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Is Blockchain Worth the Hype for Corporate Client Markets in 2020?

7 months ago by Andrea Amato

You've heard about Blockchain in the news before, but where does it stand in a global and Maltese context?

The Origins of Blockchain

Blockchain, the engine that runs Bitcoin, originated in 1991 and was then described as a “cryptographically secured chain of blocks” by Stuart Haber and W. Scott Stornetta.

Within the technological pipeline, the application of blockchain developed its potential into financial and interorganisational transactions. The second generation of blockchain excited markets with upgrades in cryptocurrency and Bitcoin.

Bitcoin was developed by Satoshi Nakamoto in 2009 and although it was not the first online currency to appear, it is Nakamoto’s design which dominates the technology today.

Bitcoin was introduced to the world in the now famous Bitcoin white paper; an academically constructed article proposing bitcoin as a novel system for electronic transactions. Nakamoto stated the necessity of Bitcoin as a medium of peer-to-peer transactions which “would allow online payments to be sent directly from one party to another without going through a financial institution”. The omission of a third-party ledger leaves many benefits for this technology, primarily autonomy and control between peers.

In theory, blockchain boasts several advantages. It utilises a carefully constructed database; transactions are recorded and cannot be later modified. This encourages reliability and transparency for the technology. In practice, corporate services had initially adopted this technology to prevent double spending with third parties. In this way, it is possible you've seen the technology be adapted for remote jobs, and in general jobs in Malta.

Blockchain’s quick responsiveness creates a competitive advantage to these sectors as an efficient means to carry out transactions across global networks. Such interest has peaked within IT and finance jobs in Malta. The production of high-quality contracts between corporate peers is a quick sell to align with today’s modern economy.

However, it is worth noting that this technology is not without limitations. Blockchain requires high energy consumption to run its engine and record transactions. It is also notoriously costly; with high initial capital costs and costs attributed to its energy consumption. Blockchain has been under threat from several cyberattacks, including those attempting to crack its encryption methodology.

From a practical perspective, the employment of blockchain has led corporate markets to reduce personnel. This is due to less need for human intervention in transactions. The preceding caveats are important to consider for organisations interested in adopting the technology for their own project requirements.

The future of blockchain remains under discussion. There is less disagreement over whether the technology works, rather conversations presently surround its long-term utility for the global economy.

Blockchain has successfully expanded its financial roots into other industries. For example, the life sciences utilise the technology to support sensitive data transactions. This expansion attests to the adaptability of blockchain across sectors, simultaneously reiterating the need for critical evaluation over the use of the technology as it develops. Such developments would be interesting to observe further in a Maltese context, including other sectors like HR and work from home jobs.

Albeit blockchain was originally developed to reduce human intervention, human collaboration is still required to support a growing platform.  

Blockchain Technology and Corporate Client Markets in 2020

Andrea Amato in conversation with Joshua Ellul

I virtually met Dr. Joshua Ellul, the chairman of the Malta Digital Innovation Authority (MDIA) and director at the Centre for Distributed Ledger Technologies (DLT), to discuss the relevance of blockchain technology in Malta. Focused around DLT, Joshua lectures a masters programme in blockchain at the University of Malta.

After discovering Bitcoin for the first time in an online forum, Joshua wasn’t initially too interested in the technology, “I never really looked too deep back then”, he stated, as the potential to decentralise more than decentralised monetary systems had not yet been proposed. This opinion was overturned when Joshua came across Ethereum (the second largest cryptocurrency platform after Bitcoin), “Bitcoin allowed for a decentralised digital cash or rather gold, Ethereum allowed for the decentralisation of software execution”. With this in mind, Joshua found promise in the technology and like other enthusiasts fancied the concept of a digital service that omitted third-party involvement.

With Bitcoin and other cryptocurrencies’ surge in popularity in 2017, Joshua offered his academic experience when Malta expressed its interest in becoming a leader in the technology. At the time, he was working on releasing his own initial coin offering (ICO), “I had everything just about implemented and ready-to-go”, Joshua expressed, “but never got around to launching due to being too busy with other activities”.

Nevertheless, Joshua looked towards blockchain’s potential, “it was great to see Malta taking a lead in this space—and I truly believe the laws passed had foresight”. Such encouragement led to the creation of the MDIA, which supports regulating frameworks for the technology.

It was great seeing to see Malta taking a lead in this space—and I truly believe the laws passed had foresight.

It would be ideal for Malta to attract similar industries that require limited space and only access to a computer—especially with COVID-19.

On discussing the advantages blockchain technology brings to the Maltese economy, Joshua acknowledged established sectors in Malta, namely in iGaming and finance jobs. His recommendations stem beyond these sectors, “it would be ideal for Malta to attract similar industries that require limited space and only access to a computer—especially with COVID-19”. This suggestion is in light of recent workplace trends; work from home and remote jobs. Joshua believes that blockchain should just be one of the various sectors to attract and that Malta should “widen the net and strive to create a software-tech ecosystem”.

Malta is still ahead in the trusted software regulatory game and should aim to build a sector and brand that consumers and investors can look to, and trust when it comes to software assurances.

Additionally, Joshua noted the disadvantages to operate some aspects of blockchain in Malta, largely due to the energy consumption some types of blockchains require. “Malta is not the ideal place to host such hardware given our sunny climate and cooling costs that would be required to keep the hardware running”, he stated. He then reiterates the need for a specialised workforce to implement the technology, as “underlying issues often require that professionals in the area understand peripheral disciplines”.

However, Joshua admits it is difficult to find specialised experts in the field, though this concern is later partially addressed: “It is for this reason, a multidisciplinary Masters in Blockchain and DLT was designed at the University of Malta”.

Through MDIA, Joshua believes certification of blockchain technology is often necessary to “provide assurances to their users, investors, and other stakeholders regarding their implementation”, especially for “high-risk or critical applications”.

He concluded the interview by noting the technology’s relevance in Malta today, “Malta is still ahead in the trusted software regulatory game and should aim to build a sector and brand that consumers and investors can look to, and trust when it comes to software assurances”. Nowadays, through education, knowledge, and collaboration, the technology can be implemented across industries and serve a multitude of purposes.

Our job is to maintain its credibility through constant innovation and a willingness to adapt.

This article is from the Castille Quarterly Newsletter | December 2020.