Breaking the Blockchain code
The future lies in a blockchain consensus operating system that is permissioned, decentralised and regulated by governments for economies to prosper and people to feel empowered, explains Zurab Ashvil
For blockchain to truly become a part of daily life, there is one thing that needs to change, and that is regulation. Traditional blockchains offer trustless interaction and transparency, making them attractive to businesses and governments as well as individuals and solving many privacy and security issues inherent in standard software and web apps. However, the space has been difficult to regulate, with no access point to individual blockchains for regulatory authorities. At the same time, blockchain projects frequently struggle to attract institutional investment.
L3COS structurally recognises that no one blockchain structure can be all things to all participants and uses a triple-layer structure to meet the needs of three types of uses: national governments, businesses and organisations, and individuals. This has been recognised by an increasing number of high-value investors seeking involvement with the project.
L3COS has developed the first quantum-safe blockchain operating system with sufficient scale and speed to meet the growing needs of central banks around the world. Its blockchain technology is immutable, fully auditable, traceable and transparent, all of which makes fraud, money laundering or other black-market financing impossible. Blockchain is now a tried and tested technology with up to half of the leading companies in the US, and many others around the globe already deploying it in their systems and process management.
This triple layer consensus system is quantum-safe, cost effective and can digitalise transactions faster and with greater transparency. The brainchild behind the 'regulation' is Zurab Ashvil, a serial tech entrepreneur and a former SoftBank executive, whose start-up has developed the world's first quantum-safe blockchain-based operating system that enables full governmental and regulatory oversight.
Part of this team is Sir Mark Lyall Grant, a former senior British diplomat who joins in the capacity of an advisor as the company starts to engage with central banks around the world. Other big names include Massimo Buonomo, a highly regarded professional in the blockchain field with more than 15 years of experience in international financial markets as senior equity banking analyst, and Martin Graham, former head of markets at the London Stock Exchange.
Ashvil explains how the digitalisation of economies will be accelerated by regulated blockchain:
The digitalisation of economies involves the automation of services in order to make them quicker, cheaper and more efficient. This process is made possible through blockchain, as smart contracts can be used to manage all manner of transactional relationships between governments, corporations and individuals. But if this is the case, why isn't the world using blockchain to do exactly that already?
The truth is that, for all the promise and potential of the technology, existing blockchain networks have failed to match up with the world we live in. They advocate anonymity above all else, even though we know that it is human nature to want to understand the people we deal with. This is why, for all the excitement about blockchain technology, real progress towards the digitalisation of economies has stalled. What is needed is a new, regulated blockchain that provides the benefits of decentralisation for the people and corporations that use it, while also reflecting the representative government and societal structures we recognise.
All economies can benefit from digitalisation
While some progress has been made in the internet era, most industries and economies have failed to digitise in a way that is truly transformational. As a result, people are stuck with paper-based processes when they deal with banks, accountants, lawyers and many other institutions in their daily lives. They need to constantly confirm their identities with a range of intermediaries because anti-money laundering and Know Your Customer procedures aren't joined up. They have to sign, scan and return contracts via email or wait for them to be delivered by post.
Most of these steps have been developed to meet regulatory requirements and avoid fraud or corruption, yet fraud still costs the global economy an estimated $42 billion every year. Of course, this is not to say that regulation isn't necessary. There's no doubt that supply chains need to be monitored and quality assurance upheld. As citizens of representative nation states, this is what we expect from the people we vote into power. They should keep us safe from harm and lay the foundations for our prosperity. What seems abundantly clear to me though is that very few nations have harnessed the power of blockchain to enable regulated digital economies.
Some governments have embraced blockchain
There are some governments that have successfully pushed ahead with their adoption of blockchain. In Sweden, the country's land registry started experimenting with how it could use blockchain to record property transactions in 2016, in order to save over ?100 million by eliminating paper processes. A similar initiative has occurred in Georgia, where I was born. Also in 2016, the country's National Agency of Public Registry began a large blockchain implementation that resulted in 1.5 million land titles being registered on the blockchain by 2018. However, the standout example of a blockchain-enabled nation must be Estonia.
This Baltic state is known as the keenest advocate of digitalisation, with 99 per cent of public services available as e-services. It has deployed blockchain in production systems since 2012, using the technology to power healthcare, property, business, courts and many other government registries. These are all great examples of governments digitalising their economies with blockchain. What is really exciting about how blockchain is changing right now though is the interest that some of the biggest nations are showing in it as they look to transform their financial ecosystems.
Blockchain for Central Bank Digital Currencies
In recent months, many of the world's leading economies have signalled their intent to investigate whether a Central Bank Digital Currency (CBDC) might be a worthwhile direction for their monetary system. In fact, the Bank of England, Bank of France, Bank of the Netherlands, Bank of South Korea, Bank of Thailand, Bank of Canada and the European Central Bank are all assessing the opportunities and challenges involved. In particular, they are studying whether regulated blockchain technology can provide fast, secure and transparent payment systems, as well as efficiencies of administration.
The fast and secure exchange of information between governments and within digital economies can be provided by a real-time gross settlement system. With this in place, sovereign states would be able to facilitate the increasing consumer preference for digital payments over physical cash, while also implementing an immutable digital ledger of transactions. This regulated blockchain would be the foundation of fast and efficient digital economies in which businesses and individuals interact seamlessly with one another. It would also be a major step forward from the blockchain solutions that exist today.
Existing blockchains won't work for governments
The reality is that existing blockchain networks can never meet the needs of the government when it comes to regulating digital economies. On the one hand, there are permissioned blockchains provided by old technology companies. These are built on legacy systems and pull together various outdated components, rather than meeting the needs of a blockchain-enabled government in 2020. On the other hand, you have the most well-known decentralised blockchain networks that have risen to prominence in recent years. These have made billionaires of their founders but to say they will be the foundations on which future digital economies are built is far-fetched. To be clear, the problem isn't decentralisation per se. The problem is that existing blockchain networks combine decentralisation with a belief in anonymity above all else. Not only does this feature go against our desire to understand and trust the entities we engage with, it also completely excludes the role that governments must play. This is why a totally new approach is required.
Powering digital economies
What is needed is a blockchain consensus operating system that governments can regulate. They need to be able to control who is registered and brought into the system, so that corporations and individuals can use it to feel safe, secure and able to prosper. Once in the system, these entities can interact in a decentralised manner, using smart contracts that automate processes and drive efficiency. By failing to achieve this ideal, existing blockchain networks have never been adopted en masse and will never be able to meet the needs of sovereign states. This is why I designed L3COS, a regulated blockchain that will accelerate the benefits of the digital economy for everyone.
UAE Blockchain Agenda
In 2018, the UAE launched its UAE Blockchain Strategy 2021 that aims to capitalise on blockchain technology to transform 50 per cent of government transactions into the blockchain platform by 2021. The technology is poised to shape the UAE's future as the nation adopts its digital economy agenda. Businesses have realised that the only option to remain competitive is to embrace the digital route.
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