What are the most important elements of Blockchain Technology that we should know about?

Blockchain technology aims at the optimal management of digital information. It allows for the secure recording and storage of digital data, in a way that allows for their dissemination with the general public or with selected persons, on the basis of a predetermined protocol excluding their falsification. Therefore, Blockchain technology concerns a technology which is interlinked with transparency and the enhancement of security and trust in terms of who, where and when he draws up, shares, completes (and not deletes) a digital file. 

How important is it to apply this new technology to both the public and private sectors?

First of all, it should be clarified that it is not a matter of choice whether this technology will be applied or not. What I mean with this, is that we are experiencing a broader technological advancement as humanity, which involves changes in the way we communicate and transact. Our long-standing need for faster and more economical data exchange solutions have led us to the digitization of data. From thereon, having "conquered" digitization, the focus has turned to the creation of technologies for the reliable recording, storage and sharing of digitized information. We are all looking and striving for technological 'tools' for the easy and trusted certification of the authenticity of the now digitized information. This is a fact to which both the private and the public sector must respond adequately, approaching it from now on, as the normal development of services and markets more generally. We are experiencing a wider technological advancement as a humanity, which encompasses changes in the way we communicate and trade.

What are the most important advantages of this technology and potential risks?

From my experience, I consider that the reporting and recording of advantages or risks of Blockchain technology is a subjective matter. It depends on an individual’s professional background, on the practical (and not only theoretical) usefulness of technology, combined with the problem it is employed to solve, and certainly not on the general predisposition on the part of the professionals. For me as a lawyer, this technology has the advantage of a secure proof of creation, distribution and flow of any digital information, in such a way that any proprietary and property rights and obligations of persons are disclosed and certified in real time. This is perhaps the greatest and most tangible benefit existing at the moment insofar as the administration of justice and legal science more generally are concerned. In relation to potential risks, I believe that there is no risk in the technology itself. As in any other case, risks may arise through human failures or omissions during the programming of the protocol for the management of digital information, in the so-called "smart contract" (smart contract).

In which industries is there interest in applying this new technology?

The global interest in this technology, as well as the evolution of the technology itself, are following a parallel upward trend. Major companies have developed and are offering their customers specialized software programs that allow them to create and manage their own private platforms and Blockchain applications. Through these platforms and applications, the optimal dissemination of information and data between partners, employees and customers is achieved. In addition to the individual sectors of economic activity which currently record the greatest interest, such as the finance, health, real estate and logistics sectors, a horizontal promotion of technology is also recorded as a tool for raising and managing investment funds under the rubric of asset tokenization. Major companies have developed and offer their clients specialized software programs that allow them to create and manage their own private Blockchain platforms and applications.

What exactly is the trend with regards to asset tokenization?

Blockchain technology has somehow "unlocked" the ability to convert any asset into individual digital shares, giving the opportunity to access an incomparably larger base of potential buyers and raise liquidity in a regime of transparency, lower costs and full automation. Since its issuance and for the entire duration of its effect, the digital share represents the value and rights allocated to it in real time, on the basis of the underlying asset. If, for example, the underlying asset is a single share of a company, divided into 10 digital units, then each of them represents 1/10 in value and rights over that share, as those are formed over time. In another example, if someone sells a property worth 1 million Euros, divided into digital shares of 100 Euros, those willing to pay this minimum amount will obviously be much more than those who can pay 1 million Euros. This provides for excellent prospects especially with regards to assets that are difficult to liquidate, such as real estate, intangible assets, loans and receivables and this is precisely where the trend is observed internationally. I believe it is only a matter of time before it also develops in Cyprus. 

What drastic changes do you expect following the establishment of the Legislative Framework?

It is very important to stress that legislative intervention is necessary in order to fully reap the benefits of the technology. Private-sector initiative and adoption of the technology must be accompanied with corresponding actions from the public sector and in particular with legislative and regulatory rules that recognize, vis-à-vis everyone, the legal force of contracts, transactions and generally all functions performed through Blockchain technology. This is what has essentially been set in motion with the drafting by the Ministry of Finance of the “Bill on the Distributed Ledger Technology Law of 2021”. The completion of the discussion of the Bill and its passage into law, which I wish will be in due time, will in my opinion, bring about the necessary legal certainty to businesses and consumers in relation to sale and purchase contracts executed through smart contracts and digital assets (cryptocurrencies). This is something which I foresee will be strengthened further with the adoption of the much-anticipated EU Market in Crypto-Assets Regulation, known as MiCA. 

