Insights

SOV and a Sustainable Global Future

Welcome back to the final part of my article series on the Marshallese sovereign, the new hybrid crypto-fiat-currency being issued as the legal tender of the Republic of the Marshall Islands.

So far in this series, I’ve explained how SOV can act as a bridge connecting the Blockchain Island to the real economy mainland; explained why SOV is a better way to address current regulatory concerns than traditional fiat currencies like the US dollar; why a sovereign cryptocurrency is the only viable way to power the Internet of Things in the timescales demanded by industry; and how SOV can square the circle between individual privacy and the need for oversight.

These are all important issues, but they’re mostly driven by short- and medium-term concerns. Practically, this is the right approach: it’s hard to effect change by focusing on far-off and hypothetical problems or benefits. But tech companies are coming under increasing scrutiny for their shortsighted attitude to everything from privacy and the environment to global inequality and their role in maintaining the very fabric of society. And rightly so: Facebook’s “Go fast and break things” motto is looking increasingly naive, now that we’re starting to see just how broken things can get…

So today I’d like to focus on the long-term implications of SOV and why I feel SOV offers genuine solutions to previously intractable questions of sustainability and global cooperation, and why the Marshallese are perfectly placed to be the custodians of this powerful and potentially world-changing technology.

Privacy and Identity

Welcome back to my series of articles on the Marshallese sovereign (SOV), the new hybrid crypto-fiat-currency being issued by the Republic of the Marshall Islands, which I believe represents our best chance to connect the currently isolated “Blockchain Island” of the cryptosphere with the mainland of the real-economy.

Last time, I explained how a currency like SOV is needed to square the circle between two enormous and contradictory pressures currently building in the real economy: the impending Internet of Things, which foresees billions of smart devices communicating and performing microtransactions across borders and jurisdictions, and regulators’ unwillingness to even permit anonymous transactions between people, let alone the myriad autonomous devices of the Internet of Things.

As a hybrid crypto-fiat-currency, SOV has the necessary programmable features and cost structure to support the microtransactions. The Internet of Things needs to be viable – something which no fiat or central bank digital currency could do). Notably this same programmability allows the SOV to satisfy regulators’ requirements, with the added reassurance of being the legal tender of a sovereign nation.

All necessary compliance procedures relating to KYC, AML, CFT, OFAC filtering and any other relevant compliance requirements would be built into SOV’s protocols, with on-boarding overseen by a network of official verifiers, which could include banks and exchanges. 

The necessity of the SOV

Welcome back to my article series exploring the potential of the Marshallese sovereign (SOV), the new hybrid crypto-fiat-currency which is being issued by the Republic of the Marshall Islands. 

Last time, I explained why SOV will offer a better form of fiat than conventional fiat like the US dollar. But a hybrid crypto-fiat-currency like SOV can offer so much more.

There is a huge systemic need to legitimize cryptocurrencies, not only because of the network effects of the existing billions of conventional fiat accounts controlled by people, but also because of the oncoming wave of potentially hundreds of billions of interconnected devices in the Internet of Things. These devices will need the ability to offer, negotiate, consume and pay for services among themselves, all at razor-thin margins, something which current infrastructure cannot provide.

Why SOV is better than other fiat currencies, and no threat to true cryptocurrencies

Welcome back to my article series exploring the potential of the Marshallese sovereign (SOV), the new hybrid crypto-fiat-currency which is being issued by the Republic of the Marshall Islands. 

In the first part, I suggested that SOV as a hybrid crypto-fiat-currency could be the fastest and simplest way to bridge the divide between the Blockchain Island and the real-economy mainland. But “fastest and simplest” isn’t always the same as “best”, and some might argue that the Blockchain Island shouldn’t be connected to the real-economy mainland at all, or at least not for many years. In addition, crypto enthusiasts might worry that a legitimized currency such as SOV could, instead of acting as a bridge, prevent “true” cryptocurrencies from ever becoming mainstream at all. 

