Bitmalta submits its short-term proposals for a blockchain island

Last week, Bitmalta has submitted a list of twenty short-term proposals to the Parliamentary Secretariat For Financial Services, Digital Economy & Innovation, ready for implementation while the holistic national blockchain framework is being set up. It is extremely important that certain quick measures are taken in light of the fast progress being registered by jurisdictions such as Estonia and Switzerland. These quickly-implementable solutions, termed as Bitwins, are of sufficient importance to place Malta in a more prominent position, while at the same time paving the way for the long-term national blockchain framework.

The full list of Bitwins is the following:

1.            Confirm that Initial Coin Offerings (ICOs) can be done through Maltese-registered companies. This is merely a confirmation of the current situation, since the law does not provide for ICOs and therefore they are allowed under the applicable laws. However, it is strongly suggested that a definition of ICOs is provided so as to classify which ICOs can take place.

2.            Clarify when they should be classified as securities and when they should not. In the former case, should a profit-sharing mechanism be involved, the Malta Financial Services Authority (MFSA) should consider allowing Private Investment Funds (PIFs) to be used in certain ICOs for the runners of such ICOs to give a share of the profits to the underlying token holders.

3.            Offer subsidies or tax incentives to organisations wishing to set up international blockchain conferences in Malta, as well as to foreign blockchain-oriented organisations wishing to relocate their operations to Malta. This may include widening the scope of the Finance and Gambling Professional tax schemes to blockchain coders and other blockchain-oriented professionals.

4.            Support the Malta Information Technology’s (MITA) Innovation Hub in all blockchain-related accelerator programs. This can lead to helping build successful business cases in Malta for effective international PR exercise.

5.            Urge financial and credit institutions to seek dialogue with blockchain-related companies wishing to open a local bank account so as to facilitate and quicken the process for such companies, subject to sufficient safeguards being provided.

6.            Issue monthly blockchain updates in the form of a newsletter to keep the momentum going.

7.            Send Maltese delegates to prominent international blockchain conferences, a full list of which can be provided by Bitmalta and updated from time to time.

8.            Hold a roundtable conference by the end of the year, the scope of which should be to allow regulatory and public authorities to communicate directly with private entities in the blockchain sector and solve any pending impasses.

9.            Set up independent think tanks, accelerators and incubators with international experts, functioning similarly to other projects such as the Smart Dubai Accelerator.

10.       Encourage anyone wishing to open up a Bitcoin ATM, subject to their full adherence to AML regulation and other applicable laws. For this purpose, a set of guidelines should be published and potential vetting considered as well.

11.       Run a government portal through which all those who have blockchain and cryptocurrency related queries can submit their questions. Moreover, this portal should also set out clearly the position of the government on blockchain technologies and cryptocurrencies on certain pressing issues such as current tax treatment, risks and benefits, and other high-level information.

12.       Meet with the CEOs of the major public blockchain platforms, such as Ethereum, Waves, Stratis, Neo, Lisk, and IOTA.

13.       The Malta Gaming Authority (MGA) should embrace distributed ledger technology and consider allowing remote casinos to be hosted on a blockchain.

14.       The MGA should accelerate the process through which it would allow operators to accept cryptocurrencies, a proposition which was already put forward in its recent white paper.

15.       Start consultation on the feasibility of associations, partnerships, trusts or companies to be formed or at least recorded on a blockchain.

16.       Start conversations with Switzerland, Singapore, Estonia and Isle of Man, amongst others, to explore potential cooperation with such jurisdictions and develop active relationships with the same so as to achieve an effective PR exercise.

17.       Issue clarification on whether funds can hold cryptocurrencies and whether fund asset managers can invest in cryptocurrencies.

18.       Offer free training courses for the broader public to educate them on high-level blockchain topics.

19.       Start internal government training about blockchain technologies, and ensure that key personnel in different departments are knowledgeable about the topic.

20.       Set up sub-departments within the Central Bank and the MFSA specifically focused on the topic of blockchain technologies so as to keep abreast of developments and take quick action when new opportunities arise, as well as to keep an open communication channel with the various industries.

We strongly believe that there has never been a better time for action especially in light of the negative news from the Chinese government. The objective of Bitmalta is extremely clear: it is the first non-profit association dedicated towards the advocacy of blockchain technologies and cryptocurrencies, as well as serving as a hub for private and public entities alike interested in this sector and facilitating dialogue. This is what we have successfully been doing and what we will continue doing in the foreseeable future. That is why we ask everyone and anyone who is interested in the sector to join us and pave the way for the capital of blockchain and distributed ledger technologies.

