Tag: blockchain

Our algorithmic venture into AI

Posted on by Colette Mangion

Author: George Mangion
Published on Business Today 18th April 2019

It was Prime Minister Joseph Muscat, at a speech he gave last year at the Delta summit, who talked about a vision to regulate Artificial Intelligence (AI), the internet of things (IOT) in an all-encompassing regulatory framework.

In his mind set, Malta just about climbed the slippery slopes of blockchain, and is now in an adventurous mode to tackle the next mountain of AI.

Undoubtedly, a technology that USA tech giants pour billions of dollars annually into for research and development purposes.

It is an open secret that government is keen to be seen helping innovation and would like to see Malta becoming a jurisdiction that attracts talent from all over the world.

Artificial intelligence and robotics are two ‘overnight successes’ in advanced economies that have been decades in the making, and their intersection will soon change a multitude of industries.

The evolution of smarter AI and more versatile robotics has helped both technologies to push past repetitive tasks to take on adaptive and more intelligent applications. In the coming years, the result will be nothing short of a revolutionary paradigm shift.

AI technologies will continue disrupting beyond 2019 and become even more widely available due to affordable cloud computing and big data explosion.

The gargantuan task was taken on board by Silvio Schembri, Malta’s junior minister for the digital economy and innovation.

At a recent press conference in Singapore, he revealed the country’s plans for the government’s new task force in an ambitious mission to become one of the world’s leading AI nations.

How can Malta gain from the wave of popularity that is gripping the ubiquitous sector of robotics?

The answer is found in the impending age of smarter robotics. These will certainly have a profound impact on traditional manufacturing; for instance, our health sector will soon make use of robotics to allocate medicines to patients and assist in useful operations taking place in the operating theatre.

AI thrives best by combining large amounts of data sets with fast, iterative processing and intelligent algorithms. This allows the AI software to learn automatically from patterns or features in that vast data set.

It is trendy to read on latest AI topics in the mainstream news. It is no exaggeration that AI has become a catch-all media term that refers to any computer programme that automatically does something.

Many people make referrals to AI without actually knowing what it really means. There is often a public debate on whether it is an evil or a panacea for humanity. Put simply, one may explain that in Malta this technology will in the near future spearhead novelties in the manufacturing sectors and create interesting scenarios in areas of productivity, safety, service, transportation, land registration and police records.

More will be revealed in the near future, when driver-less cars will become fully functional and slowly enter into the mainstream.

Autonomously driven cars and drones are both forms of advanced robotics, and they will pave the way for more specialised services that will speed productivity. They will impact every area of our lives.

As was the case of the internet revolution, some of the originalities will happen in a gradual, evolutionary way; albeit some will happen in a sudden, revolutionary manner.

To delve deeper into the subject matter, one may mention that apart from AI there is its cousin – Machine Learning (ML), and its sibling – Deep Learning (DL).  One may actually think they are all of the same stable but in fact they are different.

AI and the Internet of Things (IOT) are inextricably intertwined, with several technological advances all converging at once to set the foundation for an AI and IoT paroxysm. AI involves machines that can perform tasks that are characteristic of human intelligence. Typically, it includes things like planning, understanding language, recognising objects and sounds, learning, and problem solving. It goes without saying that the learning process involves feeding huge amounts of data to the algorithm and allowing the algorithm to adjust itself and improve.

To give a simple example, machine learning has been used to make drastic improvements to computer vision (the ability of a machine to recognise an object in an image or video).  In order to achieve this, the process may involve gathering hundreds of thousands or even millions of pictures and then have humans tag them.

For example, the humans might tag pictures that have a cat in them versus those that do not. Then, the algorithm tries to build a model that can accurately tag a picture as containing a cat or not as well as a human. In its simplicity, one may then conclude that once the accuracy level is high enough, the machine has now “learned” what a cat looks like.

Deep learning processes are one of many approaches to machine learning. It was originally inspired by the structure and function of the brain, namely the interconnecting of many neurons.

PKF Malta has taken the initiative to launch a training lab called the The Bit-Pod concept. This is a meeting place for informal discussions among practitioners, engineers and IT enthusiasts to network where they can informally discuss topics on the cosmic subject of this technology.

This is a non-profit organisation, intended to help connect entrepreneurs (mainly start-ups) to people, programming engineers, and other enthusiasts across the AI, blockchain and robotic fields. Whether you are looking to connect, learn, share, or work, Bit-Pod offers a selection of opportunities to network with other start-ups helping you scale the slippery slopes of early stage development.

It is undoubtedly true, that in other countries such initiatives are automatically sponsored by government agencies. The champion is Israel, which habitually offers financial and logistical help to nurture growth among start-ups. Regardless, the private sector in Malta is ready to give its share to develop this ambitious niche that will place Malta among the front runners in technical innovation.

Mastering this objective helps Malta to fulfil its mission to establish a national artificial intelligence stratagem.  Do not miss booking your place at the tech crowd converging in Malta for the Innovation Summit to be held next month.

