Don’t Be Afraid! The financial system is changing

I’ve been interviewed in The Times of Malta, in occasion of the Malta AI & Blockchain Summit that is held on May 23-24, 2019

Times of Malta, Sunday Edition, May 19, 2019

You are one of the early adopters of blockchain. Fast-forward to today – would you say that blockchain has disrupted technology and society in an anticipated manner?

It is a common feature of exponential technological change that its impact is overestimated in the short run and underestimate in the long run, even by experts. Blockchain is the same: those of us who have been following the technology for many years, since the publication of the original Bitcoin white paper in 2008, would want the incumbent structures to have been superseded by a new global financial system based on Bitcoin and the applications built on blockchain, powered by cryptocurrencies. And to a certain degree that is what actually happened. There are still too many people who haven’t taken a single step to be part of this future: that is the promise of the future value of Bitcoin, blockchain based platforms and the disruptive value creation that they will bring everywhere.

Blockchain – as with every other form of disruptive technology – is accompanied by the fear that people will cede control to machines. What instils this fear – and is it justified, to a degree?

The complex world we are building needs dynamic control systems and feedback loops that require faster response times and a deeper overall understanding than what humans are capable of. We have been on a path of technology enabled civilization building for ten thousand years. We are confirming how science and reason are the right answers, in order to address the problems we see in the world. Implementing in blockchain based platforms the new financial system of the 21st century should not frighten more than sitting in a car and driving to a new city. When the automobile was born, skeptics predicted they couldn’t go faster than 50 miles an hour, or the passengers would suffocate. We will have the chance to become familiar with the solutions that blockchain brings us, and abandon our fears.

There is a constant tension between centralisation (such as networked platforms and social media) and decentralisation (blockchain itself). What will this tension lead to?

The architecture of the platforms we are building is an expression of the available technologies, as well as of the regulatory environment that supports them. It is in the nature of accelerating technological change to go beyond what centralized planning and control can foresee. Experimenting at the edges guarantees that the innovation delivered by sustainable and scalable solutions is going to be born in a decentralized fashion. And actually that is what we are already seeing, not only in blockchain, but in many uncorrelated industries: solar photovoltaics in energy, digital manufacturing, vertical farming, personalized health, peer to peer learning, trust networks are all emerging independently, and evolving decentralized solutions.

Are businesses and startups heeding the call to redesign business models around blockchain?

The evolution of business models and the disruption that the new ones create comes from the bottom up desire to succeed, by the passion of newcomers to deliver products and services at scale, more efficiently than it was possible before. By definition change is going to be risky and as a consequence more likely to be embraced by startups that have the courage to experiment, rather than by established corporations that put their existing success on the line. Most of the blockchain based business model innovation is still to be realized. We have barely started to understand that the governance of corporations is now a technology that can be implemented in code, and where digital platforms can achieve new degrees of efficiency and freedom, comparable to what moving to email from delivering hand written letters represented.

Last year, Malta pitched itself as ‘Blockchain Island’. Beyond the marketing tag, how realistic is this pitch?

Capital and talent flow freely around the world today, looking to find places where they can be applied to address the humanity’s biggest challenges. They need a clear regulatory framework so that at least that part of the risk of an already risky endeavor can be minimized. Malta has been able to provide that clarity, in a manner that doesn’t appear to have introduced excessive bureaucracy, and that can scale with the inflow of projects and startups. It must now leverage this position, understanding that the loop can be closed with regulations being periodically updated, incorporating what has been learned in the previous period. This update can’t take a decade, but must reflect the rapid changes of blockchain technology itself. As a matter of fact, regulatory technology is the next step, where legislation itself becomes implemented in smart contracts, evaluated by blockchain based platforms, where compliance is efficient, accountable, and transparent.

How can Malta attract talent and creativity in order to thrive?

The founders of startups, creators of our digital innovation represent a new degree of freedom in how they organize their work and their life. Far from being beholden to a single physical location, they constantly evaluate what are the best conditions to thrive: working conditions, co-working spaces, service providers, speed of internet connections, lightest possible bureaucracy for residence permits, incorporating a company… But also the quality of life, lack of air pollution, lack of traffic jams, well connected airport for international travel, exciting and affordable food, varied rent options. Malta must aim to evaluate and satisfy these to attract startups.

You will be speaking at the Malta AI and Blockchain Summit – what will you focus on?

The connections between Blockchain and AI are important and their challenges similar. After a certain degree of success they both have to stand up to deliver the ambitious promises that their supporters have been articulating. The platforms and tools that are being developed based on both technologies, have to become much easier to use to gain widespread adoption among consumers and at enterprises. The deepest disruption that they can deliver promises to enable new business models that can create trillions of dollars of new wealth around the world. All of this is only possible through the hard work of talented people, passionate about addressing the problems that they see around themselves in the world. Society itself will be transformed by their success, and it must embrace these changes.