Meeting with the Parliamentary Secretariat For Financial Services, Digital Economy & Innovation

On Monday, the 28th of August, 2017, Bitmalta had a fruitful meeting with the Parliamentary Secretariat for Financial Services, Digital Economy & Innovation (‘PSFS’) at the Auberge De Castille in Valletta. The PSFS, headed by the Hon. Silvio Schembri, is responsible for the creation and steering of a national blockchain policy aiming to place Malta at the pinnacle of the blockchain industry, making it once again a pioneer of another technological breakthrough and therefore echoing the success achieved upon regulation of the remote gaming industry back in 2004.

Bitmalta welcomes the approach taken by the PSFS which is seeking to cooperate with the relevant stakeholders in this novel industry in order to usher in a framework regulating blockchain startups and cryptocurrencies. Indeed, it would be advisable to strengthen the initial message issued by the Prime Minister embracing blockchain technologies and cryptocurrencies by providing interim measures welcoming such businesses while the comprehensive framework is being structured.

One can definitely say, with optimism, that the Government of Malta is set on transforming Malta into a blockchain island, and that Bitmalta offers its full support to this initiative. Bitmalta also hopes to see full cooperation between the regulatory authorities in line with the vision of the Government of Malta, as cooperation is fundamental at this moment in time. Overall, the PSFS is looking at injecting speed into the process mentioned above, while at the same time retaining the important balance between caution and haste so as to safeguard Malta’s reputation as the jurisdiction of choice for financial services and remote gaming businesses.

Official warning from Bitmalta regarding DAScoin

It has come to our attention that an offshoot of OneCoin[1], one of the most notorious Ponzi schemes in cryptocurrencies over the past year, has emerged onto the market and news about it is circulating at a rapid pace. Known as DAScoin[2], it claims to be utilizing a novel blockchain technology which touts itself as “the most secure” yet. However, as to date, no actual product has been released despite it being promised since March of this year.

 The DAScoin project is being led by NetLeaders (previously known as Coin Leaders), and the Chairman of NetLeaders is John Pretto[3], one of the most active promoters of the OneCoin Ponzi scheme.  Additionally, the CEO of DAScoin is Michael Mathias, a well-known OneCoin affiliate although it is unknown whether he is still involved in OneCoin or not. Therefore, two infamous OneCoin backers are behind the DAScoin setup, which should already serve as enough red flags to send a bull into full frenzy.

However, the alarm bells keep on ringing, as the project was promised for release in March this year[4], but to date, nothing “tangible” has emerged and everything is built on a pipe dream. Moreover, the promised product is built on a private blockchain, and for something which is being touted and advertised as “the Bitcoin killer” and “the most secure cryptocurrency”, it is ridiculous to have something of that magnitude built on a private blockchain, unlike Bitcoin, which utilizes a fully transparent public blockchain.

The aggressive marketing style is attributed to a Multi-Level Marketing (MLM) hybrid pyramid scheme[5]; although MLM in itself is not necessarily illicit, it is often used for fraudulent purposes, as happens to be the case in DAScoin. NetLeaders/Coin Leaders has laid out a seemingly-attractive investment scheme whereby the more one invests into DAScoin, the more one receives corresponding tokens, in a non-linear manner (another red flag). Original investors get a hefty bonus once a certain amount of referrals are accumulated in order to encourage other people to join in the scheme. What makes this project stand out as a scam is that the value of DAScoin is centrally assigned by the people behind DAScoin themselves, which means that the value of DAScoin is “pegged to nothing more than the rate of investment from NetLeaders affiliates”[6].

Several other deplorable schemes[7] have emerged over the past few months and unwitting investors have lost significant amounts of money thanks to such rogues who taint the benefit of blockchain technologies and applications built upon them such as legitimate cryptocurrencies. We urge the general public to exercise caution and to heavily research projects in which they would like to invest, and that the old adage stands true: if it’s too good to be true, it probably is.