George Mangion

Author: George Mangion
Published on Business Today 18th April 2019
Get in touch: info@pkfmalta.com | +356 21 493 041

AI invasion – is Malta ready?

Posted on by Colette Mangion

Author: George Mangion
Published on The Malta Independent 21st March 2019

No article this week can fail to mention the current uncertainty that is facing the British economy due to the complex political manoeuvring on an agreed deal on how best to exit the EU. Be that as it may, the Western world is also going through other major changes in the political, economic and administrative fields. The advent of Artificial Intelligence (AI) is entering the economic stage through the backdoor but many feel that it is so powerful that we can only ignore its influence at our own peril. It is no minnow. Experts predict that it in 10 years’ time it will underpin $15.7 trillion of global economic growth.

Some fear it will wreck job opportunities and create mass unemployment in certain sectors yet others are less sanguine and think that it will simply transform current jobs and create new ones. The McKinsey Global Institute reckons that by 2030 up to 375 million people, or 14 per cent of the global workforce, could have their jobs automated away. Employers will have to decide whether they are prepared to offer and pay for retraining, and whether they will give time off for it. Many companies are sympathetic to the need for workers to develop new skills, but mass education is the remit of national governments and should not come at the employer’s expense.

This is debatable because less advanced countries do not have the resources to train workers to reach the higher technical skills required once the AI revolution becomes mainstream. Technological change always causes disruption, but AI is likely to have a bigger impact than anything else since the advent of computers, and its consequences could be far more disruptive. Being both powerful and relatively cheap, it will spread faster than computers did and influence many sectors.

Another important question is how to protect privacy as AI spreads. The internet has already made it possible to track people’s digital behaviour in minute detail. There is little doubt that in the coming years, AI will offer even smarter tools for businesses to monitor consumers’ behaviours, both online and in the physical world. This could become a threat to privacy.

A corollary of AI is machine learning. One can explain this as autonomous learning capacity which empowers a machine to learn on its own without being explicitly programmed. It is a subset of AI that provides the underlying system with the ability to automatically learn and improve from experience. Today, many US firms are competing to provide AI-enhanced tools to companies.

As can be expected, millions are invested to develop new technologies and companies that achieve a major breakthrough in artificial intelligence could easily race ahead of rivals and toughen global competition. More likely, in the years ahead, is that AI might contribute to the rise of monopolies in industries outside the tech sector where there used to be dynamic markets, eventually stifling innovation and consumer choice. The fear is that smart computer programs will eliminate millions of jobs, condemning a generation to minimum wage drudgery or enforced idleness.

Never mind the robots, fear the software as real-life experience has shown otherwise. For example, the arrival of automated teller machines (ATMs) spared bank employees the job of handing out cash and freed them to offer financial advice to customers. Obviously, some jobs could be made a lot easier by AI. One example is taxi drivers. Some fear that taxi drivers will be replaced by autonomous vehicles. But in future taxis will still be manned particularly when needed in town to manoeuvre around busy streets which are far harder to drive through than driving long distances down a motorway. Interesting advances powered by AI are happening in many medical areas in hospitals.

Other potential uses of AI is to detect cyberattacks, or coordinate fleets of drones, and it is useful for mass surveillance where many people congregate as there is facial recognition. Furthermore, increased automation gives more physical control to digital systems, which in turn makes cyberattacks even more dangerous. Regulation is needed to ensure that AI engineers are employing best practices in fighting cybersecurity and limiting the intrusion of cyber thieves especially in banks and sensitive data centres.

The fusion of AI and Blockchain systems will further enlarge the arsenal with tools for fighting cybercrime and make DLT databases tamper-proof. For example, when any transaction is recorded on blockchain that transaction is made known throughout the chain connecting users to each other. Therefore, it is not possible to tamper with a blockchain, which is why trust is built into the system rather than guaranteed by a ‘central owner’ of the data.

This powerful technology is silently ushering in the fourth industrial revolution. It will allow individuals to regain control of their own data, such as medical health or education records, and use it in ways that would not have been possible in the past. Blockchain and DLT technology will improve the tracking of intellectual property rights, as well as strengthen the concept of ownership in the digital sphere. Having discussed briefly the uses of AI, how can tiny Malta ever play a part in this success story? It so happens that Prime Minister Joseph Muscat has called for a global framework for regulating research into, and the development of, artificial intelligence technologies when he addressed a top conference in Shanghai China last year. AI, the internet of things and a best-in-class regulatory framework are now high on the government’s agenda, following the successful introduction of the world’s first comprehensive set of blockchain laws last year. Castille is smelling the coffee and the penny has dropped to lay the foundations for a digital innovation hub. The fly in the ointment is having superlative technical facilities to train a workforce with the right skills. It is a tall order, since millions are needed to train a workforce proficient in AI but it is never too late to start. The government recently announced the funding of a scholarship bourse for postgraduate degrees, as well as a lab to encourage the exploration of emerging technologies. One looks forward with courage to the next Delta Summit this year sponsored by the government with the hope that it will attract tech-evangelists and AI engineers to help us build a local ecosystem. One hopes this fulfils the vision of the prime minister and hallmarks his legacy at a time when he is rumoured to be contemplating his exit from the political stage.

