hand.

As for the EEAP problem, as you might know if you followed my blog, it led to the European Financial Transparency Gateway (EFTG) pilot, for which the following economic mechanism has been proposed

The OAMs represented in the animation are examples only. The blockchain used is a slightly-modified clone of steem dubbed "EU blockchain". It enabled the pilot project to be delivered in record time and on a very frugal budget.

Conclusion

It is the first time in history when implementing economic mechanisms that incentivize economic and political actors to do the right thing becomes practical. Incentive-based regulatory harmonization is a radically different approach to complement existing ones.

Yes, "incentive-based regulation" is theoretically possible even without blockchain. But "possible" does not, and until today never rhymed with "practical" nor "economical". Custom-designed and built IT systems tend to be costly, take years to implement and are often plagued by serious bugs, as was recently illustrated by the WiFi4EU policy for which the Commission preferred "the devil it knew" of classical IT rather than the "new ch(a)i(n)ld on the block".


If you know what witnesses are and agree that people commited to keeping this blockchain ticking play an important role ...

(by simply clicking on the picture - thanks to SteemConnect)

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This is one gem of a post and I can relate to a lot of it from my prior years at the European Space Agency. For more than a year I worked with a project on how satellite applications could better benefit countries in the Alps. After bringing relevant stakeholders together from different sectors, the most obvious point for improvement was shared data standards and IT compatibility that would allow joint innovation and sharing of key information. Especially for environmental protection, search and rescue efforts at the borders (the mountains do not recognize lines on a map).

However, you quickly notice how all countries want to stimulate growth in their own economies and build excellence in this cutting edge IT. So most would have their own funding programmes for national SMEs, resulting in numerous efforts to reinvent the same wheel, resulting in incompatible solutions that were not enabling collaboration and joint coordination.

Especially since Satellite Data, and Earth Observation images in particular, are now increasingly open and free for anyone to use, I see this as a key area where blockchain-based solutions are the way to go. With the data being open and free to anyone, and the problems it help solve being in everyones joint interest (detecting forest fires, avalanche-dangers, lost airplanes and ships etc), open-sourced solution that anyone can contribute to and benefit from would make the most sense economically in terms of cost versus benefit for all.

I actually started drafting a Steem-based solution for it, but now @steempress is taking all of my time so I'm postponing it to when I have more time :P

Again, great article!

This is such amazing reading @sorin.cristescu! It is incredibly promising to know that there is an advocate such as yourself who has discovered the possibilities of this technology. We are very interested to support you and make sure that projects you work on in this regard are well supported by the steem community. Amazing things ahead!

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Thanks Matt! We can do incredible things with this technology, but it won't be a walk in the park ... technology has kept advancing but "human nature" has stayed the same since Saint Augustine :-)

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Yes, we certainly need a step up in our wisdom to keep up with the tech

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Blockchain yes - but reinstalling natural cultures and nations ! We will NEVER allow anything you call "European Integration" thats GENOZIDE !

It's good to see blockchain evoluate in real field application rather than just trading and financial investment; but I have to say we need to be very careful to what political says (I think about Macron saying this) as the action are usually very different from their initial speech.
The second point is that centralisation and globalisation (of data, means, etc...) can be good when well done, but needs to be done with care, because we don't have all the same needs, culture, philosophy; and many people feel isolated because their very specific situation isn't part of the global strategy; made for the more numerous people. It can be effective, but it can create fractures in economic and social spheres.
(But it's just my thought :D )

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Political action is extremely complicated in democratic countries (unlike authoritarian ones). Politicians say what they would like to do, in an ideal world (if there were no vested interests to get in the way).

The resulting action is bound to fall short of expectations and disappoint. It doesn't necessarily mean that the politicians were lying (though they do so too, some of the time), it just means that there were forces which didn't advertise their opposition yet still tried to counter the advertised action.

Nice post Sorin. Has no idea you were an advocate

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Look who's here! My very first Steem idol! Welcome! Thank you, I'm honoured. My second or third post back in 2017 was titled "The future of steem follows @kyriacos" :-)
I think you unwittingly played a role in me becoming an advocate over time!

