Bitcoin and GamingMEDIA ROOM
What is bitcoin?
Bitcoin is only one of the most common cryptocurrencies. Other types of cryptocurrencies include Litecoin and Peercoin. Bitcoin differs mostly from FIAT (normal money), in the sense that is it not controlled by Governments or by Central Banks. In this way it is similar to gold and diamond, as it can be sent from user to user without the need of an intermediary. In fact, one of the ideas which brought to existence cryptocurrencies, is the fact that a system needed to be created to avoid having the intrusion of a Government and/ or a Central Bank.
How does bitcoin come to existence?
Bitcoin starts with a process called mining. Mining means, solving a complex mathematical problem. Every time there is a solution found to the complex problem, a reward is given in the form of a bitcoin.
Bitcoin and Malta
Although Malta, has always been in the forefront to embrace technologic novelties, to date the different local authorities have not taken a favourable position to bitcoin.
In fact, the Malta Gaming Authority (MGA) has recently stated that it is not accepting requests from companies who would like to accept cryptocurrency transactions. The Chairman of the MGA has recently stated that the MGA is seeking to adopt a national approach and given cryptocurrency is a financial instrument, the MGA shall be collaborating with the Central Bank, the FIAU and the MFSA.
In today’s world, were every transaction is compliance driven, cryptocurrencies are a struggle when determining the source of funds. As we are sure that everyone is aware, today, each transaction needs to be backed up with documentation with respect to source of funds. Because Bitcoin is an electronic means of payment, which may be recorded by means of ledger (this is not compulsory), it will be close to impossible to determine the source of funds in this respect.
It is also a known fact that that it is easier to pay for illicit and illegal activities by means of bitcoin as these are not regulated by a Governments and/ or a Central Bank, therefore making a Bitcoin transaction potentially money laundering.
How secure is bitcoin from theft?
Like a cheque, bitcoin requires a signature to prove the owner of the bitcoin (that is the account holder). Each transaction sent from an electronic wallet would also have a specific key which corresponds to the particular account owner. This key, unlike a signature may not be copied. The down side however, is that the key will not have a date linked to it. Nevertheless, it is easier to defraud using FIAT money rather than using cryptocurrencies.
While, we do believe that in the future we must find a way to live and work with cryptocurrencies, one must admit that what we know to date, is not enough to have local authorities embrace it, neither use it.
About the Author
Dr. Ann Bugeja joined CSB Group in January 2011 where her areas of interest cover Ship and Yacht Registration, Employment Law, Contract Drafting,Residence and Work Permit applications and applications for Special Tax Status.