George Mangion

Author: George Mangion
Published on The Malta Independent 21st March 2019
Get in touch: info@pkfmalta.com | +356 21 493 041

Artificial Intelligence: ignore at your own risk

Posted on by Colette Mangion

Author: George Mangion
Published on Malta Today 21st March 2019

The advent of Artificial Intelligence is entering the economic stage through the back-door but many feel that it is so powerful that we can only ignore its influence at our own peril. It is no minnow.

Experts predict that it in ten years it will underpin $15.7 trillion of global economic growth. Some fear it will wreck job opportunities and create mass unemployment in certain sectors yet others are less sanguine and think that it simply transforms current jobs and create new ones.

The McKinsey Global Institute reckons that by 2030 up to 375m people, or 14% of the global workforce, could have their jobs automated away. Bosses will need to decide whether they are prepared to offer and pay for retraining, and whether they will give time off for it. Many companies feel sympathetic towards the need for workers to develop new skills, but mass education is the remit of national governments and should not come about at the employer’s expense.

This is debateable, since less advanced countries do not have the resources to train workers to reach the higher technical skills required once the AI revolution becomes mainstream. Technological change always causes disruption, but AI is likely to have a bigger impact than anything since the advent of computers, and its consequences could be far more disruptive. Being both powerful and relatively cheap, it will spread faster than computers did and influence many sectors.

Another important question is how to protect privacy as AI spreads. The internet has already made it possible to track people’s digital behaviour in minute detail. There is little doubt that in the coming years, AI will offer even smarter tools for businesses to monitor consumers behaviours, both online and in the physical world.

This may become a threat to privacy. A corollary of AI is machine learning. One can explain this as autonomous learning capacity which empowers a machine to learn by its own without being explicitly programmed. It is a subset of AI, that provides the underlying system with the ability to automatically learn and improve from experience.

Today, many US firms are competing to provide AI-enhanced tools to companies. As can be expected, millions are invested to develop new technologies and companies that achieve a major breakthrough in artificial intelligence could easily race ahead of rivals and toughen global competition.

More likely, in the years ahead AI might contribute to the rise of monopolies in industries outside the tech sector where there used to be dynamic markets, eventually stifling innovation and consumer choice. The fear is that smart computer programs will eliminate millions of

jobs, condemning a generation to minimum-wage drudgery or enforced idleness. Never mind the robots, fear the software.

But real-life experience has shown otherwise. For example, the arrival of automated teller machines (ATMs) spared bank employees the job of handling out cash and freed them to offer financial advice to customers.

Obviously, some jobs could be made a lot easier by AI. One example is taxi drivers. Some fear that taxi drivers will be replaced by autonomous vehicles. But in future taxis will still be manned particularly when needed in town to manoeuvre around busy streets which is far harder than driving long distances down the motorway. Interesting advances powered by AI are happening across many medical areas.

Other potential uses of AI, is to detect cyberattacks, or coordinate fleets of drones, in hospitals and where many people congregate it is useful for mass surveillance through facial recognition. Furthermore, increased automation gives more physical control to digital systems, which in turn makes cyberattacks even more dangerous.

Regulation is needed to ensure that AI engineers are employing best practices in fighting cybersecurity and limiting the intrusion of cyber thieves especially in banks and sensitive data centres.

The fusion of AI and Blockchain systems will further enlarge the arsenal with tools for fighting cybercrime and make DLT databases tamper proof. To give an example, when any, say transaction, is recorded on blockchain, that transaction is made known throughout the chain connecting users’ to each other.

Therefore, it is not possible to tamper with a blockchain, which is why trust is built into the system rather than guaranteed by a ‘central owner’ of the data. Thus, this powerful technology is silently ushering the fourth industrial revolution. It will allow individuals to regain control of their own data, such as medical health or education

records, and use it in ways that would not have been possible in the past. Blockchain and DLT technology will improve the tracking of intellectual property rights, as well as strengthen the concept of ownership in the digital sphere.

Having discussed briefly the uses of AI, one may ask if and how can tiny Malta ever partake of this success story. The answer is blowing in the wind as it so happens that Prime Minister Joseph Muscat has called for a global framework for regulating research into, and the development of, artificial intelligence technologies when last year he addressed a top conference in Shanghai China.

AI, the internet of things and a best-in-class regulatory framework are now high on the government’s agenda, following the successful introduction of the world’s first comprehensive set of blockchain laws last year.

Castille is smelling the coffee and the penny has dropped to lay the foundations for a digital innovation hub. The fly in the ointment is having superlative technical facilities to train a workforce with the right skills. It is a tall order, since millions are needed to train a workforce proficient in AI.

