What is DLT?
Distributed Ledger Technology allows digital information to be distributed, however, it bars it from being copied. The basic idea is that of an office collaboration software such as a spreadsheet module where all the information is available to everyone at the same time rather than shared with one another by locking and unlocking the information until it is updated.
The Three Pillars of DLT are;
Decentralization Transparency Immutability
Decentralization
In a decentralized system, the information is not stored by one single entity. In fact, everyone in the network owns the information.Transparency
A person’s identity is hidden via complex cryptography and represented only by their public address. So, while the person’s real identity is secure, you will still see all the transactions that were done by their public address.
Immutability
In the context of the blockchain, immutability means that once something has been entered into the blockchain, it cannot be tampered with. For every modification of transaction, a hash is created, if they are tempered with the transaction hash changes. Therefore, they are all uniquely identified and if one tries to change it, it becomes much more easily discoverable. Moreover, if someone alters the information on their blockchain, it is not automatically updated on each of the rest.
Regularisation
Malta is at the forefront in the regulation of Innovative Technology, so much so, that last year three new bills came into effect ensuring this field is carefully regulated.
The Malta Digital Innovation Authority Act has established an authority which is composed of at least 4 members; with relative qualifications and experience in relation to the subject matter. The Authority’s overarching purpose is to act as a watchdog; having both a supervisory and regulatory role in the field of innovative technology. Apart from the regulation of products, it also provides for the recognition, certification, and registration. Moreover, it has the duty to promote governmental policies, whilst also forming policies itself in relation to this field keeping in mind both short and long-term objectives.
The Innovative Technology Arrangements and Services Act guides the Malta Digital Innovation Authority on the various methods of recognition which it can resort to when it comes to acknowledge new types of technologies. Moreover, the Authority through this Act was granted the competence to not just recognise but also introduce technologies through certification of different innovative technology. According to this law, the Authority has the right and duty to establish the criteria that such technology needs to abide by in terms of quality, features, attributes, behaviours or aspects. One can receive a certification for anyone of the criteria aforementioned, but it would not automatically operate as a certification for the rest of the criteria. Nonetheless, it cannot bar the applicant from applying for the certificate of the other criteria either. This certificate includes the details of the product and has a unique number for purposes of identification. When issued the certificate is in favour of all the parts of the innovative technology, unless expressly stated otherwise. In case no certificate is issued within 3 months it shall be deemed as refusal and the applicant shall enjoy the rights of appeal.
Malta was amongst the first which was thrown in the deep end when it attempted to regularise this industry, mostly because it was and still is unexplored waters. In fact, many legislators are put in difficulty due to its modernity and the constant developments occurring, which are widening DLT’s use, resulting in many new legal implications.
This shall not be construed to be advice but shall merely serve as a brief description of blockchain and DLT technologies.