No, this isn’t an article about Italian cars!
In the financial sphere, the word ‘fiat’ is used for currencies that have no intrinsic value, but whose value is established by some administrative authority (government) or agreed by the parties of a transaction. Examples of fiat currencies are the dollar, the euro, the lira etc, which change hands as an abstract value of real products and services.
In 2009, a new coin started being talked about, Bitcoin, which is completely digital and not established by government or a central bank. Transactions take place between people considered peers and without intermediaries, verified cryptographically and written in a distributed public ledger on a large number of computers around the world. This register is typically referred to as a blockchain.
What is different, and special, about this new distributed public ledger system, over a traditional replicated database system, is that the latter’s integrity depents upon the administrators and computers forming the database being trusted, whereas with the former, transactional integrity is guaranteed by the system itself and the cryptography used, even if the administrators and computers are untrusted. It is clear why the traditional trusted intermediaries, such as banks, are no longer strictly necessary in such a system, except for exchanges to fiat currencies.
People or other legal entities can purchase Bitcoin by changing their fiat currencies in exchange organisations, such as Independent Reserve and Coinspot in Australia, who have accounts in a traditional bank apart from forming part of the Bitcoin system. After this, the Bitcoin can be exchanged again to other fiat currencies, or change hands as payment for other goods and services. There are reports of more than 100,000 businesses around the world accepting payments in this currency.
Since then a number of other digital cryptographic coins were issued, collectively referred to as altcoins, like Ethereum, Litecoin and many others, all with their specific distributed ledger. An interesting development of some is the smart contract feature, representing contracts consisting of value transactions represented a token that depends upon programmable logic, and records of this occurrence being distributed safely over the ledger, like the other digital currencies. I had written in The Voice No. 162 about one example, called POWR involving the trade of sustainable electricity, which works on the Ethereum distributed ledger.
Another consequence of the diversity of digital currencies or cryptographic tokens is that one can change one digital coin to another without using traditional fiat money. One can see why with the passage of time, and use of these digital currencies becomes more widespread in the economies of a country and the world, the importance of fiat currencies and their organisations declines.
Not only that, but when a distributed public ledger is used for other items of value that are not money, this disruption of traditional industries increases. Just one example is the use of blockchain in land registries.
Fears and dangers there are quite a few. A major one is the frenzied speculation that digital currencies can make you filthy rich, which has led to many people investing (and borrowing to do so) in currencies like Bitcoin because everyone was doing so, with stories of astronomical profits (which was true for a few months), and now many have been bitten when the story changed.
Another danger is a particular aspect of cryptographic coins and tokens, that of anonymity. Today, one can hold coins in a digital wallet, either online, on a smartphone or computer, or a small electronic device. However has access to this wallet has access to the coins held there. Therefore the owner is anonymous, and digital value can change hands anonymously. The potential for use of this mechanism for money laundering or other criminality is very clear.
Today there is little or no regulation of this industry, and so there is also the fear of the issue of a new currency or token for sale (Initial Coin Offering – ICO) that is in fact fraudulent, or used for criminal intentions.
Why does this interest exist in the land of our forefathers?
The Maltese government seems to want to be at the forefront of exploiting the new business opportunities for the Maltese economy, especially now that countries around the world are still studying this phenomenon and debating internally if, how and to what extent to intervene.
This is the second consultation, after that issued by the Malta Financial Services Authority (MFSA) earlier in the year.
It is clear that the government has spotted an opportunity for the country, and is taking steps, fast yet measured, to grab it. Up to now it has not declared what principle to adopt with respect to currency anonymity, an aspect incompatible with the fight against money laundering and criminality. I would imagine that such considerations and others will be made while laws and regulations are being drafted.
As a Maltese person, I cannot fail to rejoice in this positive and dynamic show by my birth country, at the forefront of an industry so exciting, technologically advanced, revolutionary and transformative, not only for the country but for the world.
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Le, dan mhux artiklu fuq karrozzi Taljani!
Fid-dinja finanzjarja, il-kelma ‘fiat’ tintuża għal munita li m’għandiex valur intrinsiku, imma li għandha valur stabbilit minn awtorità amministrattiva (gvern) jew maqbul bejn il-partijiet ta’ transazzjoni. Eżempji ta’ muniti fiat huma d-dollaru, l-ewro, il-lira u l-bqija, li jibdlu l-idejn bħala l-valur astratt ta’ prodotti u servizzi reali.