But it is never too late to start. Government recently announced the funding of a scholarship bourse for post-graduate degrees, as well as hosting a lab to encourage the exploration of emerging technologies.

One looks forward with courage to the next Delta Summit this year sponsored by the government with the hope that it will attract tech-evangelists and AI engineers to help us build a local ecosystem. One augurs this fulfils the vision of the prime minister and hallmarks his legacy at a time when he is rumoured to be contemplating his exit from the political stage.

George Mangion

Author: George Mangion
Published on Malta Today 21st March 2019
Get in touch: info@pkfmalta.com | +356 21 493 041

PKF launches The BITPOD-an Innovation marvel.

Posted on by Colette Mangion

Author: Dr. Marilyn Formosa
Published on: The Commercial Courier

 

The BITPOD, which will function as a quasi-lab, will comprise a live project dedicated to fuelling research and development with a special accent on the emerging fusion between technology and the financial world as we know it.

It goes without saying that distributed ledger technology and virtual financial assets will play an important role in the experiment which promises a publication by the end of the year to be made available to the public in a compilation of the findings, observations, conclusions and results.

Complimentary to the BITPOD will be the BITBLOCK Sessions which will present a series of ad hoc working sessions in a casual format, once again aimed at provoking thought, ideas and novel discussion with local as well as international patronage.

The importance of honing and harvesting research and development locally, and attracting the same from the international forum, cannot be stressed enough, especially in light of our national ambition to service a centre of excellence, within the advancing realms of robotics, AI and all forms of revolutionary living.

As a nation we certainly have the intention and now we are also armed with the legislation, but we still have a long way to go before we can confidently say that we have secured the coveted working ecosystem.

We commend the good work and investment being done by Government and encourage the private sector, to like ourselves, follow suit on this remarkable journey that promises to make its mark an indelible one.

Dr Marilyn Formosa
Head of Legal – PKF Malta
marilyn.formosa@pkfmalta.com

BitPod Centre
35, Mannarino Road, Birkirkara, BKR 9080
+356 2148 4373 I 2149 3041 I info@pkfmalta.com

Cryptocurrencies, robotics and AI will dominate 2019

Posted on by Colette Mangion

Author: George Mangion
Published on Malta Today 14 January 2019

Malta just about climbed the hill of blockchain and must now scale the mountain of AI, a sector in which US tech giants pour billions of dollars in research and development.

Last year, the government was advised to take the bull by the horns and with the assistance of technical advisers rushed the Malta Digital Innovation Act together with a framework for virtual financial assets.

This was pioneering work, hoping that Malta will succeed (as it did in the remote gaming sphere) to be a leader in blockchain and its offspring,  the cryptocurrency regime.

Some say that Malta has taken the bull by the horns and plunged ahead in the sensitive area of virtual currency trading when virtual currencies were at their peak (Bitcoin peaked at $20,236) even though larger countries such as China, India, and EU countries were banning it. But of course, it is all a matter of the early bird catches the worm.

This year, while Bitcoin is making a shaky climb closer to $4,000, the entire industry of cryptocurrency is still reeling from hitting relative new lows. Since the start of the year, the number one cryptocurrency by market capitalisation is down nearly 80% since peaking in December 2017.

For some, the falling price of Bitcoin has raised the alarm and led to widespread selling out. This spurs negativity and a soured mood towards crypto and blockchain-based assets.

Yet hope springs eternal, since, at a recent Crypto Summit held in London by Bloomberg, panel speakers seemed to suggest that, while there’s no denying the immediate outlook for cryptocurrency is shaky, the industry is just experiencing a temporary setback. They hope it will eventually see a rally in the market this year.

Speaking on the panel, Chief Investment Officer at CCL Investment Management James Bevan gave hope to investors who have continued to stick with crypto through the falling market year.

This view was confirmed by Changpeng Zhao (CZ), the CEO of Binance. In his opinion, the market for cryptocurrencies has a promising future, and the year 2018 was merely a correction after the excessive growth that occurred during 2017. In particular, the strategy and business philosophy sustaining Binance have not changed at all; in fact, CZ noted that the company’s expansion plans are now more aggressive and structured, offering more services to a larger public.

Binance not only focuses on the use of current technologies but is also working to build a better future by investing in start-ups that do not have the necessary resources to begin but have great potential to help the ecosystem in the future. Given the level of innovation, security and digital functionality instilled by the technology of cryptocurrency, the industry as a whole has established a precedent pointing that the way forward for 2019 is more innovation and research.

Malta just about climbed the hill of blockchain and must now try scaling the mountain of AI, a sector in which US tech giants pour billions of dollars annually in research and development.

Quoting Forbes, it remarks that prospects for sustaining global competitiveness are now directly tied to the industrialisation of AI. AI and machine learning are predicted to reshape manufacturing, energy, transportation, and financial management. Countries that can successfully cultivate a culture of disruptive innovation will be strategically positioned to lead in the 21st century.

