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Ep 68: Digital Sovereignty Beyond “Buy European”
58 Plays12 days ago
This episode starts with a simple argument: Europe cannot buy its way into digital sovereignty. Professor Roman Beck explains why the real issue is not nationality, but control, and why blockchain and decentralized systems belong in that conversation. From governance and key custody to resilience and execution, this is a policy discussion about what blockchain infrastructure can offer when institutions are thinking seriously about sovereignty.
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Transcript
Introduction to 'The Policy Layer' Podcast
00:00:06
Speaker
Welcome to the Policy Layer, where we talk about the real decisions shaping crypto, tech, and the future of trust. I am Silvia Sanchez, your host from the Avalanche Policy Coalition. We aim to bridge the gap between the builders of Web3 and the people that are shaping the rules.
00:00:24
Speaker
On our podcast, you'll hear from policymakers, developers, academics, and others working at the edge of tech and regulation. We ask the questions that everyone's actually wondering and we keep it easy to follow.
00:00:37
Speaker
This is the Policy Layer.
00:00:43
Speaker
All right. Hi, everybody, and welcome back to the Policy Layer. Today's
Europe's Digital Sovereignty Strategy
00:00:48
Speaker
episode is about digital sovereignty, but not in the slogan heavy way that we often hear this phrase. Today we have Professor Roman Beck, whose work sits at the intersection of blockchain governance, standards and digital infrastructure. He is Chester B. Slade Endowed Chair of Information Systems at Bentley University, where he directs the cryp the Crypto Ledger Lab.
00:01:12
Speaker
He also received an honorary doctorate for his trailblazing work on blockchain governance and was named AIS Fellow on 2025. As co-founder of the European Decentralization Institute, he engages in transatlantic policy networks connecting academia, industry and government. And we're using one of his recent arguments as a starting point that Europe cannot simply buy its way into digital sovereignty and that the real issue here is not nationality but control.
00:01:43
Speaker
So we're talking about infrastructure, procurement, governance and what sovereignty means when the economy is running on digital rails. So Roman, welcome to the policy layer. Thanks a lot and thank you for having me.
00:01:55
Speaker
Amazing. So I always like to start and explaining the the concept, just giving people a bit of context. So let's begin with the argument itself.
00:02:05
Speaker
When you say that Europe cannot procure its way to digital sovereignty, what do you mean by that? That's a great question. and Well, essentially, kind of the the more recent geopolitical developments have illustrated to people and companies all over the world that having control over your procurement is something that is quite essential. You know, rare earth metal, ah oil, you know, in the procurement sector for physical goods, that is something that is rather commonplace.
00:02:34
Speaker
however However, when it comes to the sourcing and control over digital resources, over your digital infrastructure, That understanding and the awareness for that is still a bit underdeveloped.
00:02:46
Speaker
ah When we talk about digital sovereignty, obviously in a nutshell, it means you are able to pull the plug before someone else is it is it doing for you. So in other words other words, control over your infrastructure, over your technology stack is not just buying or procuring it nationally ah for several or several reasons.
00:03:11
Speaker
ah First, if you are doing so, you know you may run the risk that you are creating just different dependencies. Now, not necessarily from international global players, but from national or in the case of the European perspective, from European players.
00:03:29
Speaker
So you are switching one dependency for another. And the second thing is, even if you would do that, let's say you're a US company and you're buying only US services, ah how is it safeguarding you that tomorrow or in a year that company is bought by a Chinese or ah any other kind of company in the world, which essentially is routing the control over those digital infrastructure layers,
00:03:59
Speaker
to a foreign authority. So sovereignty is increasingly something that is of concern, not just for Europeans, but also for US companies and and other companies and countries around the world, which requires a deeper discussion and a more nuanced discussion than just by nationally.
00:04:21
Speaker
That is sort of the essence the essence of of that statement you just referred to. Great, and and I think that immediately raises a distinction that I also think it's important to mention here because in your piece you make the point that nationality is not the same as control. um Because a company can be European on paper while the infrastructure underneath is still exposed somewhere else. So why is that distinction between nationality and control so central?
Nationality vs. Control in Digital Sovereignty
00:04:52
Speaker
Well, we have seen recently, I think that was in in the French parliament, that a cloud service provider was actually questioned about whether or not the data for national French identity ah data will be shared with other nationalities. And the the head of that cloud service provider in France was not able to completely exclude it from the possibility that national French identity data ah cannot be ah shared at any point in time with a foreign force.
00:05:29
Speaker
and That was a moment for France realizing that ah having good contracts, having ah regulation, ah being a sovereign nation is not good enough ah to safeguard the data from any kind of access of foreign companies or foreign forces, foreign countries.
00:05:52
Speaker
ah This is a great example for ah illustrating that increasingly the competitive ah competitiveness and the well-being of nations is not just, as I said in the beginning, based on ah access and control over physical traces, you know, having access to oil, having access to food and so on, but also control over your digital a supply chain.