But SOV is not an alternative to cryptocurrencies such as bitcoin. A currency such as SOV is indeed the best approach to building this bridge, because it represents the quickest and easiest way to address establishment concerns. In fact, it will do a better job of meeting regulators’ concerns than any current approach, so it will remove any wiggle room if those concerns turn out to be less than sincere. In short: SOV will be better fiat than existing fiat, in addition to (and in part because of) its advantages of being a cryptocurrency.

Let me explain why.

Will the Real Blockchain Island Please Stand Up!?

In early October 2016, while I was working on an early draft of Malta’s National Blockchain Strategy, I wrote the phrase “Blockchain Island” for the first time. I was pleased with how succinctly it described the central problem we were trying to solve: the issue of integrating cryptocurrencies with traditional financial, legal, and regulatory systems – and catering for the ubiquitous use of Blockchain technologies.

When I wrote it, I never suspected how much influence the Blockchain Island concept would end up having, in Malta and beyond – or how quickly the intent behind the phrase would be lost.

My plan was for Malta to create a fully virtual jurisdiction which could connect cryptocurrencies and Blockchain technologies to the rest of the global financial system, a bold move which Malta was ultimately unwilling to take. But now the Marshall Islands, a country facing multiple looming existential threats, seems willing to take up the mantle with its new hybrid crypto-fiat-currency, the Marshallese sovereign (SOV).  

Legal Personality for DAOs and Smart Contracts: What is in it for me, as a developer?

DAOs, Smart Contracts and… Who? Me!?

Earlier this year I and Dr. Max Ganado listed several reasons (see our paper  Legal Personality for Blockchains, DAOs and Smart Contracts) why recognising “Legal Personality” to so-called Innovative Technology Arrangements (ITAs) makes a lot of sense. (Note: An Innovative Technology Arrangement is a generic term used in the Maltese Blockchain Laws that encompasses blockchain/dlt platforms, smart contracts, DAOs, AI and other technologies that share the traits of autonomy and at times even self-sufficiency).

The idea of legal personality for ITAs is firstly received with a lot of skepticism. Lawyers, politicians, businessmen, policy makers, corporate service providers and in general those engaged in the business side of things have a number of reservations. Likewise, software engineers, open source proponents, technologists, and all those driven by the ideals of decentralized power are also skeptical about the idea. We listed a dozen arguments. While some of them might seem very abstract, academic and remote, there are very practical practical and important motivations that need to be appreciated.

But it is only when you are touched directly, in person, that you might relate to the significance of those arguments.

Malta Blockchain Regulation Proposal: Legal Personality for DAOs and Smart Contracts

UPDATE 2018-05-31: This blog post has been revised and extended into an article: Legal Personality for Blockchains, DAOs and Smart Contracts (PDF), published by RTDF, 1-2018, p. 39, Corporate Finance and Capital Markets Review, Thomson Reuters Transactive.


Technology Arrangements

On March 2, 2018, the Blockchain Malta Association hosted an event entitled “Reflections on the DLT Regulation.” A number of lawyers and industry experts were invited to debate the consultation document issued by the Government of Malta and wherein the country’s intention to regulate the sector was presented. The consultation document proposed three new bills, which cover a broad range of issues.

The second of the three bills is about “Technology Arrangements and Service Providers” (TAS Bill). It is understood that the term “technology arrangement” was chosen to leave space in the future to cover not only Blockchain and Distributed Ledger Technologies, but also other “arrangements” such as Artificial Intelligence and Internet of Things.

Malta’s National Blockchain Strategy: The Big Picture

In my earlier post Malta the Blockchain Island: The Story so Far I described the sequence of events that led to Malta to announce a legal framework governing Blockchain technologies; and that it was all guided by an overarching National Blockchain Strategy. In this post, I will highlight what thinking actually drove me to create and design that strategy.

The ideas underpinning the strategy can be visualized as follows:

20180216-malta-national-blockchain-strategy-overview

Let’s look at each element in more detail.