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Blockchain paradise: Dancing on a hotplate

[LONG READ] Why is Malta rapidly initiating blockchain projects? 

Last Tuesday, on International Workers’ Day, Prime Minister Joseph Muscat continued with his usual preposterous “the best in Europe” and “the envy of the world” talk, founded on his pretentious, insolent and annoying personality that seeks to create a false appearance of brilliance.

In reality, the Labour Party celebrations were actually measures to ease the stress amidst current domestic and international pressures that threaten to end their dysfunctional way of ruling.

The high-spirted dance of happiness by Muscat is fuelled by the pain inflicted from the raging inferno beneath his feet. This was attested just a few days before, when Muscat made a rallying call for May Day celebrations to help extinguish public defiance being created by the Daphne Project.

I can never fathom how many think we are so damn good. Firstly when we are completely dependent on foreign companies to manage our university (e.g., Google and Microsoft), communications (Malta is connected to the internet network grid by four submarine cables all landing in Sicily), energy needs (we have no domestic resource of fossil fuels and no gas distribution network), and technical expertise in technology and informatics (e.g., blockchain companies).

Secondly, when our transportation system (e.g., road and pavement conditions, traffic congestion), and our highly defective waste disposal system (e.g., the stench and ugly sight of garbage dumped on pavements together with many overflowing public bins particularly in the summer months, a situation much similar to India), are a complete disaster.

And when in addition, we are incapable of producing top specialists in specific medical diagnostics, disease treatments and surgical procedures (e.g., a country forced to send cancer patients to the UK), how can this country be happy to focus on the cannabis, gambling and financial interests; rather than on the most urgent problems on Earth – protecting the natural environment that sustains all of us, valuing the sciences that could help improve our physical human condition, and securing the moral blessings of liberty and freedom to every individual as required by the Maltese Constitution.

What the shenanigans in power don’t tell us is that all we can hope for is wishful thinking. I take as example the blockcahin lobby, because all we hear from the business and political parasites is that it’s all happy horse shit, everything is great.

Two months ago, Muscat himself outlined his delusional vision of becoming the global pioneer in digital currencies, financial technology, and blockchain.

Instead of blowing smoke up their arses like many did in Valletta on May Day, the real question everybody must ask is: What leads this country to rapidly initiate blockchain projects?

It is an extremely important question that should be taken very seriously because while blockchains are novel for the Maltese, many others across the world have vast experience working on distributed databases. If we then restrict ourselves to Bitcoin-like implementations of cryptographically stored exchangeable value tokens (cryptocurrencies), there are more than 1,500 already available, as well as a wild range of other adaptations of the blockchain concept currently active or in development. I list a multitude of examples towards the end for those who put a high premium on accuracy.

Muscat’s wild romance with blockchain began in April 2017; when he enlisted the London-based accounting, audit, tax, and consulting corporation PricewaterhouseCoopers (PwC) to advise him on the technology.

He then set a blockchain task force to work on the implementation of a national blockchain strategy by enticing the Malta Financial Services Authority, the Financial Intelligence Analysis Unit and the Central Bank of Malta, with the dreams of the Malta Gambling Authority controlled by Joseph Cuschieri, who was appointed chairman by Muscat after attaining his superpowers in 2013.

We have now reached the moment when we need to confront the problems of runaway technology, which produced all the fictional novels of consumer-driven dystopian societies maintained and sustained by machines or robots.

Ten years ago, no government had blockchain on their agenda. The original Satoshi reference implementation on Bitcoin, released in late 2008 kicked off the blockchain drive.

Three years later, blockchain became the focus of intense interest which hasn’t abated since. The Bank of England was one of the first to initiate a global discussion on the prospects for the introduction of digital currencies. And with good reason. The UK is an Extreme Surveillance and Security State that in 2016 legalised the Investigatory Powers Bill, an act of Parliament of the United Kingdom that empowers the state to surveil anybody if the government deems it necessary.

And today, no other government is more interested in blockchain applications than China. However, the biggest problem with most explanations of blockchain is that they usually start with Bitcoin, even though money is not their most important application.

The 2017 European Parliamentary Research Service document “How blockchain technology could change our lives” clearly outlines aspects of blockchains that the general public is most likely unaware of. These include Smart Contracts, Electronic Voting, Decentralised Autonomous Organisations, Digital Restrictions Management and Patent Privilages.