On cryptocurrencies more generally, there is a lot of reticence across Europe, since they are considered to be of high risk. What are your comments on these concerns?

Reservations and concerns exist not only at European but also at international level and my stance is that caution is not only necessary but also helpful. It is true, for example, that investing in cryptocurrencies carries a high risk of loss of funds. The crucial thing, however, is to identify the objective reasons on how and why there are concerns raised about cryptocurrencies and what it is that might sustain such concerns, or even worse, exacerbate them. There are, in my view, two main reasons for these concerns. The first concerns the long period of inaction on the part of the supervisory authorities and the absence of regulations, which has enabled a culture of anarchy and appropriation, such that cryptocurrencies (generally and vaguely) are unfairly described as 'tools' of fraud, money laundering, and so on. The other reason, which for me is deeper and more complex, has to do with the all-encompassing and persistently dismissive attitude of the banking sector towards cryptocurrencies. This dismissive attitude is recognized by many as the natural banks that banks have vis-à-vis the competition that cryptocurrencies potentially establish and enable vis-à- vis their operations, as alternative decentralized, financial systems. 

Do you believe that banks will change their stance towards cryptocurrencies?

Certainly. Nonetheless, this will not happen overnight. I believe that they will ease their resistance gradually and simultaneously to the strengthening of the regulatory framework for transactions in cryptocurrencies, in a way that is more familiar to the traditional banking regulatory framework. In particular, I consider that the two most important chapters in initiating such a process of reassessment and acceptance are first of all, the mandatory licensing requirement for the provision of services related to cryptocurrencies and, on the other hand, the proper supervision and adherence to strict procedures for the acceptance and systematic checks of customers and transactions. In addition, the importance of providing banks with the appropriate technological tools should not be forgotten, such that the assessment of potential risks in this specific market is carried out by adequate and most importantly, correct means. 

What do you mean for banks to be provided with adequate and correct means?

I mean that existing practices, platforms and generally the customer and transaction checking systems employed by banks, are not compatible with the cryptocurrencyecosystem. To put it simply, we cannot expect that within this ecosystem, the risk to a bank will be determined, nor should it be determined, only by reference to a customer’s identity card, Curriculum Vitae, a water or electricity bill, and so on. The procedures for the acceptance and systematic checks of customers and transactions related to cryptocurrencies must be carried out through specialized systems that utilize Blockchain technology. These systems focus on the content of the customer's "digital wallet" and the origin and type of their cryptocurrencies, rather than on subjective assessments based on their financial profile. They are, therefore, technological tools that both offer more reliable results in terms of the source of the customer's wealth and set the combatting of money laundering to a different level. 

You are the first Cyprus law firm and one of the first law firms internationally to adopt Blockchain technology. How did this innovation come about and how do you use it?

By evaluating various benefits that Blockchain technology can deliver to the legal profession and equipped with a willingness to integrate more technology into our services, we have been offering our clients since 2019, the option of issuing a digital certificate of shares on a blockchain. This innovation of ours has attracted great interest in Cyprus and abroad, helping many colleagues along the process, to better understand the potential of this technology. This innovation has also attracted the interest of supervisory authorities as it became possible for the first time, to certify the authenticity and validity of such a certificate inexpensively, directly, at any time (24/7), even by the person legally responsible for the keeping and updating the register of shareholders of a company; namely, the company secretary. We are currently planning to upgrade the system with the inclusion of additional data, which will offer a speedy, automated and fully updated status of the customer's profile. 

As an academic, what would you say are the most important changes brought by the new technologies in the field of Higher Education and to what extent are you satisfied with the interest shown in these new curricula?

Blockchain, Artificial Intelligence and many other new technologies will disrupt and benefit almost all areas of work sooner or later. It is for this reason that Higher Education assumes a pivotal role, both in the research and educational fields, as well as in the interconnection and parallel action with industry actions and businesses in general. I am pleased that I am experiencing this challenge as an academic at the University of Nicosia, one of the leading international universities in the field of Blockchain and cryptocurrencies. From my experience as a member of the University’s Institute For the Future, I do not personally consider that the concept of "congested professions" exists anymore. The curricula, level of research and education, always combined with the needs and prospects of the labour market, open new professional horizons. This is my message to every young fellow lawyer and to every young scientist in general. We live in an age of specialization and it is possible that never before have specialization and technology 'gone hand in hand' to the same extent as they do today. Blockchain, Artificial Intelligence and many other new technologies will disrupt and benefit almost all areas of work sooner or later.