 

[1] http://behindmlm.com/mlm-reviews/onecoin-review-100-5000-eur-ponzi-point-cryptocurrency/

[2] Official DasCoin website <https://dascoin.com/>

[3] http://behindmlm.com/mlm-reviews/coin-leaders-review-dascoin-is-a-onecoin-ponzi-points-clone/

[4] https://www.facebook.com/DasCoins/videos/1761353720548868/

[5] https://www.thebalance.com/is-it-multilevel-marketing-or-a-pyramid-scheme-2947159

[6] https://bitcointalk.org/index.php?topic=1636850.0

[7] OneCoin, SwissCoin, PlatinCoin, LeoCoin, CapriCoin, etc

Bitcoin's obituary as a currency

The number 13 is normally associated with bad luck, but it’s certainly not the case for Bitcoin as it has reached the fantastic milestone of crossing over $4,000 in price for a single BTC on the 13th of August, 2017. That’s no mean feat for a cryptocurrency which has taken the world by storm and has gotten everyone talking about it, sparking off one of the greatest paradigm shifts in technology of the 21st century through the introduction of the distributed ledger technology known as the blockchain. However, the road to this milestone was a very bumpy one indeed, and one bump too many has caused me to write this article.

I don’t want this article to be one focused on the basics of Bitcoin, but a bit of history won’t go amiss. In 2008, Satoshi Nakamoto issued a white paper titled “Bitcoin: A Peer-to-Peer Electronic Cash System”. He (or she, or they) dubbed this as the new electronic payment system based on cryptographic proof. I have highlighted these words in order to counter the argument of those who say that Bitcoin was not created to serve as a currency. Bullshit. The intent of Satoshi was very clear indeed – that Bitcoin would one day replace the system of fiat currencies and be the one currency to rule them all.

However, I strongly believe that Satoshi’s vision of Bitcoin did not near completion for unknown reasons. It might be the case that other DLT systems were close to being released, prompting Satoshi to grab the first-mover advantage. Or, it could also be that the 2008 economic crisis was seen as the perfect opportunity to publish a revolutionary white paper in the wake of the negative public sentiment on the traditional systems. Whatever it was, Satoshi gave birth to a wonderfully flawed child, and left it up to the people to bring up this child in the best way possible.

If two parents squabble over the upbringing of their child, what is to be expected when that same child has thousands of parents? That is precisely what we’ve seen happening over the past years when it was obvious that Bitcoin was in dire need of an upgrade due to its lack of scalability and severe transaction malleability problem. What should have been a quick and easy decision turned out to be a years-long dragged out petty argument, with the parents acting much more childishly than one would have ever expected. Even to non-technical people such as myself, the solution was obvious – Segwit was the first natural step towards upgrading Bitcoin, and it was rejected because a sizable portion of the miners wanted to safeguard their investment in the mining hardware. While that was understandable, it is certainly not justifiable, and the miners should have never been afforded that much power. They are the guardians of Bitcoin’s blockchain, not the owners. The owners are all those who own some Bitcoin, no matter how small a fraction that might be. And the owners just saw their control being wrestled away from them.

And so we ended up with the only possible compromise – implementing Segwit along with a block size increase to keep the miners happy and further centralize their power. The miners threw a tantrum, the miners got what they wanted. This will continue each and every time there is a contentious issue… because there will be another contentious issue, you can rest assured on that. Whether it’s another security problem or an inevitable moment when the Bitcoin network hits its peak capacity once again, there will be another situation where lack of an internal governance system will prove to be a very serious problem indeed.

I have touched upon certain issues in the chunk of text above, but allow me to go straight for the jugular and highlight the issues which I believe will impede Bitcoin from achieving mainstream currency status:

1.      Proof of Work is outdated

Proof of Work, Bitcoin’s consensus mechanism for the miners, is arguably the most secure solution out there. However, it is also the most inefficient, and apart from having the tree-huggers crying murder, it is one of the main impediments allowing for next-gen scalability for the Bitcoin network. Other solutions such as Proof of Stake are viable alternatives which, although having a lesser degree of security, are being developed to be as nearly secure as Proof-of-Work as to make little to no difference, and Proof of Stake allows for a vastly greater throughput of transactions per second than Bitcoin can ever hope to achieve through Proof of Work. Proof of Burn is one such solution which amalgamates the best of both worlds from Proof of Work and Proof of Stake, although it has not yet gained anywhere near the popularity of PoW and PoS.

2.      Bitcoin lacks an internal governance system (and so does Ethereum)

In order to effect any change on Bitcoin and Ethereum, miners have to go through a laborious process of upgrading their software to signal their consensus on a proposed change. That leads to a momentary disconnection from the network, however minute, as well as increased costs of upgrading and the threat of a hard fork. Other projects such as Tezos and BOScoin have set out to eliminate this problem by integrating a voting system in their blockchain, where network participants can simply vote with the a click or touch of a button and the will of the majority wins, with the minority having to succumb to the will of the majority. Sounds familiar?

