The media has been buzzing with features on the big swings in the values of cryptocurrencies, especially bitcoin. For many, the advent of virtual currencies defines the future of the financial services.

For others, it is just another speculative asset like tulips, pork bellies or dotcom stocks. But what is inspiring policymakers in public administration, business and finance is the underlying technology on which bitcoin is based: the distributed ledger technology, the umbrella term for blockchain systems. Most economic, political and legal systems are structured on the use of contracts, transactions and the records of them, maintained by bureaucracies formed to manage them as efficiently as possible.

The economy’s digital transformation has outpaced the traditional record-keeping systems that are looking increasingly inefficient, convincing many policymakers that, in a digital world, the way we regulate and maintain administrative control of a myriad of human activities has to change. Blockchain offers a solution to this problem.

It is an open, distributed ledger that can record transactions between two parties efficiently and in a verifiable and permanent way. The announcement of the setting up of the Malta Digital Innovation Authority, with the promised accompanying legislation on its operations, is meant to promote the use of virtual currencies and the exploitation of the distributed ledger technology.

Few doubt that blockchain has the potential to revolutionise business and redefine companies and economies. Many believe it could bring about change similar to that caused by other revolutionary technologies in the last few decades. Read more from…

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