00:06:19
Speaker
as we are seeing kind of cross domestic productivity in developed countries is predominantly generated in in the service sector. Like three quarter of cross domestic productivity comes from the service sector.
00:06:33
Speaker
while that service sector is dominated and very centralized by a few ah big tech companies around the world. Now typically that may not be a problem if we are all kind of on the same page so to speak but if that situation is changing and I think we are all witnessing right now that geopolitically there are several forces out there who are dissatisfied with the world order the post-Second World Order and trying to change that.
00:07:03
Speaker
And in that geopolitical change of of powers, ah focusing also on your digital sovereignty is gaining importance. And I also think that when we talk about digital sovereignty in practical terms, there are deeper layers of the infrastructure because it's all about also moving from the slogan and into the system. We have things like cloud, key custody, settlement rails, exit paths, auditability. So...
00:07:31
Speaker
Now that we have separated nationality from control, I think the question becomes, what are the actual layers of infrastructure that matter most? Well, I think those who are familiar, and most of the listeners most likely are familiar with the whole blockchain movement and ledger technologies, they know the slogan, not your keys, not your coins.
00:07:53
Speaker
um So for most people having a ah crypto wallet, it is clear that you know control over the keys to access the wallet is essential and nobody else can typically, in a permissionless public environment at least, access or ah control your wallet if it is a ah and a non-custodial want.
00:08:16
Speaker
That kind of notion, your not your keys, not your infrastructure, so to speak, to transfer it to all kinds of digital infrastructure is important. The term is often used governance by design.
00:08:29
Speaker
and Meaning, you know, governance first, not regulate after. So that essentially is that, keep keeping control over the keys, independent of which kind of infrastructure, ledger or not, we are talking about. And that is becoming more and more important.
00:08:47
Speaker
we are seeing movements around decentralized cloud computing, for example. I just mentioned you know that ah cloud computing is the backbone not just for companies but also countries.
00:08:59
Speaker
And companies and countries alike increasingly realize that if you are sourcing your services out of an international cloud service provider, other forces, ah third parties may have access to your data.
00:09:14
Speaker
That is a concern. ah If you can't encrypt it and you can't control it and if you can't 100% make secure that no one else but you, for your eyes only, the data is stored and is stored in in your jurisdiction if you wish, but for most technically it is secured so that nobody else can access that, then essentially everyone can access it.
00:09:39
Speaker
You know, something that is not 100% under your control is not under your control. At whichever, whatever layer we are talking about in in the tech stack, the moment there is a choke point, there's a single point of failure, there is a controller,
00:09:55
Speaker
who can actually define, who can have access to your data. It's not your data. But it goes beyond data sovereignty, sovereign decision making, which kind of data, which kind of information we are seeing, what kind of filter and filter bubble we are in, what kind of news we are receiving, which kind of news is shown to us.
00:10:16
Speaker
How we store our data I just mentioned, but also our ability to execute our
Global Geopolitical Tensions and Digital Control
00:10:22
Speaker
decisions. Can we actually enforce our contracts? Can we enforce our agreements, not just within a jurisdiction, but also cross-border, becomes specifically times distress?
00:10:37
Speaker
at times of distress at times of geopolitical conflict, at times of war, increasingly more important. And we are seeing that kind of conflict is flaring up everywhere in the world.
00:10:50
Speaker
We are seeing that the world is more in disagreement than it has been in the last 80 years, which again enforces the need and also illustrates the necessity to have a closer focus and look on our digital infrastructure maybe your personal infrastructure to keep your digital traces, your digital persona, ah your digital persona, so that no one else can actually kind of steal your identity or can impersonate as you.
00:11:22
Speaker
And that goes to the same for companies as well as for countries. And that's a really big point. And I also think like tying it back in, one light that really stood out to me from your piece is that the gap is not primarily technological, but it's institutional. You argue that Europe's real problem is insufficient federal capacity over strategic digital infrastructure.
EU's Institutional Response to Digital Infrastructure
00:11:43
Speaker
So what does that look like in practice? And we could just like elaborate on that a bit more. Well, I mean, we can talk about different approaches, but I think what has been quite ah influential and has created ah some shockwaves where a couple of speeches Mario Draghi gave in recent years, ah focusing on yeah a European Union, a federation of countries is almost by definition slow.
00:12:10
Speaker
You know, you have a couple of voices, you have a lot of kind of opinions, and typically that is considered as a strength, as heterogeneity and and and and debate of different perspectives is typically leading to better better outcome. But it's not fast.
00:12:26
Speaker
um However, kind of we are seeing that changes and shockwaves through systems, financial systems, supply chains, physical supply chains, ah the dependency on oil, but in our case, of course, the dependency on digital services, that those shockwaves are transferred and and transitioning faster and faster. So a system that is a federated system is almost by definition outgunned.
