Issue link: https://maltatoday.uberflip.com/i/1069175
11 OPINION www.creditinfo.com.mt info@creditinfo.com.mt Tel: 2131 2344 Your Local Partner for Credit Risk Management Solutions Supporting you all the way George M. Mangion gmm@pkfmalta.com The writer is a partner in PKF, an audit and business advisory firm LAST year, the government was advised to take the bull by the horns and with the assistance of technical advisers rushed the Malta Digital Innovation Act together with a framework for virtual financial assets. This was pioneering work, hoping that Malta will succeed (as it did in the remote gaming sphere) to be a leader in Block- chain and its offspring – the cryptocurrency regime. Some say that Malta has taken the bull by the horns and plunged ahead in the sensitive area of virtual currency trading when virtual currencies were at their peak (Bitcoin peaked at $20,236) even though larger countries such as China, India and EU countries were banning it. But of course, it is all a matter of the early bird catches the worm. This year, while Bitcoin is making a shaky climb closer to $4,000, the entire industry of cryptocurrency is still reeling from hitting relative new lows. Since the start of the year, the number one cryptocurrency by market capitalization is down nearly 80 percent since peaking in December 2017. For some, the falling price of Bitcoin has raised the alarm and led to widespread selling out. This spurs negativity and a soured mood towards crypto and blockchain-based assets. Yet hope springs eternal, since at a recent Crypto Summit held in London by Bloomberg, panel speakers seem to suggest that, while there's no denying the immediate outlook for crypto- currency is shaky, the industry is just experiencing a temporary setback. They hope it will even- tually see a rally in the market this year. Speaking on the panel, Chief Investment Officer at CCL Investment Management James Bevan gave hope to investors who have continued to stick with crypto through the falling market year. This view was confirmed by Changpeng Zhao (CZ), the CEO of Binance. In his opinion, the market for cryptocurrencies has a promis- ing future, and the year 2018 was merely a correction after the excessive growth that occurred during 2017. In particular, the strategy and business philoso- phy sustaining Binance have not changed at all; in fact, CZ noted that the company's expansion plans are now more aggressive and structured, offering more services to a larger public. Binance not only focuses on the use of current technologies but is also working to build a better future by investing in start-ups that do not have the necessary resources to begin but have great potential to help the ecosystem in the future. Given the level of innovation, security and digital functionality instilled by the technology of cryptocur- rency, the industry as a whole has established a precedent pointing that the way forward for 2019 is more innovation and research. Malta just about climbed the hill of Blockchain, now we must try scaling the mountain of AI – a subject that USA tech giants pour billions of dollars annually in research and development. Quoting Forbes, it remarks that prospects for sustaining global competitiveness are now direct- ly tied to the industrialization of AI. AI and machine learning are predicted to reshape manufac- turing, energy, transportation and financial management. Countries that can successfully cultivate a culture of disruptive innovation will be strategi- cally positioned to lead in the twenty-first century. Alongside traditional manu- facturing, the world is seeing a rising wave of innovation that has the capacity to transform existing markets and value net- works. In particular, consider the application of approaches from big data, machine learn- ing, and AI. All these forces have the power to process, analyse and utilise this data with the potential to transform healthcare, addressing major global challenges in the preven- tion, detection and diagnosis of disease. By contrast, governments that resist AI will find themselves facing a daunting future. It is welcoming to note that the EU has developed a funding initia- tive to help SME's in the field of robotics and innovation. The funding is capped at €200,000 per each successful applica- tion and is part of the Horizon 2020 research and innovation programme. Mindful of the legal and tech- nical minefield that lay ahead, the MFSA called for experts to help design and draft parame- ters leading to a safe framework and good governance to face such challenges. It is an open secret that government is keen to be seen helping innovation and would like to see Malta becoming a jurisdiction that attracts talent from all over the world. But readers may ask how can Bitcoin become mainstream un- less Fintech is attracted as well. We have just lost three private banks that closed last year and no effort should be spared to attract more members in the banking community. It is always a case that banks and monetary institutions are wary of chal- lenges set by virtual currencies but like the internet, which was resisted in its early days, the DLT revolution is here to stay. Just ponder how since we left the gold standard, central banks run billions of transactions in fiat currency which are not backed by any intrinsic value yet we blindly trust such paper cur- rency. We know that following a process of quantitative easing practised in EU and USA, this has seen the printing of billions of paper currency by central banks to calm the markets and wipe off excess liquidity. Holders of fiat currency hold no qualms to trust in its exchange value. How does Blockchain technolo- gy try to solve this dilemma? The answer is Blockchain deciphers the trust issue. It is undoubtedly true that last year, cryptocurrencies have had a very volatile history so caution among investors has set in. But we cannot stand and wait for the next rally. It is encouraging to quote the prime minister Joseph Muscat, at his year-end greet- ings, who waxed lyrical about Malta wanting to jump-start the process to regulate ostentatious topics such as research within AI and the Internet of Things, in an all-encompassing regulatory framework. This way the unas- sailable vision of a progressive Malta will become a reality and the entire island gains. George Mangion Cryptocurrencies, robotics and AI will dominate 2019 Malta just about climbed the hill of Blockchain, now we must scale the mountain of AI – a subject that USA tech giants pour billions of dollars in R&D maltatoday | WEDNESDAY • 9 JANUARY 2019