3.      Bitcoin’s blockchain is outdated

This is closely related to the first highlighted issue of consensus, but not just that. The ten-minute average block confirmation window has worked relatively well so far, but what will happen when a hundred thousand transactions per second need to be verified? EOS’ graphene blockchain solution can theoretically handle such a load; Vitalik Buterin’s sharding proposition is also a viable answer for this problem. Segwit and a block size increase can only get you so far; it’s like trying to upgrade the metaphorical horse when others are developing their own car. Good luck trying to get Bitcoin’s miners to agree on any similar solution.

4.      The barrier to entry for Bitcoin is still too high

And I am not referring to Bitcoin’s price – rather, I am referring to the fact that Bitcoin is still pretty hard to get hold of, understand, and store for your average person on the street. A lot of questions are still commonplace nine years after Bitcoin’s conception: what exchange should I use, which wallet should I download, how do I store Bitcoin securely, etc. Even if the mythical Exchange Traded Fund gets approved in the U.S. someday, it still won’t open the floodgates for mainstream adoption. The public needs an easy one-touch system which allows them to quickly and effortlessly convert their fiat currencies into Bitcoin or any other currency of their choice. Sure, applications such as Coinjar can do that for you, but they still require setting up and moreover they are not native blockchain solutions. Projects such as Waves with its underlying decentralized exchange and Bancor with its smart tokens protocol are steps in the right direction towards achieving an integrated conversion solution that is as close to seamless as possible, making cryptocurrencies a truly global system with no borders in place.

All this does not spell Bitcoin’s death; far from it. Bitcoin is still king and will continue being so for a long while due to its first mover advantage and the fact that it is the reserve currency for almost all other cryptocurrencies. It will continue leading the way and setting an example of what can be achieved through blockchain technology. I strongly believe that a price of $4,000 per BTC is still just a scratch on the surface, and a price of $10,000 per BTC is certainly realistic. Heck, that would just be the start if Bitcoin gets its act together and goes through an unlikely transformation allowing it to become a true mainstream currency. However, at this point in time, I am of the firm opinion that Bitcoin is not the cryptocurrency, and that it will best serve its purpose as a store of value, a form of digital gold, which is not anything remotely bad either and will allow it to reach new heights.

That means that the race for the “next Bitcoin” is still open, and the market is flooded with contestants, with only a few truly standing out. Hey, it might also be that the winner is an idea which is still lurking in the depths of your mind, so never be afraid of speaking out and developing it, because you might just be the key to the new world’s largest currency!

 

Article written by Jonathan Galea. The personal views of Jonathan Galea do not necessarily reflect that of Bitmalta.

Official statement from Bitmalta regarding the MFSA's warning on virtual currencies

In reply to the Malta Financial Services Authority's (MFSA) warning issued today, the 31st of July, 2017, Bitmalta would like to point out that such a warning would have been justified five years ago in view of the yet-uncertain nature and effect of cryptocurrencies, but not in this day and age when jurisdictions worldwide are readying themselves for acceptance of cryptocurrencies rather than shying away from this technological revolution. 

We are extremely disappointed, to say the least, that whereas Malta's Prime Minister Dr. Joseph Muscat and Hon. Silvio Schembri, the  Parliamentary Secretary for Financial Services, Digital Economy and Innovation, are actively advocating the adoption of blockchain technologies and cryptocurrencies in Malta, the MFSA are unfortunately still quoting long-since settled risks pertinent to cryptocurrencies and adopting an approach which may be defined as being too cautious. The blockchain technology is firmly rooting itself as "the next big thing", a disruption which will echo that of the Internet back in the late 90s, and cryptocurrencies are but one single application of such a technology, albeit an important one as they show what can be achieved through the use of blockchain technologies. It is therefore of utmost importance to create incubators for such thriving projects to grow unmolested and study them closely, and  unfortunately the approach adopted by the MFSA is anything but proactive. Cryptocurrencies are here to stay, whether you ban them or not, so it is advisable, even obvious, that measures should be taken to educate the public about them rather than scaremonger. 

The risks cited by the MFSA have been sufficiently covered over the past few years as follows:

Money may be lost on the exchange platform

It is a well-known practice among cryptocurrency holders that funds are best stored on a local PC rather than on an exchange. One of the primary breakthroughs brought about by cryptocurrencies is that they remove the need for any middlemen in transactions, and exchanges should only serve as a temporary means of storage for active trades. Money may also be lost on any other website on which you store e-money too, so that point is moot.

