How small jurisdictions could drive mass adoption of Blockchain technology
Everybody’s talking about Blockchain these days. Given its potential to increase efficiency, transparency and security levels in nearly every global industry, it’s safe to assume the excitement surrounding the technology will skyrocket.
However, Blockchain is not fully accepted by all sectors and jurisdictions. Many are still skeptical about the perks it can provide. Whether we like it or not, we’re talking about a disruptive technology that could directly challenge a country’s economic status quo. As Blockchain is constantly being tested, explored, and used by stock exchanges, corporate banks, and Silicon Valley giants, it is being aggressively scrutinized by regulatory entities and governments across the globe.
The progress, mass adoption and overall state of Blockchain in smaller countries is extraordinary, in spite of lingering hesitance with big jurisdictions to welcome the technology. Considering the chameleonic nature of the Blockchain, it was only a matter of time before the technology would relocate to different homes such as Gibraltar, Malta, Georgia, Germany, Liechtenstein, and Switzerland. There are certain characteristics that make smaller jurisdictions appealing, the first one being their willingness to embrace new technologies.
Small countries — a safe haven for the crypto industry
Smaller countries are more competitive, responsible and accessible, and less constrained by conventional ways of conducting business than their competitors. When the Blockchain emerged to drive significant impact on the world’s economy, smaller countries were more than happy to jump on a disruptive journey, rather than issue bans and bulletproof regulations.
Blockchain is being implemented across a wealth of niches, sectors, and industries. The current focus is on smaller countries because decision makers, stakeholders and principal authorities are more local, more open, therefore more willing to embrace policy recommendations from the experts. It’s easier for people to communicate, collaborate, reach a consensus and settle on a plan of action that benefits the entire community.
Georgia, for example, is the world’s 2nd most active crypto mining country. Home to nearly 4 million people, it has crypto-friendly regulations and very cheap hydroelectricity; two factors that contributed to its mining boom. Most of the country’s crypto mining activity comes from Bitfury, which is a US-based tech company. The mining facilities were once located outside of Tbilisi, but according to recent reports, Bitfury sold the main data site. For stakeholders, it’s easier to maintain communication and collaborate with each , as well as reach agreements, tackle challenges and coordinate plans of action in smaller jurisdictions. For a type of technology as rapidly changing and transformative as Blockchain, smaller countries seem to be like the perfect home.
With Blockchain, smaller jurisdictions can stay relevant
There’s a need for small-sized jurisdictions to preserve their relevance on a global level, especially in a developing industry such as Blockchain. Liechtenstein, Switzerland, and Gibraltar must grow and maintain the competitive edge in certain sectors, therefore they cannot depend on the world’s larger economy to compensate for their shortfalls. Gibraltar is an excellent example, given that its two most important industries are online gaming and financial services; both with direct and instant application to Blockchain technology.
In a recent report, it was stated that Gibraltar’s official government had plans to make ICO tokens “commercial products”, as opposed to the US where these are “securities”. The country has also introduced a licensing system and a DLTRF (distributed ledger technology regulatory framework) that regulate all businesses that use DLT within or out of Gibraltar’s jurisdiction to store or send value. The authorities continue to work on further regulation on ICOs.
Banks in smaller countries understand that KYC and AML demands of a Blockchain-based business. Auditors, accountants, and lawyers are well-equipped to handle emerging challenging and investment funds that focus on tokens, cryptocurrency, and further implications of the technology are well-serviced from a legal perspective. Gibraltar has proven to have an open mind as far as Blockchain is concerned. The government is willing to interact and engage with a new technology that delivers solutions and has proven to serve the entire community.
Liechtenstein aka. Bitcoinstein
The potential flexibility and dynamism characteristic in smaller countries clearly explain why Blockchain has boomed. The practical implications are making certain industries like finance and tech enter the scene well-equipped with in-depth knowledge about all things Blockchain-related. With nearly 40,000 residents, and low tax rates, Liechtenstein has more businesses than citizens. Hidden between Austria and the Swiss Alps, the country’s Crown Prince Alois welcomes the crypto community with open arms.
After being involved in the development and creation of Ethereum, Yanislav Malahov developed his very own Blockchain-based company Aeternity in Liechtenstein. After meeting with tax authorities and local regulators back in 2015, he made a final decision because “you can open a company without a bank account, just by using Bitcoin or Ethereum”, said Malahov in a Forbes interview.
Although a member of the European Economic Area, Liechtenstein is not part of the EU. Its main advantage is that it also provides financial services for businesses in the Blockchain and cryptocurrency niches. Banks are more than willing to handle crypto investments, and they’re even providing advice on ICOs, whereas most countries in Europe — with a few exceptions — are not very crypto-friendly.
Earlier this year, Crown Prince Alois has implied that he might be integrating Blockchain technology to handle daily administration of the monarchy. With monthly Blockchain meetups hosted in the capital of Vaduz and newly-founded crypto businesses such as Chainium, Malahov is even thinking about opening a Blockchain-based co-working space in Liechtenstein. Although still in its early stages, for crypto-based startups Liechtenstein’s alpine forests have never looked so mesmerizing.
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