How To Create Malta's National Blockchain Strategy
What was the background and series of events which led to Malta creating its National Blockchain Strategy and who was involved? What is the future of blockchain in Malta, the so-called “Blockchain Island.”? We speak to Steve Tendon, Founder and Managing Director of TameFlow and ChainStrategies and the person who drove the creation and design of Malta’s National Blockchain Strategy.
Mass adoption of blockchain will eventuate via various applications and use cases in similar ways consumers use mobile phones or the internet
There are socio-economic benefits of utilising blockchain technology that go beyond cryptocurrencies. An example of which is the storage of academic titles on the blockchain which would verify professional qualifications of people who flee from war torn countries such as Syria
Blockchain technology adoption in Malta will be driven by innovative businesses and professionals who unified by their vision of the potential opportunities of blockchain
Innovation in law will drive and create space for innovation in technologies such blockchain. Malta’s blockchain regulator is called the “Malta Digital Innovation Authority”
Still work to do around communicating and changing perception of blockchain with bitcoin as synonymous with illegal financial activity
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Lucy Lin- Forestlyn, www.forestlyn.com
Link to the interview:
Abridged transcript of the interview below:
Lucy Lin: Hello! My name is Lucy Lin. I'm the founder of Forestlyn. I'm here with Steven Tendon today, and he is a key figure in the establishment of Malta's National Blockchain Strategy. He's the founder and managing director of TameFlow. It's a management consulting company focused on performance and design. They also have a sister company called Chain Strategy which is a strategic advisory in blockchain, crypto, start-ups, ICOs, et cetera. That's just a very brief background of Steve. I'd love to hear a little bit more about your companies that you've ran so far, and how you actually got to Malta and where you are right now.
Steve Tendon: I've been here now for 12 and a half years so quite a while. At the beginning it was by chance. I came over here because of an assignment, a client that was working here and I just looked around and saw what you see and said, "Not too bad."
Lucy Lin: And luckily you were able to also do something that you're quite passionate about, so how did you actually get into this space and how did you end up working for the Ministry of Economy?
Steve Tendon: Well, I had two long careers in my life which happily intersect in bringing me to this role of facilitating the adoption of blockchain technologies here in Malta. Originally, I am a software engineer and I worked in software engineering for a long, long time. So, I had all the technical knowledge in order to understand what is happening in crypto with the algorithms and calculations that happen, for instance, between protocol. I was exposed to the bitcoin as early as 2010 and so at the very, very beginning.
Steve Tendon: So these were the ideas but I didn't know how to manage this in practice, and in 2015 I happened to be at a conference in Antwerp in Belgium. It was a very funny conference. It was called the Dare Conference because you had to dare to go outside of your comfort zone. And yes, I was a speaker there, so I did things that I would never repeat again. But anyway, there was also an exhibition area and there was this company from the UK, it's called Colony. Theywere presenting a prototype of exactly the kind of software that I was looking for in order to manage my company. And I was just so amazed about how this software was working.
Steve Tendon: And of course the former software engineer in me came out and asked, "But how do you do this? I've never seen this and I don't understand how you do it." And the gentleman who was the founder of Colony, Mr. Du Rose said, "We're using Ethereum." I said, "Eth what?" Ethereum. And I said, "Okay, yes, yes." I didn't know what that was so I went back to the hotel room in the evening, I googled Ethereum, and I came across the white paper of Vitalik, VitalikButerin's wide paper, and I think I read the first three sentences and my mind was blown away and said, "Yes. This is going to create a new revolution, a new global revolution, a new industrial economic, social, political revolution that no one has ever seen before."
Steve Tendon: So I decided there and then that I have to get into this. This was when I discovered the smart contracts, the idea of not only decentralized storage of value, like the bitcoin but decentralized computation, decentralized logic and decision making. I decided I have to get into this. So, I was covered on the IT software side because of my software engineering background and I was starting to think, "What can I do to learn more about this in terms of what it means for businesses?" And I signed up at a course at MIT. It was a fintech and future commerce course led by Professor David Shrier.
Steve Tendon: And funnily enough, blockchain was one of the topics and even more surprisingly, reg tech, regulatory technologies was another topic. And I decided to take those tracks, and I was very lucky to get an assignment from Professor Shrier that was the combination of reg tech and blockchain, and was very open-ended because it said, "Imagine that 10 years from now, you're going to describe a country, a jurisdiction that was built from scratch today using blockchain technologies." So my mind, my fantasy went wild and I started to imagine what would it mean if a country really adopted blockchain technologies?