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Well, I am not very popular with the big boys because of the way I phrase things. So the future is not really following me. Harsh truths are hard to swallow.

Glad to see you are doing well.

Congratulations @sorin.cristescu!
Your post was mentioned in the Steem Hit Parade in the following category:

  • Pending payout - Ranked 1 with $ 296,36

Wonderful post, sharing the possibility of blockchain to incentivize positive behavior is something the world could embrace and radically transform society - for the better. Thank you for your work in making this happen.

Sorin chiar ma bucur, dar un lucru am invatat si sunt sigur pe el, cel mai puternic o sa supravietuiasca, Eu imi doresc ca aici pe steemit sa reusim sa creem un ecosistem similar google dar superior e singura solutie primul monopol descentralizat si controlat anonym de useri cu steem power :D un viitor stralucit !

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Mulțumesc Ovidiu! Și eu îmi doresc asta. O să vină și acel moment. Răbdare:-)

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Hi @sorin.cristescu!

Your post was upvoted by @steem-ua, new Steem dApp, using UserAuthority for algorithmic post curation!
Your UA account score is currently 6.061 which ranks you at #298 across all Steem accounts.
Your rank has not changed in the last three days.

In our last Algorithmic Curation Round, consisting of 187 contributions, your post is ranked at #18.

Evaluation of your UA score:
  • You've built up a nice network.
  • The readers appreciate your great work!
  • Good user engagement!

Feel free to join our @steem-ua Discord server

One day I will achieve your level of income.

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Such an amazing read! Thanks Sorin!

Good job
You are very talented.

You made a good post @sorin.cristescu!. this is very useful for every one, who want that his children take good health. I like your post & support your projects. Thank you very much for this post.

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www.dikeith.com.co

@steemium purchased a 75.76% vote from @promobot on this post.

*If you disagree with the reward or content of this post you can purchase a reversal of this vote by using our curation interface http://promovotes.com

Such a good reading

buen post ciertamente bien acertado

Blockchain is future

感谢分享

Seems credible... however is there any news of it coming down under -- we in Australia seem to miss out on a lot of opportunities. Every time I try to do something online or sign up with something or even us an App -- the developers have not even thought about Australia - Australian dollars or Australian data bases !! I know we are ON THE OTHER SIDE of the World and but we are NOT a backward country and we need more and more BIG businesses from Europe and USA and Canada and so on to give us a go!!

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Well you do have Atlassian which is a great tech unicorn founded by Aussies

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About 206.25$ has been spent to promote this content.

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?
how you calculate?

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As @transisto says, I used Steemium to manage the promotion campaign. Steemium told me how much is needed to get the post to Nb. 1 in Trending, I've sent it the funds and it took care of placing bids with the various bots. Kudos to @lightproject and @transisto, good work!

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Nice did Not know About this service

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Did you pay the money or your employer? #justcurious

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You must be kidding! :-) Although, coming to think of it, perhaps one day employers will pay some ancillary benefits in crypto. Some employers already offer meal vouchers (paper based); tomorrow, you can imagine getting your meal vouchers as crypto.

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It's @Steemium that sent all the bids.

Very interesting your article, certainly the world is changing and every time it becomes more important to be aware of the changes regarding theology, since every time it becomes more important in our environment

Thanks for using @edensgarden!

Thank you for this article, this has some very promising information that can help us in the future. :)

Thank you very much for sharing your experience.

This post has received a 100.0 % upvote from @boomerang.

good/you cros

you cros! like post

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Nice post ,and also thanks for the information Two-Time-Value-of-Money-Formulas-57a520e15f9b58974aa1f9f4.jpg

amazing article, i read complete such a amazing and sufficient info, i will pray you get more success.

It’s a great idea!

This is an amazing read.

Good idea. Thanks for this post.

Very good post, it's help to improve the new thought.

Yez

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Informative and impressive taught @sorin.cristescu. It enhanced my knowledge.

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Good idea

We are very interested to support you and make sure that project you work on in this regard are well supported by the steem community amazing this ahead!