Alongside traditional manufacturing, the world is seeing a rising wave of innovation that has the capacity to transform existing markets and value networks. In particular, consider the application of approaches from big data, machine learning, and AI. All these forces have the power to process, analyse and utilise this data with the potential to transform healthcare, addressing major global challenges in the prevention, detection, and diagnosis of disease.

By contrast, governments that resist AI will find themselves facing a daunting future. It is welcoming to note that the EU has developed a funding initiative to help SMEs in the field of robotics and innovation. The funding is capped at €200,000 per each successful application and is part of the Horizon 2020 research and innovation programme.

Mindful of the legal and technical minefield that lay ahead, the MFSA called for experts to help design and draft parameters leading to a safe framework and good governance to face such challenges. It is an open secret that government is keen to be seen helping innovation and would like to see Malta becoming a jurisdiction that attracts talent from all over the world.

But readers may ask how can Bitcoin become mainstream unless fintech is attracted as well. We have just lost three private banks that closed last year and no effort should be spared to attract more members to the banking community. It is always a case that banks and monetary institutions are wary of challenges set by virtual currencies but like the internet, which was resisted in its early days, the DLT revolution is here to stay. Just ponder how, since we left the gold standard, central banks run billions of transactions in fiat currency which are not backed by any intrinsic value, yet we blindly trust such paper currency.

We know that following a process of quantitative easing practised in the EU and US, this has seen the printing of billions of paper currency by central banks to calm the markets and wipe off excess liquidity. Holders of fiat currency hold no qualms to trust in its exchange value. How does blockchain technology try to solve this dilemma? The answer is blockchain deciphers the trust issue.

It is undoubtedly true that last year, cryptocurrencies have had a very volatile history so caution among investors has set in. But we cannot stand and wait for the next rally. It is encouraging to see Prime Minister Joseph Muscat, at his year-end greetings, wax lyrical about Malta wanting to jump-start the process to regulate ostentatious topics such as research within AI and the Internet of Things, in an all-encompassing regulatory framework. This way the unassailable vision of a progressive Malta will become a reality and the entire island gains.

George Mangion

Author: George Mangion
Published on Malta Today 14 January 2019
Get in touch: info@pkfmalta.com | +356 21 493 041

A Blockchain marvel discovers Malta’s solid regulations

Posted on by Colette Mangion

Author: George Mangion
Published on Malta Today 7th December 2018

Having all data in Blockchain may close doors for certain professions but proudly open vacancies for cybercrime busters even though in theory hackers cannot access data through a central point of vulnerability, on the understanding that Blockchain networks are nearly impenetrable.

With the onset of Blockchain technology, there is disruption. Soon, the world will greet a proliferation of Artificial Intelligence which empowers robotics, machine-learning and Blockchain systems that make verification by auditors and registration of certain traditional contracts redundant.

Readers may be jolted by this assertion and think that this prediction is nothing but scare-mongering. Yet, the way Blockchain technology is structured is said to revolutionise the method how records are kept and maintained.

Naturally, having all data in Blockchain may close doors for certain professions but proudly open vacancies for cybercrime busters even though in theory hackers cannot access data through a central point of vulnerability, on the understanding that Blockchain networks are nearly impenetrable. This may be the case, yet the concentration of data in distributed centres attracts cybercrime.  Cybercrime’s footprint is increasing each year both in its sophistication and frequency.

Traditional defence strategies such as hardening of firewalls and intrusion prevention systems are no longer sufficient. Away from the curse of cybercrime and its nucleus of nefarious hackers, let us focus on the positive side.

The onset of Artificial Intelligence (A.I) coupled with the power of machine-learning will open new horizons in the next decade. There is no denying that it is a complex and ever-changing technological context. This interaction will be highly productive in creating new business opportunities which will be baptising the fourth Industrial revolution.

One may question why the fuss about Blockchain. Certainly A.I techniques are not new, although we are hearing about them as they are becoming more mainstream. Following the birth of the internet, twenty years ago we have seen and waited quietly for the next miracle in business development. It has arrived with the debut of Blockchain and its derivatives nine years ago. Many are purporting this to be the next miracle since the design of the ubiquitous steam-engine.

Taking the bull by the horns, Malta was quick to embrace the revolution and has promulgated laws to regulate it. But the ecosystem is still in the initial stages. For Malta, the drive for diversification of economic pillars is a good thing but this quest needs to be fully funded and supported by stakeholders. Obviously, to do this we cannot gild the lily and expect the green shoots to appear after the first rain.

The MFSA and FIAU are circulating for consultation with practitioners a tail of rules. These rules place a heavy onus on practitioners before accepting Blockchain clients and hold them responsible as a subject person to report to FIAU any suspicious transaction within three days of its occurrence.