We can now answer the aforementioned question succinctly, by arguing that digital currencies and blockchains have capabilities directly related to social organisation. And in today’s digital society, the situation will only get worse because as usual it is the general public who is losing out.

For example, in a society where digital cash is fully adopted, blockchain technology can replace the traditional form of payments and achieve the goal of removing cash. Once that comes true, the government can monitor its citizen’s personal financials down to every single transaction and invalidate ones they do not like by making them illegal.

Secondly, malignant computing driven hardware has already been implemented and used by the United States Assassination Program where drone attacks used the geolocation capabilities of SIM cards to locate targets.

As blockchains are also implemented by software, they can execute malignant computing driven hardware instructions automatically while preventing the pre-defined consequences encoded in the blockchain from being modified. As a result, the blockchain can initiate an enforcement in the physical world that is implemented in software code in a way that is very difficult or impossible to stop, because blockchains – by their very nature – prevents them from being hacked.

The possibility of creating absolute laws which cannot be violated is made possible by introducing a smart contract or a decentralised autonomous organisation inside the blockchain.

And following recent public scrutiny of Facebook, people need to realise that it is very easy to make computers track everything you do. The blockchain protocol has a lot of flaws. This means that personal or sensitive data should never be stored on blockchains. Consequently, the drive to blockchain everything is flawed.

I conclude with the biggest ever professional negligence trial of a financial accounts auditing corporation at the end of 2017. And as we have become accustomed time and time again, the alarm bells get in full frenzied and earsplitting resonance once it is revealed that the corporation is PricewaterhouseCoopers. The corporation we cannot trust to detect a $2.9 billion criminal fraud that led to the failure of Colonial Bank Group in 2009; the government of Malta is trusting in setting the economic direction of this country.

I see three possibilities with Joseph Muscat, either we have returned to infantilism, or the Labour administration is going to shaft us, or both.

The Global Blockchain Experience

2018

The Kenyan Ministry of Lands uses blockchain to digitise the land registry.

2017

Royal Mint and CME Group. Created the RMG blockchain and trading platform for real-time holding and trading in gold.

London Stock Exchange Group Plc. Teamed up with IBM to build a digital blockchain for issuing private shares of small and medium enterprises in Italy.

Korea Financial Investment Association (Kofia). Implemented a Chain ID identification blockchain for securities firms and merchant banks.

Bitland. A Ghanian bitcoin company providing blockchain technology for land registry services.

Rwanda Blockchain project. Rwandan government introduction of WISeKeys identity management and Microsoft Azure Blockchain to drive the Rwanda Land Registry Authority digital recording of property deals and authentication of land titles.

2016

De Nederlandsche Bank (DNB). The Dutch central bank reached its third implementation of their internal blockchain DNBcoin and are now delving into smart contracts and trusted ownership. It also extrapolated what the blockchain network would look like in 2140.

Intercapital Public Limited Company (ICAP PLC). The UK financial services firm completed a test case for blockchain. In December 2016, the company changed its name to NEX Group PLC. In March 2018, CNBC announced that NEX Group will be bought by American financial market company Chicago Mercantile Exchange & Chicago Board of Trade (CME Group).

Japanese Mizuho Bank and Fujitsu conducted an operational trial using blockchain that makes it difficult to tamper with the ledger’s transaction histories.

R3CEV LLC. The New York distributed database company completed a set of trials involving five distinct blockchain technologies (Eris Industries, Ethereum, IBM, Intel and Chain). Blockchain trading involved 40 banks using cloud computing infrastructure provided by Amazon, Microsoft and IBM. The company leads a consortium of more than 70 of the world’s biggest financial institutions – e.g., Barclays, Credit Suisse, Goldman Sachs, J.P. Morgan, Royal Bank of Scotland, Bank of America, Citi, Deutsche Bank, HSBC, Morgan Stanley, National Australia Bank, Royal Bank of Canada, Skandinaviska Enskilda Banken, Soci.et.e G.en.erale, Banco Santander, Credicorp.

Korea Stock Exchange. Lauched a blockchain for trading equity in startup companies.

Korea Financial Investment Association. Created a consortium of five blockchain firms and twenty-one financial investment firms for managing trade finance processes.

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