00:12:54
Speaker
um ah in comparison to more centralized and and more hierarchically organized ah systems, maybe countries or companies. So if Europe wants to keep its heterogeneity,
00:13:09
Speaker
ah plural ah political landscape if Europe wants to keep its and defend its values then a way needs to be found that can combine the the federated system with faster decision making And that is this kind of resilient or robust federation and I was kind of alluding to in that in that article you mentioned.
00:13:34
Speaker
And essentially that can be done through ledger technologies. You know, we can actually keep sovereign data control and decision making as much as possible at the lowest possible level.
00:13:49
Speaker
That is the idea of subsidiarity, that a municipality, a county, a country stays in control of whatever is actually best dealed with and best organized at that level.
00:14:02
Speaker
But in the case of a supra national entity and institution such as the European Union, you also have to make sure that between Portugal and Algeria and everywhere in between, decision making is done fast.
00:14:16
Speaker
ah Finding a solution, agreeing on a solution is done fast and can be executed in the same way same way wherever you are. The European Union or its member state to be more ah precise, started in 2017 EPSI, the European Blockchain Services Infrastructure, which is exactly that. It is executing cross-border um agreements, ah transactions.
00:14:44
Speaker
that are executed wherever you are in the same way and at the same speed. If you can utilize that and create more ah pa government to government but also kind of business to government applications and and and and processes on such a system, you can actually use decentralized rails, ledger technology, and combine it with institutional necessities, necessities we believe, or Europeans believe, ah of value,
00:15:19
Speaker
um privacy, and your right to decide for your own well-being, you know independence, all those things. and And you can combine them and become as a faster and more resilient system.
00:15:33
Speaker
However, that, of course, is a combination of organizational and technological well, yeah, amalgamation of technology and institutional logics, which also needs to be brought forward, which is something that moves fast in terms of processes and decision-making at the European Union level, ah relatively fast. The development of EPSI was done ah in ah in ah in ah ah in a pretty astonishing fast way. However, it is not fast enough in its rollout. you know I think kind of Europe is good on like and slides.
00:16:07
Speaker
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00:16:20
Speaker
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00:16:39
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Decentralized Infrastructure as a Resilience Strategy
00:16:57
Speaker
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00:16:58
Speaker
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00:17:39
Speaker
I just wanted to unpack a bit more and this this argument that decentralized infrastructure when applied correctly can be understood as a risk management strategy. So just like a um if you could dive a bit more into that.
00:17:54
Speaker
Well, obviously, decentralization, having multiple nodes in the network, follows the same logic as the DARPA net, the beginning of the Internet. If one node goes down, the rest of the system can continue to operate.
00:18:07
Speaker
ah it is It is distribution of operational execution power, but it's also distribution and resilience in terms of decision-making and governance power.
00:18:19
Speaker
So if there's enough nodes, so to speak, in a system that are operational, the whole system ah will continue to to be resilient and will be will be able to operate even if ah ah if some major nodes are taken out.
00:18:35
Speaker
ah The other way around, if you have a single point of failure, if you have a hub-and-spoke infrastructure, then of course it is it is clear to any um attacker or any anyone who wants to bring down the system, where where are the choke points? you know If there's a central system, if there's ah a server, and any kind of centralized infrastructure,
00:18:58
Speaker
then everyone knows exactly where to go and what kind of systems need to be brought down in order to cripple or completely destroy any kind of functioning system.
00:19:09
Speaker
But the resilience is not only coming from the distributedness and the, well, and potentially decentralized ah network, it also comes from randomness.
00:19:20
Speaker
um One of the learnings which might be a bit counterintuitive ah from ledger technology and from the consensus mechanisms is that and the moment you can't foresee who is entitled to ah validate the next transactions that going on to the next block that is going on to the ledger,
00:19:41
Speaker
ah you have no idea which attack point is in the system to intercept. So in other words, if you if you don't know kind of which country is going to bundle the next transactions to put them onto the network because ah the consensus mechanism is randomly selecting who is going next.
00:20:01
Speaker
From that randomness, in combination with the distributedness of a system, the resilience materializes. And that is a resilience that is hard to match and therefore not not achievable if you are deploying more centralized systems.
00:20:17
Speaker
And I think that also leads to an important question for for the ecosystem. And
Defining True Digital Sovereignty: Control and Dependency
00:20:24
Speaker
i think that there's a lot of language in circulation right now around sovereignty, resilience and strategic autonomy. But I'd like to know what do you think both policymakers and the Web3 industry, the ecosystem as a whole, still misunderstand about sovereignty in digital systems? You know, you can, you can this is a very good question, you know, kind of autarky, sovereignty, independence. um
00:20:50
Speaker
i From an academic point of view and often kind of we on the academic side, we we love to to go into definitions and go to details.