There are other rules reining the governance of VFA agents and issuers, making them fully responsible to monitor clients before they are accepted to vet any business that may potentially lead to money laundering or financing of terrorism. The license fees payable to become an accredited agent or an issuer are not cheap when compared to other jurisdictions.

Making this an exclusive club reflects the way how authorities are raising the bar. Every firm needs at least three officials with a pass in an exam (apparently patronised by Institute of Management in tandem with a law firm – Ganado Associates) as a prerequisite to becoming accredited as a VFA agent.

Last month over 300 candidates sat for the exam but only a small percentage managed to pass. Certainly, starting on a high note will help the authorities shift the chaff from the wheat and avoid the apologetic story when licenses granted to three local banks, ended up being investigated for alleged money-laundering activities.

Another ingredient for the success in this sector is the attraction of technical advisers assisted by a number of crypto-friendly banks. The latter are conspicuous by their absence. Therefore, together with an eminent platform of rules, the government is expected to help in upgrading the levels of computer science and maths in schools.

Quality education is the building block of future generations of IT savvy students. Having raised the legal foundations to regulate Blockchain one must maintain momentum by recruiting more IT staff and A.I experts within the regulators.

Anything less will fail – it is like opening a grand pub with no beer. It goes without saying that more funds are needed to multiply the efforts in our university to research machine and quantum learning. It was a bold step when Malta decided to become a crypto and Blockchain hub in Europe and rightly so, government has sponsored a mega conference – Delta – to help promote this vision.

This has put Malta on the map and attracted the attention of giants such as Binance, Okex, and BitPay.

To help broaden the path for new business PKF Malta visited the headquarters of the Social Good Foundation Inc. in Tokyo, Japan – a company whose ICO raised an impressive $30 million from overseas private institutional investors. This foundation is headed by Soichiro Takaoka. and is using A.I to conduct research in the investment industry.

Simply put, it consists of algorithmic trading in which results are improved by analysing a variety of big data to discover investment targets, such as shares that are likely to increase in value.

The founder of Social Good Foundation says that it aims to become the Amazon or Rakuten of the Blockchain era. Soichiro Takaoka has an impressive biography. Having graduated B.A in Tokyo University, he started his career at Mitsui & Co., Ltd, where he was engaged in Overseas Investment Review, New Business Development, and M&A in the IT business sector.

Soichiro was engaged in overseas investment review, new business launches, and M&A in the information industry sector. He formed the Ayumi Trust Group (formerly the Abraham Group) in 2005. This is an IT media business pioneer, targeting the wealthy class. He then established and managed a Hong Kong securities company licensed under HKSFC (later sold).

Readers may ask, ‘What is the secret of success of Social Good?’ The answer is that it holds funds in reserve so as to maintain the value of the cryptocurrency and establish credibility. The novel idea behind this cryptocurrency is that it allows the holder to receive cashback when shopping at participating stores, part of which is automatically donated to charitable organisations.

The Foundation submitted its business model patent application regarding a cashback system utilising cryptocurrencies in Japan and the United States early this year.

At the end of April, the number of Social Good holders has surpassed 30,000 people worldwide. The image of Social Heart is one of a neutral fund rating organisation; it is positioned to use big data to carefully select superior funds worthy of long-term investment by the wealthy from a huge volume of fund data.

If Malta can lure such mega-asset managers given that it has enticed giants such as Binance, then one augurs that more Blockchain platforms are persuaded to weigh their anchor in our sheltered crypto harbour.

As always, fortune favours the bold.

George Mangion

Author: George Mangion
Published on Malta Today 7 December 2018
Get in touch: info@pkfmalta.com | +356 21 493 041

Blockchain renaissance portends the collapse of certain accounting professions

Posted on by Colette Mangion

Author: George Mangion
Published on Malta Today 28 November 2018

Blockchain technology has the potential to unsettle the nature of today’s accounting. It may constitute a way to vastly automate accounting processes in compliance with the regulatory requirements.