Fl-2009, bdejna nisimgħu fuq munita ġdida, il-Bitcoin, li hija kompletament diġitali, u ma kinetx imwaqqfa minn gvern jew bank ċentrali. Transazzjonijiet isiru bejn persuni li meqjusa fuq l-istess livell (peer-to-peer) u mingħajr intermedjarji, u jiġu vverifikati b’mod kriptografiku u miktuba f’reġistru pubbliku imxerred (distributed ledger) fuq numru kbir ta’ kompjuters madwar id-dinja. Dan ir-reġistru huwa ġeneralment imsejjaħ katina ta’ blokok (blockchain).
Li huwa differenti, u speċjali, bis-sistema ġdida ta’ reġistru pubbliku mxerred, fuq sistema tradizzjonali ta’ dejtabejż (database) irreplikata, huwa illi f’dan tal-aħħar l-integrità tat-transazzjonijiet tiddependi fuq l-amministraturi u l-kompjuters li juffurmaw id-dejtabejż ikunu fdati, mentri f’tal-ewwel l-integrita tat-transazzjonijiet hija ggarantita mis-sistema nnifisha u l-kriptografija li tintuża, anke jekk l-amministraturi u l-kompjuters ma jkunux fdati. Huwa ċar għalfejn intermedjarji tradizzjonali fdati, bħall-banek, mhumiex iktar strettament neċessarji f’sistema bħal din, ħlief għall-kambju ma’ muniti fiat.
Persuni jew entitajiet legali oħra jistgħu jixtru l-Bitcoin billi jibdlu l-muniti fiat tagħhom f’organizzazzjonijiet ta’ kambju, bħall-Independent Reserve u Coinspot fl-Awstralja, li jkollhom kont f’bank tradizzjonali apparti li jiffurmaw parti mis-sistema tal-Bitcoin. Wara dan, il-Bitcoin jista’ jerġa jinbidel f’munita fiat oħra, jew jibdel l-idejn bħala ħlas għal prodotti jew servizzi oħra. Hemm rapporti li iktar minn 100,000 negozjui madwar id-dinja jaċċettaw ħlas b’din il-munita.
Minn dakinhar ħarġu diversi muniti diġitali kriptografiċi oħra, kollettivament imsejħa altcoins, bħall-Ethereum, Litecoin u ħafna oħrajn, kollha b’reġistru imxerred speċifiku tagħhom. Żvilupp interessanti ta’ xi wħud minn dawn ir-reġistri kien il-faċilità ta’ kuntratti intelliġenti (smart contracts), fejn kuntratt jirrappreżenta transazzjoni ta’ valur irrappreżentat minn towkin li jiddependi fuq xi loġika li jista’ jiġi pprogrammat, u rikordju li dan ikun seħħ jiġi imxerred b’mod żgur fuq ir-reġistru, bħall-muniti diġitali l-oħra. Kont ktibt fuq The Voice numruNru 162 dwar eżempju wieħed, imsejjaħ POWR u li jinvolvi n-negozju ta’ enerġija elettrika sostenibbli, u li jaħdem fuq ir-reġistru imxerred tal-Ethereum.
ŻviluppKonsegwenza ieħor bid-diversità ta’ muniti diġitali jew towkins kriptografiċi huwa li wieħed jista’ jibdel munita diġitali waħda f’oħra mingħajr ma juża flus fiat tradizzjonali. Wieħed jista’ jara kemm iktar ma jgħaddi ż-żmien, u dawn il-muniti diġitali jibda jkollhom użu iktar mifrux fl-ekonomija ta’ pajjiż u tad-dinja, l-importanza tal-muniti fiat u l-organizzazzjonijiet tagħhom tonqos.
Mhux hekk biss, imma meta r-reġistru pubbliku mxerred jintuża għal affarijiet oħra ta’ valur li mhumiex flus, dan it-tħarbit fl-industrija tradizzjonali jikber. Eżempju wieħed biss huwa l-użu tal-katina ta’ blokok fir-reġistru tal-artijiet.
Biżgħat u perikli hemm diversi. Waħda ewlenija hija l-ispekulazzjoni sfrenata li l-muniti diġitali jistgħu jagħmluk sinjur kbir, li wassal lil ħafna nies jinvestu (u jisselfu biex jagħmlu dan) f’muniti bħall-Bitcoin għax kulħadd kien qed jagħmel hekk, bi stejjer ta’ profitti astroniomiċi (li kien veru għal diversi xhur), u ħafna issa bdew jingidmu meta l-istorja inbidlet.
