Malta. One of the world’s smallest and most densely-populated countries, as well as a tourist favorite. Balmy Mediterranean weather, glorious sunshine, warm waters and plenty of history. In fact, due to Malta’s central location in the Mediterranean, the island nation was for centuries a crucial strategic naval base. The 400-odd thousand inhabitants of Malta are well used to punching above their weight on the world stage.
However, over the past decades of relative peace (in Europe, at least), it’s easy to imagine Malta retreating somewhat in significance, contented to plough comfortably on as a lovely, small island nation, popular tourist destination and happy part of the European community.
But Malta instead opted to be an early adopter of many new digital technologies, leading the way for other nations, in contrast to its historical surroundings. Malta made early inroads into iGaming, for example, from being a top location for online casino start-ups like Voodoo Dreams offering slots and other games, to be the first EU member state to enact comprehensive legislation on remote gaming, in cooperation with the Malta Gaming Authority (MGA).
Always ones to keep up with the newest advancements, Malta are today also leading the way in new currency technology. “We must be on the frontline in embracing blockchain and Bitcoin,” said the country’s prime minister, Joseph Muscat, “we must be the ones that others copy.” From contested naval center to the home of cryptocurrency, perhaps?
Bitcoin and other cryptocurrencies use blockchain technology to create a currency that’s digital, anonymous, decentralized, self-regulating, and secure. So-called ‘miners’ use computing power to solve generate algorithms that serve to anonymously verify and confirm transactions, and are rewarded in Bitcoin (or whichever cryptocurrency is being mined) periodically.
The difficulty of the algorithms and the reward for miners is scaled based on how long the blockchain is (solving a puzzle adds a block to the chain, rendering that transaction verified and unalterable) and on the total amount of computing power currently being used to mine. Mathematically, this works out to mean that the total amount of Bitcoin will never exceed 21 million, allowing the currency to avoid the problems of inflation faced by traditional fiat currencies.
Currently, each Bitcoin is worth approximately $2,500 USD. Many think that Bitcoin is currently a bubble waiting to burst, but – for now – it’s not happened yet. Originally, Bitcoin was created as a sort of proof-of-concept and found early use in online drug trading and other illegal activities due to the anonymous and secure nature of the currency. But over time it’s matured and found popularity, with widespread uses from video games to purchasing electronics and, well, pretty much anything on online stores like Newegg, Dell, and Overstock.
Whether cryptocurrency finds real mainstream use will depend largely on the continuation of this commercial take-up, but also on the acceptance and support of national governments and international institutions like the European Union.
That’s where the Maltese PM hopes his country can come in. Aside from the Maltese’s general trend for trailblazing burgeoning technology, there are some concrete measures being taken to embrace Bitcoin and cryptocurrency.
The first Bitcoin ATM has been installed, for instance. It will allow users to purchase Bitcoin at a physical station, or use their Bitcoin to withdraw other currencies. The introduction of these ATMs will be a huge step towards Bitcoin becoming seen as an everyday currency that is legitimate and mundane (in a good way), rather than the preserve of seedy digital criminals and computer nerds.
The Central and Eastern European Gaming Conference (CEEGC) is a new but influential conference on online gaming and gambling, an industry with big money and big influence. For their 2017 conference in Budapest, CEEGC have announced a special Bitcoin and cryptocurrency panel held in partnership with BitMalta, a cryptocurrency advocacy group based in Malta. This kind of representation on the international stage puts Malta at the heart of the cryptocurrency movement and could solidify their place as the leaders.
Of course, it’s still early days. The so-called Bitcoin bubble could burst as it did back in 2014, and there’s always a chance it might not recover. While national currencies have the backing of an enduring state and an international community to help them recover, Bitcoin is self-regulating and works peer-to-peer (P2P), rather than from a centralized bank. That means that if people stop using it, Bitcoin will rapidly fade back into obscurity.
That seems unlikely, though, given that the Bitcoin market is currently worth over $40 billion USD. Something seismic would have to happen to collapse that entirely. Plus, now that plenty of people have gotten used to it, there is likely to always be demand in society for a currency that is anonymous, secure and not controlled by a state.
That logic is why Muscat thinks Bitcoin is an inevitability. The sooner nations embrace it the better it will be both from a regulations perspective and from a markets perspective. How Malta’s embracing of Bitcoin will go exactly, we’ll have to wait and see.