Granted that Blockchain adoption is still in its infancy but that hasn’t stopped experts from speculating on the vast changes the technology may bring. The accounting and auditing profession is investing heavily to try and harness its disruptive powers as is evident by declarations of the Big Four audit group which warn about the changes to the accounting profession that like a financial Tsunami will wreak havoc unless preventive action is taken by all to master it.
One can mention that for example, Deloitte has established a Blockchain consulting business and in certain countries, EY accepts Bitcoin for settling invoices. What is new about the future Blockchain-based accounting system? What does it look like? Theoretically, it would allow secure, verified information to be stored and accessed by multiple parties across multiple locations. Because a Blockchain is encrypted and consensus verified, it essentially notarises itself.
All of this adds up to the possibility of a replacement for the double-entry accounting method that has been commonplace since it was invented by the Medieval Italian philosopher Paccioli.
This technological marvel makes it nearly impossible for records to be falsified or corrupted. It is because as transactions are permanently added to the ledger (like blocks in a chain), information is transparently presented to all parties involved and one block is then linked to the next in the chain. Files can also be time-stamped and marked with a virtual fingerprint known as a “hash string” to ensure they remain unmodified. Imagine a future world, where accounting is not a double entry, but maintained in ledgers simultaneously recording the same item in multiple locations on multiple computers, all self-balancing. Needless to say, the system is self-checking every few minutes.
When Blockchain becomes mainstream, then the practical use of auditors and notaries (to name a few professions) may be entirely replaced by the use of smart contracts and other IT verification techniques.
In practical terms, what used to be an essential service rendered by auditors and notaries to record facts and check that transactions are verified independently now becomes pointless. In simple terms, Blockchain integration disrupts the future transactional world. In essence, there will no longer be a need for middlemen, no need for expensive reconciliations since theoretically the system fights against the imposition of any corrupt data. Simply put, there will be no need for month-end cycles, no need to bring together all the different books and records of departments and counter-parties.
The Blockchain technology has the potential to unsettle the nature of today’s accounting. It may constitute a way to vastly automate accounting processes in compliance with the regulatory requirements. There is a consolation that while certain professions become dinosaurs yet there will be a sleuth of new job applications opening for IT careers.
This generates a big demand for technical savvy workers. In addition to other skills, accountants, custodians and perhaps notaries may need to adopt new ways of thinking and acting in order to make the most to muster machine-learning tools. It goes without saying, this challenging world will need different ways of thinking to survive.
The most significant issue facing certain professions is a disruption. Soon, there will be the proliferation of Artificial Intelligence which empowers robotics, machine learning and Blockchain systems that as stated above, makes verification by auditors and registration of contracts redundant. Readers may be jolted by this assertion and think that this prediction is nothing but scare-mongering.
Yet, the way Blockchain technology is structured it is said to revolutionise the way records are kept and maintained. Naturally, having all data in Blockchain may open up new vacancies for cybercrime busters even though in theory hackers cannot access data through a central point of vulnerability, having already stated that Blockchain networks are nearly impenetrable. This may be the case yet the concentration of data in distributed centres attracts cybercrime.
Cybercrime’s footprint is increasing each year both in its sophistication and frequency. Traditional defence strategies such as hardening of firewalls and intrusion prevention systems are no longer sufficient. Away from the curse of cybercrime, the onset of Artificial Intelligence coupled with the power of machine-learning will open new horizons in the next decade.
There is no denying that it is a complex and ever-changing technological context. This interaction will be highly productive in creating new business opportunities which will be baptising the fourth Industrial revolution. One may question why all the fuss about Blockchain. Certainly, AI techniques are not new although we are hearing more about them as they are becoming the next buzzword.
Following the birth of the internet, twenty years ago we have seen and waited quietly for the next miracle in business development. Blockchain and its derivatives are here purporting to be the next miracle since the design of the ubiquitous steam-engine. Taking the bull by the horns, Malta was quick to embrace the revolution and has promulgated laws to regulate it.
But it is still in the early stages. For Malta, diversification is a good start, yet we need to nurture a team of technical advisers assisted by a growing number of crypto-friendly banks. With the support of efficient yet friendly regulation in the midst of a growing cohort of IT experts supported by Fintech – this makes the dream come true.
Surely we must double the research and development spend by Malta Enterprise – a government agency responsible for industrial promotion. This funding is badly needed in order to develop a deep understanding of how AI can speed the expansion of new business opportunities making judicious use of intelligent systems. Unless the government takes the first step to funding new research and invests in upgrading the levels of science and maths in secondary schools the growth will fizzle out. Quality education is the building block of future generations of IT savvy students.
Malta (like most other EU countries) is constantly looking to attract new talent to build a resource of workers necessary to fully exploit powerful new technologies. Otherwise having set the legal infrastructure for regulating Blockchain without maintaining momentum is like opening a grand pub with no beer. More funds are needed to multiply the efforts in our university to research machine and quantum learning.
These leaders will tap into our own cognitive strengths – pattern recognition and learning, machine vision and game playing. In conclusion, Malta needs to build on its initial successes as a Blockchain regulator yet if it wishes to succeed as the Blockchain Island in the Med, more energy is expected from MFSA to attract international IT companies and crypto-friendly banks.
Simply having the government sponsoring mega conferences and summits is a good start but it is not enough. The future is bright if we can muster the unassailable disruption that is expected to hit some of our professions.

George Mangion

Author: George Mangion
Published on Malta Today 28 November 2018
Get in touch: info@pkfmalta.com | +356 21 493 041

Exam fever hits virtual currencies practitioners

Posted on by Colette Mangion

Author: George Mangion
Published on Malta Today 13 October 2018

Mindful of the legal and technical minefield that may lay ahead, the MFSA called for experts to help design and draft parameters leading to a safe framework and good governance.

Last week saw three packed halls with young lawyers and finance executives sitting for a two-hour long exam concerning three laws introduced by the government on ICO, DLT Exchanges and cryptocurrency regulation.

