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.
Bitcoin in layman’s terms. How to explain to your granny what bitcoin actually is?
Bitcoin has reached skyrocketing popularity recently. TV talks about it emphasizing on the cryptocurrency rate, Internet bloggers dedicate articles to this digital currency, and business publications shed light on its nature. However, bitcoin remains a mystery for some of us.
Adults tend to show a skeptic attitude towards the phenomenon which roots are not clear at all. Crypto industry is one of the most complicated topics our parents and grandparents face. What is more, not all young people have a notion of bitcoin notwithstanding the continuous Internet access. So, how to explain the notion of bitcoin in layman’s terms?
Steps to simply and quickly throw light on bitcoin
1. Take physical money for a basic notion
We all understand what physical money is. It can be carried in a wallet and then exchanged for any kind of products and services. Even small children understand it. Everybody knows that money is tangible and can be brought to the shop so it has value.
2. Show similarities with online banking and cards
In fact, the majority of our transactions is conducted by means of e-money. It can be seen on the webpage of your online banking account or on an ATM’ display. Where is e-cash stored? It’s not like a wallet with e-money you can withdraw, give somebody of pay with. As a matter of fact, all our electronic money is stored in IT systems of commercial banks.
3. We already use e-cash
E-cash is only a number on a bank’s computer attached to your account id.
4. Banks are a chain of intermediaries
Banks serve intermediaries that manage an account with e-money. Therefore, by carrying out an e-payment, we in fact allow a bank to conduct it. Then, there appears a record in a bank’s system claiming it does not deal with your id money anymore, and banking accounts of a third party can now be connected to a receiver’s account. To put it simply, we often buy or pay for something not knowing a receiver and in fact send them anything. It’s a bank that is responsible for the whole process charging relevant commission.
5. Bitcoin eliminates intermediaries
Bitcoin is money we know well. The difference lies in the absence of third parties, which merely eliminates commission. Besides, bitcoin can be used as shares. Its price may fluctuate depending on various aspects. Many people even earn on bitcoin by buying it cheaper and then selling for a higher price.
The notion of mining
A logical question may cross the mind: where to find bitcoins? It’s hard to explain that money can be mined, not made. However, try to liken this process to mining of high-valued minerals. The nuance is that here you need a powerful PC, not a shovel or a pickaxe.
Where to park bitcoin
Bitcoin has grown very popular across the globe. Many companies in the countries with legalized bitcoin have already presented an opportunity to pay for their products through digital money, not only physical or electronic. You can exchange bitcoin for a certain product or even purchase real estate. Remember to follow the exchange since it is unstable and fluctuates all the time. It is called volatility.
The online publication Login Casino created a short video describing its phenomenon in layman’s terms for those who have no notion of digital economy. Click here to watch the video: https://www.youtube.com/watch?v=49eb9gq0vbg&=&t=9s
Login Casino bitcoin marathon has come to an end
Bitcoin Marathon. Marathon from A to Z, organized by the online magazine Login Casino, has come to an end. Over the past few weeks, the leading experts in the cryptoindustry were highlighting the most relevant topics connected with cryptocurrency.
The speakers of our bitcoin marathon were: Maksym Krupyshev, head of game customer service at Cubits, Andrey Ivanov, blockchain projects security development manager at Digital Security, Kristina Kost, founder of the news resource LOFFL.RU, reporting on the world of cryptocurrency and blockchain, and others experts.
The way it happened: https://www.youtube.com/watch?v=mrzX9xyC2HI
The speakers used plain language to tell our participants about what bitcoin and cryptocurrency actually are, what its role in our life is, how and in which spheres it can be applied, what the work with bitcoin should be started with, and which projects are worth being invested in. The experts gave some useful advice concerning the issue of securing your savings, reviewed the major cases, connected with crypto thefts, and shared the secrets of blockchain and ICO project promotion.
Maksym Krupyshev shared his view on what bitcoin is.
“Criptocurrency and fiat currency can work in synergy. Fiat money belongs to the state, and it will be very hard for the state not to have any control over money transactions”, believes Maksym.
Andrey Ivanov, in turn, raised the issue of blockchain project security: “There has been a lot of ICO lately on the market. Some of them are successful, but some are not. As soon as ready money begin to appear there, it starts to be of interest to perpetrators”.
However, if you did not manage to take part in the event during a live broadcast, you can always watch the archive recording in the Login Casino «Library», having authorized yourself on the website.
“We’ve been thinking for a long time over how to help our readers (and now viewers as well) get the access to the broadcast they are interested in anytime, since not everyone can enter the landing during the live broadcast. So, what we came up with was an idea to create a specific Login Casino library – an archive, where all the broadcasts will be stored, and anyone will be able to get an access to them anytime”, told Login Casino.
The next speaker for Login Casino bitcoin-marathon will be Christina Kost (LOFFL.RU)
Login Casino continues its bitcoin-marathon – a series of online conferences devoted to cryptoindustry. The guest of the next webinar, which is going to be held as a part of the bitcoin-marathon, will be Christina Kost. The topic of the webinar is “Trends and prospects of bitcoin in 2018”.
Christina Kost is the creator of the news recourse LOFFL.RU, which is aimed at covering the main events in the world of cryptocurrency and blockchain. Besides, she is the founder of the biggest cryptocurrency blockchain-community CryptoCon in Saint Petersburg.
The speaker is an expert council member of the working party on digital economy to the State Duma of the Russian Federation, and she is also an expert council member in the first blockchain-coworking in Russia – B-CH coworking. She is an organizer of the events devoted to the blockchain industry and an expert in the spheres of ICO and digital economy.
Christina gives her tips for the beginners in ICO: “The first thing to do is to present your project in a proper way, to gather all the market information and then – develop the ways of carrying out ICO, communicate with the experts and companies, which are already in this business”.
Don’t miss the live-webinar with our expert! The broadcast will be on April 10, 2018 at 16:00 here.
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