Periklu ieħor huwa aspett partikulari tal-muniti u towkins kriptografiċi, dak tal-anonimat. Illum, wieħed jista’ jżomm il-munita tiegħu f’portafoll diġitali, kemm online, fuq il-mowbajl jew il-kompjuter tiegħek, jew fuq apparat żgħir elettroniku. Kull min għandu aċċess għal dan il-portafoll għandu aċċess għall-muniti miżmuma fuqu. Għalhekk is-sid huwa anonimu, u valur diġitali jista’ jibdel l-idejn b’mod anonimu. Il-potenzjal għall-użu ta’ dan il-mekkaniżmu għal affarijiet bħall-ħasil tal-flus jew kriminalità oħra huwa huwa ċar ħafna.
Illum hemm ftit li xejn ta’ regolamentar ta’ din l-industrija, u għalhekk hemm ukoll il-biża li toħroġ munita jew towkin għall-bejgħ (Initial Coin Offering - ICO) li fil-fatt tkun intenzjonata bħala frodi, jew tintuża għal skopijiet kriminali.
Għaliex dan l-interess f’pajjiż missirietna?
Il-gvern Malti jidher li jrid ikun minn ta’ quddiem biex jisfrutta l-opportunitajiet ta’ dan in-negozju l-ġdid għall-ekonomija Maltija, speċjalment issa meta l-pajjiżi ta’ madwar id-dinja għadhom jistudjaw dan il-fenomenu u jiddibattu internament jekk, u kif, u sakemm l-aħjar li jintervjenu.
Dan il-konsultazzjoni huwa t-tieni wieħed, wara dak maħruġ mill-Malta Financial Services Authority (MFSA) iktar kmieni din is-sena.
Jidher ċar li l-Gvern għaraf opportunità għall-pajjiż, u qed jimxi b’pass meqjus imma mgħaġġel biex jilħqu. S’issa ma qalx x’prinċipju se jaddotta b’rigward tal-anonimat tal-muniti, aspett li mhux kompatibbli mal-ġlieda kontra l-ħasil tal-flus u l-kriminalità. Nimmaġina li dawn il-kunsiderazzjonijiet u oħrajn joħorġu meta tkun qiegħda tiġi mfassla l-liġijiet u r-regolamenti fil-konkret.
Bħala Malti ma nistax ma nifraħx b’din ix-xiehda pożittiva u dinamika ta’ pajjiż twelidi, fuq quddiem nett f’din l-industrija tant eċċitanti, teknoloġikament avvanzata, rivoluzzjonarja u trasformattiva, mhux biss għall-pajjiż imma għad-dinja.
1https://www.ccn.com/bank-of-englands-rscoin-a-hybrid-digital-currency-to-improve-global-trade/, retrieved 11/4/2018
2Wall Street Occupies the Blockchain; IEEE Spectrum; October 2017; p36
3https://www.coindesk.com/chinas-ico-ban-a-full-translation-of-regulator-remarks/, retrieved 11/4/2018
4https://www.bloomberg.com/news/articles/2018-03-23/the-world-s-biggest-cryptocurrency-exchange-is-moving-to-malta, retrieved 11/4/2018
5https://meae.gov.mt/en/Public_Consultations/OPM/Documents/PS%20FSDEI%20-%20DLT%20Regulation%20Document%20OUTPUT.PDF, retrieved 11/4/2018
1https://www.ccn.com/bank-of-englands-rscoin-a-hybrid-digital-currency-to-improve-global-trade/, retrieved 11/4/2018
2Wall Street Occupies the Blockchain; IEEE Spectrum; October 2017; p36
3https://www.coindesk.com/chinas-ico-ban-a-full-translation-of-regulator-remarks/, retrieved 11/4/2018
4https://www.bloomberg.com/news/articles/2018-03-23/the-world-s-biggest-cryptocurrency-exchange-is-moving-to-malta, retrieved 11/4/2018
5https://meae.gov.mt/en/Public_Consultations/OPM/Documents/PS%20FSDEI%20-%20DLT%20Regulation%20Document%20OUTPUT.PDF, retrieved 11/4/2018
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