Money may be stolen from your digital wallet

Facebook accounts can also be hacked, and your very identity may be stolen, and anything else connected to the Internet is prone to external attacks. Your data is only as secure as you want it to be, and cryptocurrencies are simply another form of data which is stored onto your computer. If you store your cryptocurrencies on a PC with no security measures in place and no password, for example, then you will be subject to third party attacks. This is another key area in which education would be a godsend, not just for cryptocurrencies but for cyber-security in general. Besides, safe storage solutions such as hardware wallets greatly minimise the risk of any external attacks, as well as multi-signature wallets and additional authentication measures such as Two-Factor Authentication (2FA).

You are not protected when using virtual currencies as a means of payment

Unfortunately neither are you protected when making payment in cash. It all depends on the parties involved in the transaction and the payment channels used. If one were to buy an item using cryptocurrencies from a reputable website with integrated consumer protection, then the applicable risk is the same as if you were to use any other means of payment. If you buy an item from an unknown third party off the dark web, then chances are that whatever means of payment you use, the risks are significantly higher. One should remember that mechanisms such as chargebacks are hotly contested by merchants as a prime avenue for fraud, so there are two sides to the cited argument in the warning.

The value of virtual currency can change quickly, and can even drop to zero

While this statement is partially true, it is likewise possible that the value of the Euro for example due to hyperinflation and unsustainable bailouts. The value of cryptocurrencies is mostly determined through demand and supply, with some cryptocurrencies pegging their value to that of other currencies or commodities, such as Tether which pegs its value to that of the U.S. Dollar (USD). Well-established cryptocurrencies such as Bitcoin have been experienced less volatility as their adoption rate increases, and therefore it is evident that both are correlated and it is simply a matter of time before the issue of volatility diminishes.

Transactions in virtual currencies may be used for criminal activities

The same applies to an even greater extent to transactions in fiat currencies. Suffice it to say that cryptocurrencies rank very low indeed when it comes to use by terrorists. Most cryptocurrencies utilise a public ledger system through which transactions can be tracked, making them a poor choice for money launderers as each and every transaction can be traced once the addresses of the senders/receivers become known. If anything, blockchain technologies allow for a paradigm shift in AML measures as they allow for a much more transparent system than the traditional ones which, safe to say, have been a failure acknowledged by many.

We hope that regulatory authorities such as the MFSA recognise the value and benefits of blockchain technologies as a whole, and that a proactive approach initiated through education is taken so as to enable Malta to become a blockchain hub in practice and not just through words. Bitmalta is readily available for any support in this area, and we would be more than happy to meet with the MFSA in order to address any of their questions and concerns on the subject and furthermore to understand why the MFSA sees a need to (re-)issue such a statement at this particular point in time and how this approach will fit in with the national Blockchain strategy that the Government is working upon. We welcome all cooperation on the matter and advise for a unified approach on the topic.

A new era for ICOs

It's safe to say that 2017 has been the year for Initial Coin Offerings (ICOs). For the uninitiated (excuse the pun), an ICO works similarly to an IPO, except that instead of shares, crypto-tokens are issued to the investors. That difference has brought about a whole wave of funding which was previously unattainable for small entities, with hundreds of millions in U.S. dollars being invested in ICOs over the past few months.

Suffice it to say that the largest ICOs this year (Tezos, Bancor, and Status) collected a cool half a billion U.S. dollars in funding between them. In other words, 500 million USD. Whichever way you put it, that's a heck of a lot of money, and concerns have been put forward on whether any start-up needs that kind of money to build a blockchain product. Most of the ICOs are bought into for pure speculation, with the token price normally rocketing after listing on an exchange, and a dip in the price happening soon afterwards, sometimes even going below the ICO price. And speculative value is indeed the main driving factor behind the price, as most of these ICOs do not even have a beta product ready by the time of the ICO, let alone a viable public one ready for launch at the end of such ICO.

All that however may be set to change after the latest downtrend in the total market cap of cryptocurrencies, which fell by almost 50% from its previous all-time-high a few weeks ago. The next bullish wave might be in the offing (in my opinion a sizable one is due by the end of September), but investors who entered at the peak should be a bit more wary this time round. That, coupled with the fact that the Status ICO has shown us that blockchain technology is still in its infancy when we witnessed the Ethereum blockchain being brought to its knees with the overload of transactions, will make for an interesting new environment for any upcoming ICOs.

Let us also not forget that 2018 will be the year where most of this year's ICOs will have to abide by their word and deliver a working product as promised in their roadmaps. Will they all do so? Of course not. We live in an analogue world no matter how much we try to digitalise it, and problems will arise which will shift the goalposts and postpone milestones, not to mention that some ICOs will most likely fail to deliver a product at all. It will be interesting to see what sort of legal recourse the investors will have should that happen.