Rumour has it that over 300 sat for the exam after attending four introductory public lectures conducted by the MFSA and a number of chosen consultants. The results were announced this week and sadly only a handful passed. This has peeved many practitioners since they were given to understand that licences to agents wishing to introduce virtual currency business were to be limited to those who passed the test. Be that as it may, it shows that there is a strong desire among practitioners to join the lucrative crypto bandwagon.

The government is being advised to take the bull by the horns and with the assistance of technical advisers, it has rushed the Malta Digital Innovation Act together with a framework for virtual financial assets. This is pioneering work hoping that Malta will succeed (as it did in the remote gaming sphere) to be a leader in Blockchain regulation.

Some may say that Malta has struck while the iron is hot and plunged ahead in the sensitive area of virtual currency trading when larger countries such as China, India and EU countries are banning it.

But of course, it is all a matter of who dares wins. Quoting the Prime Minister at a recent speech he gave to thousands of delegates attending the Delta event last week, he wants to jumpstart the process to regulate ostentatious topics such as Artificial intelligence (AI) and the internet of things in an all-encompassing regulatory framework.

Delta Summit is the world’s first government-led (and funded) event promoting Blockchain and bringing together service providers, experts and public entities. Malta just about climbed the hill of Blockchain, now we must try scaling the mountain of AI – a subject into which USA tech giants pour billions of dollars annually in research and development. This may encourage the finance minister at the next budget to scale up the dreary amount of funds allocated for applied research.

Silvio Schembri, parliamentary secretary for innovation, proudly announced that the summit would send a strong message to institutions worldwide. Mindful of the legal and technical minefield that may lay ahead, the MFSA called for experts to help design and draft parameters leading to a safe framework and good governance.

It is an open secret that government is keen to be seen helping innovation and would like to see Malta becoming a jurisdiction that attracts talent from all over the world. Little Malta aspires to become an economic superpower in the Med. But readers may ask how Bitcoin can become mainstream unless Fintech is attracted as well.

Readers still feel confused with the terminology and so to help clarify the jargon one can simplify the myth by describing Blockchain as the track while Bitcoin is the train. It is always a case that banks and monetary institutions are wary of the new challenges of virtual currencies but like the internet which was resisted in its early days, the revolution is here to stay.

Just ponder how since we left the Gold Standard, we have run billions of transactions in fiat currency which are not backed by any intrinsic value yet we trust such paper currency. We know that following a of Quantitative Easing practised in EU and USA has seen the printing of billions of paper currency by Central banks to calm the markets and wipe off excess liquidity. Holders of fiat currency hold no qualms to trust in its exchange value.

If someone asks how Blockchain technology solves this dilemma, the answer is that Blockchain deciphers the trust issue. Typically, we can ask ourselves five questions. These are:  Do we really trust the intermediaries?  Do we trust credit cards? Do we trust the fact that transactions represent real value? Do we trust banks? Do we trust our government?

Without going into the controversy which arises from answers to these questions one can do a reality check by saying that if and when cryptocurrencies become mainstream, then trust peaks. We all heard about Bitcoin, Ethereum and other coin variants which currently form part of a popular framework, yet there will be many others. Let us remind readers that located in Valletta is a company-styled Grand Central, hosting a service office and is fully operational concerning payments in Bitcoin.

This service was recently launched by Ravinder Deol, himself an international producer of cryptocurrency training courses. It is interesting to note how Grand Central being the first of its kind in Malta now offers membership plans to suit different working styles, ranging from a hot desk by the hour to a dedicated co-working desk or private office rented by the month.

In addition to providing members with fully serviced workspaces, Grand Central also has exclusivity in Malta to offer international partnership services. Its website states that thanks to linkup in London it offers guest membership of five business clubs in UK operated by The Brew, providing members with a London base and business community with whom to network. Quoting Iain Harvey, founder of Grand Central, he said: “We are always looking at what extra flexibility we can give our members and this time it’s that we offer payment channels.”

It is undoubtedly true that cryptocurrencies have had a very volatile year but even so Grand Central feels that their flexibility is paying off as membership numbers continue to increase. Banks in Britain and the United States have banned the use of credit cards to buy Bitcoin and other “crypto currencies”, fearing a plunge in their value will leave customers unable to repay their debts.

Here one can mention that Lloyds Banking Group Plc, recently said it would ban its credit card customers from buying crypto currencies, following the lead of JP Morgan Chase & Co and Citigroup. Quoting Joseph F. Borg, VP of Bitmalta, he thinks the technology will also transform banks, whether they like to embrace it or not. In the meantime, there is speculation that a handful of foreign banks are applying to the MFSA for a licence to provide virtual currencies business in the coming months. In this way the unassailable vision of Silvio Schembri will become a reality and the entire island gains.

George Mangion

Author: George Mangion
Published on Malta Today 13 October 2018
Get in touch: info@pkfmalta.com | +356 21 493 041