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Invest Cyprus 30/04-30/03/2019

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Blockchain: Cyprus on the Doorstep of the New Digital Age

Blockchain: Cyprus on the Doorstep of the New Digital Age

The hype around bitcoin shone a spotlight on the technology which supports this and similar types of currencies. The much-talked about blockchain technology, is expected to play a leading role in the so-called Fourth Industrial Revolution.

Blockchain can transform the way we exchange information and carry out transactions, so that everything is executed without intermediaries, faster and cheaper. It is essentially a series of transaction-related entries in a public, shared, and decentralised digital ledger.  Each device on the blockchain network can keep a copy of this ledger. The blocks are created through a verification process called “proof of work”, during which a complicated mathematical problem is resolved through an algorithm. Each new group of entries (block) is connected with previous groups, thereby creating a blockchain.

Due to its great potential, this technology was adopted by many businesses, organisations, and governments around the world, who are using it in various services. At the same time, the EU launched a Blockchain Observatory and Forum in the beginning of 2018, with a view to monitor developments and promote blockchain. Subsequently, EU member-states signed a Declaration creating the European Blockchain Partnership, committing to cooperate on developing blockchain-based technologies. 

Malta has already established a regulatory framework for companies active in cryptocurrencies and blockchain. Estonia has since 2016 digitised its citizens’ data (tax, medical, pharmaceutical etc.), as well as almost all of its public services data, inserting them in the blockchain. Singapore has introduced blockchain in the aviation industry, allowing interested parties to gain access to the continuously updated airport system on arrivals, departures, and delays. In this way it managed to reduce the risk of contradicting information that users can find online. Singapore’s Ngee Ann Polytechnic (NP) has also adopted blockchain as a way of verifying the authenticity of its diploma certificates. By using the blockchain-based student IDs, potential employers are able to retrieve important academic information about the Polytechnic’s students.

Blockchain can also be used by the land registry department for the registration of property rights, since by registering and validating a title deed through blockchain, a title will be more accurate as well as permanent. Many countries have started working towards this direction. Blockchain is also a useful tool in the electoral process, preventing potential electoral fraud, as this was evidenced in the mid-term elections of 2018 in West Virginia, USA, where this technology was used.

Without a doubt, blockchain is a new, continuously evolving technology under evaluation, which is not yet sufficiently regulated. At a time when citizens’ direct involvement in public service activities through digitisation is becoming more and more necessary and when public dissatisfaction with data manipulation and/or hacking is increasing, blockchain is viewed as a necessary evolution in their daily interactive relationship.

Cyprus, following the above examples and on the basis of a more modern and progressive understanding of global developments, can proceed to the regulation of certain aspects of blockchain, establishing a framework that the regulatory authorities and users can trust. The regulation of blockchain technology can contribute positively to different aspects of the society (e.g. economy, education, health). However, such an initiative requires experienced legal advisors as well as experienced Information Technology professionals, to ensure that legislators sufficiently understand blockchain technology, in order to guide and protect citizens through such a legislation.  


*Advocate at Clerides, Anastassiou, Neophytou LLC


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