Speaking of laws, the U.S. and China have already made it clear that they intend to regulate ICOs. The Securities and Exchange Commission (SEC) has already expressed its disapproval of ICOs in the past, and the People's Bank of China (PBOC) wants to bring ICOs under its thumb. Indeed, ICOs as of late have been excluding U.S. citizens from participation due to the contrary position taken by the SEC, and it's only a matter of time until other jurisdictions start enacting regulation on the matter. 

All this makes for an exciting mix that will see ICOs taking a different path than to what was trodden on up until now. ICOs are here to stay, but there will be a lot more focus on the value attributed to the crypto-tokens being issued in exchange for the investors' funds; such crypto-tokens would need to have an inherent use for the underlying platform being funded through the ICO. Any ICO which is simply racking up funds in exchange for tokens which are not inherently useful for the platform (in other words, any other cryptocurrency can be used for the platform being proposed) will have a harder time than before to attract investors. Moreover, at the very least investors will want a working product, even if still in its testing phase, to convince them to part with their hard-earned money. Lastly, the teams behind ICOs will be scrutinised in greater detail, and one can certainly trust the crypto-community in spotting and weeding out any bad actors in such teams. 

To conclude, ICOs bring about an interesting mix of crowdfunding and venture capital, at times surpassing both in the funds collected while making participation even easier as long as you have the corresponding cryptocurrencies to invest. However, I am definitely eager to see whether I'll have to eat my words should all ICOs deliver on what they're promising, or whether it will be a case of bolting shut the barn door after one or more ICOs do a Houdini (Horseini?) with the investors' funds. I believe that for each legitimate ICO there will be one other which is the mirror opposite, but after all that holds true for any other venture in other markets.

Disclaimer - this is my own personal opinion and does not reflect that of any other person, whether natural or legal. I act as an advisor to select ICOs in my own personal capacity. Please feel free to contact me on admin@bitmalta.com should you wish to discuss this article further - Jonathan Galea

Official statement from Bitmalta regarding the MGA’s white paper to future proof Malta’s Gaming Legal Framework

The Malta Gaming Authority’s (MGA) white paper on the future of the iGaming regulatory framework featured a short but promising piece about the acceptance of cryptocurrencies, recognising them as “fast and cost-effective alternatives to traditional payment mechanisms” while promising the allowance of usage by MGA licensees of such cryptocurrencies.

Bitmalta welcomes this position taken by the MGA which is in line with what the Prime Minister has been stating over the past few weeks when expressing his wishes that Malta becomes one of the leading jurisdictions championing the blockchain technology and cryptocurrencies. Since Malta prides itself as being one of the main hubs for remote gaming, it is only logical that it should support suppliers and operators alike in adopting one of the most promising technological advances of the last decade.

However, this is just but one small step which has been taken in progressing towards full adoption of the blockchain technology and cryptocurrencies, and possibly a late one at that. Other jurisdictions such as the United Kingdom have already legislated in favour of the use of cryptocurrencies by remote gaming operators, and unless Malta wants to play second fiddle to such other jurisdictions, it should ramp up its efforts to embrace such technologies by speeding up the process and employing the services of experts readily available in the Maltese islands who would be more than glad to aid Malta in repeating its resounding success achieved in 2004 when it was the first jurisdiction in Europe to successfully regulate remote gaming. The opportunity is ripe for such another historic advance, which would even dwarf what was achieved in 2004.

Bitmalta offers its full support to the MGA in this decision and believes that while one should never legislate in haste, the excuse that one should preferably err on the side of caution when considering cryptocurrencies has long since expired, and Malta as a jurisdiction should either ride the wave or be buried under it.

Storage wars - Sia vs. Storj vs. Maidsafe

Storage services on top of a blockchain have piqued the interest of quite a few developers and investors alike, with the three most popular solutions being Storj, Sia and Maidsafe. Although all three promise a similar product, the means in some instances is quite different to the end and what follows is a short analysis of all three with their strengths and weaknesses.

Sia

Having the largest market cap of all three, Sia took the cryptomarket by storm this year, growing from a price of 24 satoshis and peaking to 844 satoshis, settling down to 435 satoshis at the time of writing. Their solution promises to be fast, ridiculously cheap and secure; uploaded user data is fragmented and distributed among the network, with replication of your data fragments introduced for good measure to protect against any nodes who happen to be offline when you request your data to be “re-assembled” and accessed by you.