Steve Tendon: And re-conceived, re-imagined everything in terms of what this technology can contribute. I finished off that assignment, it went pretty well, and then didn't think much about it. It was like an academic exercise. Whoever would take into consideration those wild ideas? Just a few months later, I spoke at a conference here in Malta, [inaudible 00:06:24] is the Malta business review, circuit of conferences. That summer, 2016, was a conference on financial service's sector, and I could present a talk about bitcoin and blockchain.
Steve Tendon: In the morning before the speeches started, there was the usual reception with coffee breaks and everything, and I was introduced to the keynote speaker 10 minutes before the keynote. The keynote speaker was the Minister of Economy Investments and Small Businesses. Without knowing exactly what I was saying, I somehow exposed, you could say, a classic elevator pitch about what the blockchain could do for a country, and the Minister was so intrigued that he said, "You come and see me next week. I want to know more about this." And this is how it all started.
Lucy Lin: This was in 2016, right?
Steve Tendon: This was summer of 2016 probably, July of 2016. So next week I went and met the Minister. We had a very long conversation. In fact, I think he even postponed his next two meetings, but he was so interested that at the end, he asked me, "Can you possibly draft a strategy about this for the country?" And that's how I got the assignment of drafting Malta's National Blockchain Strategy.
Lucy Lin: That’s a really great story of how you've actually come through the whole blockchain journey and right now how you've met the minister. Can you tell us, also, how you've come to convince governments ... 'Cause I think there's a lot of governments around the world looking to make regulation, favourable for blockchain and I do think a lot of global governments that are interested in this. But you know, it doesn't just take six months for Malta to do, 'cause it sounds like it's a two year process, but how do you convince all the government officials to take this on?
Steve Tendon: The first person that I brought on board was DrMax Ganado who eventually dropped the laws, and he was the first person who helped me to formulate these ideas in a format, in a language that would be accessible and acceptable for the government. In fact, this resulted in that cabinet memo where the National Blockchain Strategy was articulated and was approved out by the cabinet, the whole project was deemed so important. At the same time, we should also say that in another area of government, a lot of interest started to develop in cryptocurrencies and this was the work of Honor Silvio Schembri who now is in charge of this new Ministry, the financial services, digital economy and innovation Ministry.
Steve Tendon: So we had these two lines coming together and his Ministry was put in place precisely to make these things happen. He called together a task force, the National Blockchain Task Force, with representatives from the legal side, from the IT techonology side, from the regulator side. So many different perspectives were represented in the task force, and then the task force acted with respect to other players in the private sector and the industry. We had, during that period, a number of events and conferences in particular with finance Malta and the Malta Financial Services Authority. Then we started to have the consultation documents coming out, collecting the feedback and incorporating that into the draft.
Steve Tendon: So, at the end it was an effort done by a whole team or diverse team, you could probably count in the order of 80, 90 people who were involved in making this happen in various ways.
Lucy Lin: Do you see mass adoption of blockchain in the country itself? And how are you communicating to the citizens in terms of this vision? Is that the next step from the government to do that? Is there specific ways that you can see mass adoption happening as well?
Steve Tendon: Mass adoption, I think, will happen but probably more subtle ways. It will not be like mandated or required, rather there will be applications and use cases which will emerge, and eventually laymen will understand, or will not even understand, will just be using the technology just like we're using mobile phones and the Internet today without having to be electronic engineers. We have already a number of initiatives both in the private and public sector, and one I'd like to mention, because it illustrates the potential of this technology, is what the Ministry of Education is doing here in Malta.
Steve Tendon: Malta's the first country which is putting academic titles on the blockchain. And many times when I describe this, people will actually say, "So what? We've been recording academic titles in databases for ages, what is the benefit? Why would we bother to put them on the blockchain?" And here you might understand why this is important because it has a huge social impact. We can compare the situation with what happened in Syria where we had a huge conflict and very skilled doctors, engineers, and lawyers had to drop everything and flee like everybody else.
