Gibraltar’s Distributed Ledger Technology regulatory framework, launched in January 2018 and the first in the world of its kind, was part of a vision for this small but influential jurisdiction. The vision was that of Gibraltar as a place, space, ecosystem – call it what you will – where the environment was just right to nurture startups, businesses and enterprises working with blockchain and in the ‘cryptosphere’. The vision is steadily becoming a reality, demonstrated by the regular attendance of blockchain and tech influencers at events such as Startup Grind Gibraltar’s Fireside Chats, and evidenced by the growing numbers of interested professionals in the audience.
Startup Grind Gibraltar’s January 2020 ‘Fireside Chat’
Startup Grind’s panel discussion at the Sunborn Hotel in Gibraltar in late January and introduced by Denise Matthews gave local players and interested parties in this field a chance to reflect on the opportunities for Gibraltar in the field of blockchain technology. “It would be good to fast forwards five years,” said Malcolm Palle, Chairman of Coisilium, at the start of the event, which had been introduced by Gibraltar’s hugely supportive Minister for Digital and Financial Services, Mr Albert Isola, “and if everyone does what they are promising to do, what is this jurisdiction going to look like? What else could it have?” This set the framework for a vibrant discussion among the panel members, which, along with Malcolm Palle, included Joey Garcia of ISOLA’S LLP, Guarang Torvekar, Co-Founder and CEO of Indorse, and Diego Gutierrez Zaldivar, CEO of IOVlabs and RSK.
Gibraltar, Joey Garcia, explained, has already positioned itself very much in the vanguard of regulation, its aim, as was neatly reiterated by the Minister, being to ensure that the players based in Gibraltar are ‘good players’ – regulated and with appropriate controls and safeguards to ensure protection for the customer, and also protection for the jurisdiction. Mr Garcia pointed to the interesting phenomenon Gibraltar is now experiencing of attracting firms and professionals of the calibre of Coinsilium, Indorse, RSK and IOVlabs among other leading blockchain firms that have set up and are regulated in Gibraltar. Gibraltar, it appears, is not only a place for established blockchain businesses, but is also attracting those companies expert at providing the technological infrastructure for the sector to expand. With the legal framework in place, companies up and running in Gibraltar, including big international players, and with the technological infrastructure in place, it was of interest to the panel to explore what other industries might do – including industries in Gibraltar – to adopt the technology.
Adopting blockchain technology
“Technology,” commented Diego Gutierrez, “is an enabler; it is not a solution itself. We need to shape technology and give the proper context for technology to be helpful for society.” Mr Gutierrez went on to explain that he had found in Gibraltar the right context for being able to develop the technology, which cannot of itself operate in isolation but functions within a framework that allows it to evolve. His company – IOVlabs (standing for Internet Of Value) – builds interconnected networks that will be used to transfer and store value. This is an evolution of the internet of information that has given the world infinite access to knowledge and information. Value, he explained, goes far beyond money: the technology will store and transfer anything that is of value to human beings. This could be personal identity, or reputation, for instance. And this, he added, is a key ingredient of financial inclusion – rich or poor, every individual has a reputation, which they should be able to carry about with them (store and transfer at will) and which would facilitate the setting up of new relationships with much greater ease than is currently available through traditional means. This means that regulations need to adapt over time to take account of new behaviours of society and this is key to establishing that framework to provide proper functionality for an evolving technology.
Guarang Torvekar expanded on this, explaining how through the development of smart contracts on the blockchain, his company was building reputational systems on the blockchain so that users can transfer their reputation – for example, good credit history – from one place to another without being constrained by geographies and jurisdictions. Blockchain technology can permit the shift from operating within confined environments or jurisdications to open environments because it is able to store securely the identity and reputation of each user. The blockchain protocol, explained Mr Gutierrez, is simply a protocol, but it is how it is applied that will define whether it disrupts and advances services to society or whether it is confined by its uses within an institution or jurisdiction. The revolutionary aspect of the technology is its interoperability when it is used by multiple parties, otherwise the technology simply becomes part of a restrictive service and it is the friction between those individual services eg. banks and how they pay each other cross-border, that incurs costs and inefficiencies to the consumer. Looking ahead, Mr Torvekar shared his vision of there existing multiple blockchains simultaneously with each of these blockchains having its own individual application, its specific utility, and this will eventually result in there being multiple players in the space.
Learning the technology…and its uses
The discussion turned to the issue of education and skills. Eventually, Diego Gutierrez surmised, there will be a move from the current focus on low-level work i.e. the development of the nuts and bolts of the technology, to a more abstracted level where developers can focus on adapting the technology to the needs of the businesses, in other words, attributing features to building blocks of technology as opposed to having to programme it from scratch. There are, emphasised Guarang Torvekar, two features of education – learning to build the tools and learning to use the tools. Joey Garcia pointed to the gap in knowledge at higher executive level of large institutions such as banks. Understanding the relevance and application uses of the technology is what will drive further adoption and this is the place on which education will need to focus.
Blockchain technology, Gibraltar and future opportunities
The opportunities that are arising on a global stage through various means such as payments systems were discussed, in particular the opportunities that are arising in Asia, where adoption and use of the technology is growing rapidly, and this led to the panel speculating on what they would like to see for Gibraltar in this space in the future. Joey Garcia pointed to his desire to see Gibraltar’s banks developing to the point of adding a whole new globally-expanded service based on the technology, and similarly to see the gaming industry increase the ways in which they are already looking at harnessing the potential of the technology, and for the technology to infiltrate other areas such as insurance and also government infrastructure projects. “We have a unique opportunity to turn Gibraltar into the lead jurisdiction for this,” added Diego Gutierrez, saying also that he believes that the best way to convince people of the benefits of the technology is to give them a tool that in some way improves their lives, and that is what he would like to see happening in Gibraltar for Gibraltarians. Guareng Torvekar expressed his belief that Gibraltar has a unique opportunity to attract more startups from across the world as well as from Europe. This, of course, is something that Startup Grind Gibraltar has been so assiduous in helping to achieve.
The panel discussion was well-received, and with further opportunities for networking being available into the evening, those attending were able to make the most of the first Startup Grind event of 2020.
To view a recording of the panel discussion and the companies mentioned, please click on the links below:
Startup Grind Gibraltar: Blockchain Technology and Opportunity for Gibraltar