Sia utilizes its own native crypto by the name of Siacoin, which is required to buy storage on the Sia network, and likewise the hosts/contributors are rewarded in Siacoin. Hosts set up their own prices, making it a free-for-all market with the best hosts being those who can offer maximum reliability (online availability) for the cheapest prices. The only caveat is that you need to lock up funds in order to buy storage, with any non-utilised funds being returned after 3 months. I can’t say I’m much in favour of this solution; users should be free to have a top-up-as-you-go facility, even in micropayments if need be. That is the beauty of crypto after all.

The fact that they’re going to introduce proof-of-burn for hosts (I’m a big fan of PoB) is a big plus in my book, and having their own blockchain is another one. The UX can do with some streamlining, and their latest development, Obelisk, has been met with criticism rather than praise; ASICs do strengthen the mining “loyalty” of a network but it also concentrates mining power into the hands of fewer people. Still, Siacoin is proving to be a strong project and one of the contenders for best-performing crypto in 2017.

Storj

With the smallest market cap of all three, Storj has been a long-undervalued project in my opinion. It is more enterprise-based than Sia, and has a fixed-pricing pay-as-you-go model which I personally see as being better. Their UX is simple and intuitive and hosting (“farming” in Storj’s instance) is as easy as 1-2-3. Storj also utilizes file-sharding/fragmentation to store data and protect it with end-to-end encryption, but the network leans more towards decentralization rather than distribution as in Sia’s case; Storj utilizes bridges which act as trusted third parties and basically take care of finding farmers to hold your data, essentially acting as middlemen. Yes, one of the strengths of crypto is to eliminate middlemen, but it does allow a much faster and easier solution than Sia’s (albeit less secure than Sia’s).

One of the main bones I have to pick with Storj is their less-than-smooth transition from SJCX, their Counterparty-based token, to STORJ, their Ethereum-based token. The move to the Ethereum blockchain was well conceived but ill-executed, with SJCX tokens still being more valuable than the STORJ ones. I would say that the problems in the transition were mainly two: the STORJ tokens ICO which took place before the transition from SJCX to STORJ, and the pricing of STORJ tokens being a lower one than SJCX’s price at the time, leading to an instant dip of SJCX’s price which caused investors some anguish. If the transition picks up pace a bit and SJCX is weeded out soon, I strongly believe that Storj will pick up the pace again.

Maidsafe

I’ll be straight – I have a bit of a love-hate relationship with this one since it’s taking longer than the Pyramids to build. Good things take a long time to be ready, but this one might just be taking the cake. Still, it’s my favourite project out of all three and it is by far the most ambitious one of them all as well. Maidsafe doesn’t just promise a decentralized storage solution; its aim is to create a new backbone on which data can be stored, accessed, and exchanged. In short, Maidsafe is a new network made up of all the participants who contribute their computing capacity in P2P fashion. dApps (Decentralised Applications) can be built on Maidsafe, with one of the most prominent ones so far being Project Decorum, a social media platform built on the SAFE network.

It is quickly cycling through its alpha testing stages and beta stage is being targeted by the end of 2017. Each testing stage is being meticulously studied, with the latest one having taken place this week (which predominantly focused on the front-end of things; hopefully, that means the back-end is getting somewhere at last!). On the negative side of things, the immensity of Maidsafe’s project is hard to understand even by tech-savvy people, and it is often dismissed as another storage-focused project which is taking too long to deliver on its promises, having spent more time in development than Bitcoin itself. Connecting normal browers to the SAFE network is not a process which beginners can easily follow; however, I have tried out their SAFE Launcher which connects the user to the SAFE network, and the UI is simple and performs well; it then becomes a question of adoption i.e. whether users would actually switch to a custom browser to access the SAFE network.

Maidsafe should be releasing Safecoins as the currency of choice for the platform sometime in the near future, with the existing MAID tokens being exchangeable for the Safecoins. Hopefully their transition from Maidsafe tokens to Safecoin will be a lot smoother than Storj’s.

Conclusion

In reality, comparing Maidsafe to Storj and Sia is not the fairest of comparisons, as Maidsafe’s objective is not storage but creating a new, more secure Internet. Although it is my pick of the bunch, development has been frustratingly slow and has only picked up pace in the last 14 months or so.

Choosing between the two storage-focused coins is difficult. Both have their pros and cons, and both aim at slightly different markets. Until Storj sorts out its tokens debacle I would stay away from it, but be careful not to miss the rollercoaster once it sorts out that. Sia has been more consistent and better-met by the crypto-community, but its slower speeds and transition to ASIC mining have chipped away slightly at its otherwise strong performance. All in all, all three can be rated as SAFE investments (sorry for the pun), with Storj promising the best returns.