Steve Tendon: But once they landed in another country as a refugee, they were asked, "Well what are you? Who are you?" Say, "I'm a doctor." "Can you prove it?" "No. My papers were burnt and destroyed. I cannot prove that." So going back to what is happening here, once you put those academic titles on the blockchain if something, God forbid, something bad happened to this country and the new generations had to literally flee the country, they would still have their academic titles. Even, if they went to the other side of the globe. So that's an example of how the blockchain has potentially a huge socio-economic impact which goes beyond just the cryptocurrencies that I mentioned.
Lucy Lin: I'm seeing more and more how Malta's become such an innovative government and how you're establishing all these things and I think we're going to continue to see more use casesfrom Malta, leading the way in terms of the rest of the world. So, in your view, what do you think is next for blockchain in Malta itself? The government, obviously, has a very positive stance. We're here for the DELTA Summit Conference which has about three and a half thousand people coming all over the world to learn more about what Malta is doing, and they are doing amazing things. But in your vision, in the next few years, what else do you think Malta will be doing from the blockchain space?
Steve Tendon: Blockchain is a technology and it will have a technology adoption curve like all technologies that have been successful. And those curves are driven primarily by innovators who think of new ways to use these technologies. So, the next thing that I believe will happen here in Malta is that we are going to attract a number of these innovators. We want to create an ecosystem of businesses, companies, designers, engineers, entrepreneurs which are all driven by this idea that the blockchain means opportunities. Once you have innovators on the ground or working in the jurisdiction ... Remember, we are global. We are not constrained to the shores of this island, but once the ideas start circulating and you have a government public service infrastructure which is receptive to these ideas, well then you will start to see the adoption of the technology in the public services space.
Steve Tendon: So, we can imagine that many of the big, difficult things that we have for instance in the financial services sector with anti-money laundering, and know your clients, counter-terrorism, financing. Those things can be in-house with blockchain technologies. But the sector itself needs to be open to adopt them and not fight it as it's doing now when anything is equated to bitcoin, and criminals, and money laundering. So, that's a big conceptual hurdle that must be overcome. But at the same time, if you don't have innovators who are doing the new things, nothing much will happen. We must get things done.
Lucy Lin: And I think we talked about this off the camera. We were talking about how important communication is as well, and how I think, previously people think, "Oh, bitcoin’s from the dark webs and it’s criminal money, et cetera." But really, I think that's where communication and education play such an important part in this because it's not that, and it's evolved so much from that and I think what's really important next for mass adoption is probably to get more use cases known and out there and get more governments in other areas to also take that up, looking at the use cases.
Lucy Lin: And I think, what's quite interesting is, I think the whole world is watching Malta and seeing what Malta is doing because You're calling it Blockchain Island, I'm calling it Blockchain Innovation Island. I think this week is going to be quite interesting and I think the world is watching Malta very closely now in terms of what it's doing next.
Steve Tendon: Well, I like that you frame it as innovation. In fact, one of the legal innovations that we have introduced is the creation of this new regulator, which by the way is not called the blockchain regulator, it's called the Malta Digital Innovation Authority. So it is an authority that cares about innovation. One thing that we will see soon, hopefully, is the approval of this Fourth law which caters for legal personality of these so-called technology arrangements. I'm very confident that when that law comes into effect, we will see a number of organizations, software engineers, businesses who engage in a decentralized application development; well they will flock to the island because there are many reasons for them to be here on the basis of that innovation in law.
Steve Tendon: So we have this situation where the innovation in law creates the space for the innovation in technology and in the real world.
Lucy Lin: Fantastic. There you go. So I think I may have to look at my status, I know there's an E-residency thing that is happening, but you can't complain. Look at these lovely beaches and we're sitting on a beach doing this interview. It's a great place. Thank you so much, Steve, for your time. I certainly have learnt a lot about Malta and also about blockchain so if anyone wants to learn more about you, where should they be going?
Steve Tendon: Well, maybe the easiest tunnel where you can reach me is through Twitter. My handle is @tendon T-E-N-D-O-N. And of course, you can take a look at my website. It's chainstrategies.com. Actually, today I'm happy to say I'm launching this new business community. It's at my.blockchainisland.club where I'm trying to bring together entrepreneurs, investors, innovators, and so on and so forth.
Lucy Lin: Great, well there you go. So you know where to reach Steve. He's a very interesting person, obviously one of the key members of the National Blockchain Strategy of Malta and one of the key personnel here right now. Thank you so much for your time, Steve, and thank you for talking to me.
Steve Tendon: My pleasure.