Payments, contracts, intellectual property, smart contracts, registers, claims, loans, financial transactions, polls and voting, case law rulings, import and export - indeed, every time a third-party is involved to process a transaction, the blockchain could replace it. And just as Google disrupted the Internet, and Napster changed the face of the recording industry, blockchain is being touted as the next internet revolution.

"The first generation of the digital revolution brought us the Internet of information. The second generation — powered by blockchain technology — is bringing us the Internet of Value: a new platform to reshape the world of business and transform the old order of human affairs for the better." Don Tapscott, author of ‘The Digital Economy’ and ‘Wikinomics’.

The technology

The irony is that this innovative infrastructure is based on the archaic, analog technology of the past – ledger systems. Originally starting off as the platform on which the much-discussed digital currency Bitcoin is based, put crudely by the Fintech industry, blockchain is nothing but a distributed ledger. It involves a means in which information is recorded and shared by a participating community. Each member in the ‘chain’ maintains his or her own copy of the information and all members must collectively validate updates. Each update is a new ‘block’ added to the end of the ‘chain’. When a transaction is conducted, it is posted globally across millions of computers. This information is then caught and verified by miners.

Blockchain makes for a very secure ledger of digital events, where parties’ identities and data are protected by cryptography. New ‘blocks’ or changes in events, can only be updated with at least 51 per cent consensus. Erasing information entered into the blockchain is not possible. Entries are permanent, transparent, and searchable, making it possible for members to view entire transaction histories.

The platform manages how new edits or entries are initiated, validated, recorded, and distributed. Blockchain is the ‘tech-charged’ public ledger of the past, with the added value of permanence, transparency, and searchability. Complex algorithms have eliminated third party intermediaries.

The result is a process where intermediaries are superfluous and no central, monitoring, certification authority is required.


Technically, the most vital elements of a block are the header and the content. The header would typically include metadata, such the exclusive block reference number, the time the block was generated and a link back to the preceding block. The content usually presents a validated list of digital assets and instruction statements, such as transactions, their amounts and the addresses of the parties to those transactions.

From the latest validated block, one would be able to access all previous blocks inter-linked in one particular chain, with the Blockchain database maintaining the entire assets history and instructions down to the very initial one. This makes the data verifiable and autonomously certified.

With the growth of participants in the chain, malicious or erroneous transactions are easily caught and overcome, as certification by the majority becomes the norm. This turns the network into a robust and secure set of actions without the need of having a central moderator or facilitator.

The death of the intermediary

Until now middlemen - banks, financial intermediaries, governments - carry out all the KYC, verification, clearing, and settling steps in the process and would ascertain that the asset can, and has really passed on from the remitter and received by the receiver.  This system presents various challenges, such as hacking, exclusion of certain categories of people, slow transactions and high costs in the form of cuts.

On blockchain every form of asset, be it currency, art, certificates, and so on, is stored, moved, managed and controlled through the individual players themselves and not through some financial intermediary. In this scenario stakeholders would be able to transact peer-to-peer and trust is established not by an institution but by collaboration, partnership, secure technology (cryptography) and skillful coding.

The Internet of Value

For the past two decades of so, we have experienced the Internet of Information – the mass dissemination of knowledge. We are now facing a new phenomenon, the Internet of Value. The difference between the two is critical. In the former, remittance of information deals with the delivery of a copy of the original. In the case of the latter, one has to be able to send the original asset over a network, be it currency, IP, vote, stocks, bonds.

Industry players say that blockchain can potentially revolutionise the financial services while others contend its impact will be less forceful.  In any case, it definitely has the potential to create a reporting system that is not only more effective than current solutions, but also more transparent and safe. It could eventually become a standard for financial transactions and real-time settlements, increasing transparency and efficiency in a highly fragmented industry. Together with its related ecosystem, blockchain will ultimately oblige financial regulators and institutions to re-evaluate and modify their traditional status quo and infrastructure.

Author: Dr Priscilla Mifsud Parker is a private client lawyer heading our Corporate, Trusts & Fintech areas of the firm. Having participated in Malta’s Fintech Legislative Framework she is able to provide guidance to clients seeking to venture into the Fintech Industry. Moreover, she also provides assistance to individuals with regards to corporate and trusts matters.  

Dr Priscilla Mifsud Parker can be contacted at [email protected] and on +356 2205 6603.