7 reasons why Factom will be one of the biggest surprises this year

Right, Waves and Stratis have launched to the moon; they're obviously good long-term holds, but if you're looking for the next big puller this year, check out Factom.

1. It utilises the crown jewel of the blockchain technology to its fullest potential - immutability of records. Specifically, data records. In a sense, Factom is the purest blockchain product out there so far; and it's just starting to sell well. Link: https://www.factom.com/products/harmony

2. Last year, the Department of Homeland Security invested $200,000 in Factom to secure the identity of its devices and avoid tampering as a result. Link: https://www.dhs.gov/science-and-technology/news/2016/06/17/st-awards-199k-austin-based-factom-inc-iot-systems-security

3. Last year, the Bill & Melinda Gates Foundation invested $500,000 in Factom to secure medical records in third world countries, where forgeries and "misplacements" of such records are rampant.

4. Factom is aiming to disrupt the morgage industry by providing a far more secure record system of loan sales, securitization, and non-performing loan trading. Link: https://www.factom.com/news/factom-launches-revolutionary-blockchain-suite-of-mortgage-products

5. In an era where the advent of smart contracts is all but imminent, trust in such smart contracts is of utmost importance. Factom is developing a product to build trust in smart contract oracles which feed real-time information to the underlying smart contract/s. Link: https://www.factom.com/products/acolyte

6. It is working with Smartrac to create a product to store and secure documents on the blockchain. Documents can then be tracked with ease and a bulletproof guarantee against tampering.

7. It has arrived this far without any marketing at all; but that's about to change. A Factom University is being developed and investors are starting to notice this revolutionary project. Are you in yet? Link: https://www.factom.com/university/tracks

Bubble... Bobble... Bockle... Blockchain

While I was writing this article, the total cryptocurrency market value just ticked over $85 billion. At the start of 2017, the figure was a relatively paltry $18 billion. Some quick maths will show that represents an increase of around 470% in the space of a few months, and naturally that has people running around screaming their head off about a bubble. But does this classify as a bubble?

The most (in)famous bubble is perhaps the tulip bubble which took place towards the end of the 1800s. Tulip flowers and seeds reached stratospheric prices before crashing down... hard. Time and time again, mankind has experienced several bubbles, with the end result being triumphant smart investors who pull out before the crash, and bagholders of the asset in question left with a trade gone terribly wrong. 

Analogies can certainly be drawn to the current situation in crypto. A sharp increase in price, feverish enthusiasm and mentions on mainstream media can be indicators of a bubble. However, certain fundamentals are being forgotten; fundamentals which potentially skew the whole bubble argument altogether.

  1. Cryptos are nowhere near being mainstream yet. It is still quite difficult to profitably buy cryptocurrencies without at least an intermediate knowledge of IT and economics, and only a small percentage of businesses accept cryptos as a means of payment. 
  2. Most crypto-projects are still in their alpha stages. And that includes Bitcoin, which hasn't even yet solved its scalability issues. Most recent projects promise a product-delivery date towards the end of 2018/start of 2019, therefore right now prices are mostly based on speculation. If the promises become reality, then that's a whole different stage altogether
  3. Most people still have no idea what Bitcoin represents. It's all too easy to be drawn inside the crypto-world and assume that everyone else knows what you know. Try asking someone on the street about what he/she knows about Bitcoin. When you get satisfactory answers on a regular basis, that's when you should start worrying about a bubble.
  4. Global connections. This can indeed potentially be one of the hugest bubbles ever in history, but I strongly believe we haven't even started yet. The reason is that we live in a world ruled by social media, where news can get around in an instant and hence no one can truly predict, with full confidence, when and how the crypto-train will stop. It might shoot off like a rocket to die off within a few months, or it might last longer than other bubbles. 
  5. Cryptocurrencies have an actual use. Unlike some other bubbles, cryptocurrencies actively set out to solve long-standing problems thanks to innovative and ever-growing uses of the blockchain technology. While most of the cryptos in circulation might have a short shelf-life, others are good candidates for mainstream adoption.

The closest parallel which can be drawn to one particular bubble at this stage is the dotcom bubble which took place at the end of the millennium. All the ingredients above were part of the dotcom concoction, save for the influence of social media - and that should definitely not be taken lightly.

If the total dotcom market cap reached circa $3 trillion in value before bursting... what sort of heights can we expect the crypto-bubble to attain? Time will tell, but one thing is certain - there will be price consolidations, even downward corrections, but the road is long and cryptocurrencies do not look as if they will be stopped any time soon.