00:21:01
Speaker
When I'm talking in ah behind closed doors, when we are doing Chatham House rule and advisory and consulting, when you're talking to central banks, when you're talking to C-level managers of companies, there's no chance and there's no time to discuss definitions. I already gave you my pragmatic perspective on that, and that is, sovereignty is when you can decide when to pull the plug before someone else is doing that.
00:21:31
Speaker
That is the the type of sovereignty that is needed. If you think it's time to move on, if you think you have to change systems, if you are forced to have to change systems, you should not experience any lock-in effects or even worse, realizing that you are trapped in a infrastructure, in a service provider environment that doesn't allow you to move on.
00:21:54
Speaker
That is limiting your digital options. So when we talk about digital sovereignty, we are talking about the full extent of your digital options today and into the future.
00:22:04
Speaker
The open source community, the open software community, there was from the beginning focusing on that. But now it is clear that that is not simply a question of open source software.
00:22:16
Speaker
It is a question of also having the keys, if needed, to to move on. that's one of the reasons why and one of my work at the European Decentralization Institute is right now we are working on the total cost of dependency, which is going to be an indicator, a benchmark for companies in Web3, in DAOs, in Ledger, but also of course also in the traditional industry to calculate what is your total cost of dependency ah as as an indicator of your vulnerability.
00:22:51
Speaker
ah People often try to advocate and convince traditional companies about the advantages of decentralized economy solutions of tokenization of Web3.
00:23:04
Speaker
This is the ah opposite approach. I'm trying to kind of sensitize decision makers in the public sector as well as in the private sector to think about what is their total cost of dependency, meaning what are they paying, monetary and non-monetary, in terms of freedom to make decisions or kind of what is the cost if they have to move.
00:23:32
Speaker
And most companies do not really Think about that. I was speaking to a couple of C-level managers because I was curious ah in Scandinavia, in in in Central Europe, I was curious about how often CIOs in board meetings of ah publicly traded companies are discussing ah centralization costs.
00:23:58
Speaker
And ah nobody was discussing this. the The people I talked to said, this is actually not a topic we are talking about. That is a concern. You know, you can't say sovereignty is is ah the minimization of the total cost of dependency of your current system. If you have a low total cost of dependency,
00:24:19
Speaker
you have reversely a high digital sovereignty which gives you digital options to act. And the ability to act rather than being driven by the market, you know, and you have to react, the ability to act is increasingly um the key to success and to competitiveness.
00:24:38
Speaker
Yeah, and that's that's a huge point. And again, and i'm i think that just as we're like wrapping up, um I want to end on a more like tangible version of of what this could look like. Because again, I think we could continue talking about different approaches and a more serious a digital sovereignty strategy. But i just to conclude, I think like very briefly, if someone only remembers one thing from this episode, what would you like the takeaway to be? What would be like the the key thing to remember? Of course,
Decentralization: Essential for Digital Sovereignty
00:25:13
Speaker
we recorded more than 20 minutes. I hope that's people take away more than that. But just to close us off with ah with a strong statement, what would be that that takeaway? That's a very good question and a very tough one. i let me Let me try to find a good sentence. I think it's important that people remember and understand that decentralization is not an ideology as it is often coined, or that decentralization is not achievable.
00:25:41
Speaker
I would rather like to believe that people are increasingly thinking about decentralization as almost the only way to achieve digital sovereignty.
00:25:53
Speaker
So if you do not believe in value creation and capture and and and distribution in networks, you know if you're not really a Web3 or blockchain and then you may believe that actually staying in control of your digital infrastructure and your digital traces ah is is important, sovereignty, and that is only achievable through decentralization and being in control. So the one sentence hopefully people remember from this from this episode is, decentralization is not an ideology.
00:26:25
Speaker
Decentralization or decentralized technology is a sovereignty technology, and that should be embraced and considered more often. Amazing. Well, I think that's a really good way to to close us off. Once again, thank you so much, Roman, for joining us for this very insightful discussion. And I think that this conversation and also the work that you guys a are doing clarified something that often gets blurred in policy debates. And it's the fact that sovereignty in the digital economy is not a branding exercise. And it doesn't come from a passport label on a supplier list, but it comes from control over the infrastructure, the enforceable governance, and the ability to act when systems are under pressure. And that's a much harder standard, but probably a more serious one. So once again, thank you so much, Broman.
00:27:15
Speaker
Thank you for having me. Amazing. And that's it for our episode today at the Policy Layer. Remember to head over to avalanchepolicy.com for more educational resources, and we'll see you all next time.
00:27:29
Speaker
We hope you enjoyed this episode of the Policy Layer. If you want to learn more, check out avalanchepolicy.com for free educational resources. And also follow us on social media at avalanchepolicy to stay updated.