Definitions

Cryptocurrencies

  • Virtual currency – aka virtual money, is a type of unregulated digital money, which is issued and usually controlled by its developers, and used and accepted among the members of a specific virtual community.
  • Cryptocurrencies (or crypto-token) – is a digital asset defined by a blockchain protocol and exchanged via that blockchain system.
  • Cryptocurrency exchanges (or digital currency exchange (DCE)) is an organisation that allows customers to trade cryptocurrencies/digital currencies for other assets, such as fiat money, or other digital currencies.
  • Altcoin is a group of cryptocurrencies that came after Bitcoin. They have some variations to Bitcoin but are able to process transactions faster.
  • Bitcoin – is a type of digital currency which involves encryption techniques to regulate the generation of units of currency and verify the transfer of funds, operating independently of a central bank.
  • Ethereum – is a blockchain-based distributed computing platform. Its operating system supports smart contracts (scripting) functionality. Most ICOs use variations of the Ethereum platform to operate their project.
  • NEO – is the first open source public blockchain in China. Built on the Ethereum model, NEO has proven to be the best platform to develop smart contracts and assets.
  • IOTA is a cryptocurrency aimed at being the currency of the internet of things. IOTA was created in 2015, MIOTA, the currency, is now (2018) the 11th biggest cryptocurrency by value.
  • Ethereum platform has the goal of using a blockchain to replace internet 3rd Those that store data, transfer mortgages and keep track of complex financial instrument. Its goal is to become the world computer – client-server model relationship.
  • FIAT money is our conventional currency declared by a government to be legal tender, but it is not backed by a physical commodity. The value of fiat money is derived from the relationship between supply and demand rather than the value of the material that the money is made of.
  • The Internet of Things refers to a network comprised of physical objects capable of gathering and sharing electronic information.

 

 

ICO Definitions

  • Initial coin offering (ICO) is a blockchain-based fund-raising mechanism in which entrepreneurs mint new crypto-tokens and sell them to loyal investors. Some ICOs distribute tokens to fundraise their project, reaching their soft and hard cap respectively to help them start off their project.
  • Blockchain is a platform technology that stores data, through groups of valid transactions, called blocks, form a chronological chain. Each block validated is cryptographically linked to the previous one.
  • Distributed ledger technology (DLT) is a system, creating a shared, cryptographically secured database.
  • Decentralization is a hard-to-quantify measure of a network’s resistance to attack, a function of how broadly control is distributed among different actors.
  • DApp is an abbreviated form for decentralized application. A DApp has its backend code running on a decentralized peer-to-peer network.
  • Smart contract is a computer program stored in a blockchain that automatically moves digital assets between accounts if conditions encoded in the program are met. It serves as a way to create a mathematically guaranteed promise between two parties.
  • Tokenomics is a self-funding mechanism for projects within the crypto economy. There are three definitions with regards to tokenomics, these are 1) a means of self-funding within the crypto economy. 2) the deployment of a token within the ecosystem of an ICO project. 3) the set of all economic activity generated through the creation of tokens.
  • White paper is primarily the ICO’s best marketing tool. It is the main document detailing the upcoming ICO.
  • Whitelisting adds to a list of people or things considered trustworthy.
  • Crowdfunding is the use of small amounts of capital from a large number of individuals to finance a new business venture.
  • An initial public offering (IPO) is the initial stages of the stock of a private company is offered to the public to be traded.
  • Due diligence is responsible steps taken by a person to avoid committing a tort or offence. A comprehensive appraisal of a business undertaken by a prospective buyer, especially to establish its commercial potential.
  • Know your customer (KYC) Is the process of a business identifying and verifying the identity of its clients. The term is also used to refer to the bank and anti-money laundering regulations which govern their activities.
  • Utility token is a token that is used to obtain/access a service.
  • Security tokens are crypto tokens deriving its value from an external, tradable asset, it is classified as a security token and becomes subject to regulations.

 

Definitions as per Maltese Law

 

  • DLT- distributed ledger technology/ decentralised ledger technology – means a database system in which information is recorded, consensually shared, and synchronised across a network of multiple nodes, or any variations thereof, as further described in the First Schedule of the Innovative Technology Arrangements and Services Act, 2018, and the term “node” means a device and data point on a computer network.
  • Innovative Technology Arrangements – the intrinsic elements including software, codes, computer protocols and other architectures which are used in the context of DLT, smart contracts and related applications as well as other arrangements as may be further defined in the Innovative Technology Arrangements and Services Act, 2018.
  • Innovative Technology Services – are those services in relation to innovative technology arrangements as are designated in the Innovative Technology Arrangements and Services Act, 2018.
  • Smart Contract – a form of innovative technology arrangement consisting of (a) a computer protocol; and, or (b) an agreement concluded wholly or partly in an electronic form which is automatable and enforceable by execution of computer code, although some parts may require human input and control and which may be also enforceable by ordinary legal methods or by a mixture of both.
  • Distributed Ledger Technology or DLT – a database system in which information is recorded, consensually shared, and synchronised across a network of multiple nodes as further described in the First Schedule of the Innovative Technology Arrangements and Services Act, 2018, whether the same is certified under that Act or otherwise.
  • DLT Asset – (a) a virtual token; (b) a virtual financial asset; (c) electronic money; or (d) a financial instrument, that is intrinsically dependent on, or utilises Distributed Ledger Technology.
  • DLT Exchange – any trading and, or exchange platform or facility, whether in Malta or in another jurisdiction, on which any form of DLT asset may be transacted in accordance with the rules of the platform or facility.
  • Financial Instrument – shall have the same meaning assigned to it under the Second Schedule to the Investment Services Act, whether or not issued in Malta.
  • Funds – banknotes and coins, scriptural money, electronic money and virtual financial assets.
  • Initial Virtual Financial Asset Offering or Initial VFA Offering – a method of raising funds whereby an issuer is issuing virtual financial assets and is offering them in exchange for funds.
  • Issuer – a legal person duly formed under any law for the time being in force in Malta which issues or proposes to issue virtual financial assets in or from within Malta.
  • Licence – a licence to provide a VFA service or services granted by the competent authority in terms of article 15.
  • VFA agent – a person registered with the competent authority under this Act and authorised to carry on the profession of – (a) advocate, accountant or auditor; or (b) a firm of advocates, accountants or auditors, or corporate services providers; or (c) a legal organisation which is wholly owned and controlled by persons referred to in paragraphs (a) or (b), whether in Malta or in another recognised jurisdiction, or any other class of persons holding authorisations, qualifications and, or experience deemed by the competent authority as possessing suitable expertise to exercise the functions listed under articles 7 and, or 14;
  • VFA agreement – any agreement the making or performance of which, by either party, constitutes a service or activity licensable under this Act.
  • VFA exchange – a DLT exchange operating in or from within Malta, on which only virtual financial assets may be transacted in accordance with the rules of the platform or facility, which is licensed by the competent authority under this Act to provide such services.
  • VFA exchange operator – is a person or persons who manages and, or operates the business of a VFA exchange and may be the VFA exchange itself.
  • VFA service – any service falling within the Second Schedule when provided in relation to a DLT asset which has been determined to be a virtual financial asset.
  • Virtual Financial Asset or (VFA) – any form of digital medium recordation that is used as a digital medium of exchange, unit of account, or store of value and that is not – (a) electronic money; (b) a financial instrument; or (c) a virtual token.
  • Virtual Token – a form of digital medium recordation that has no utility, value or application outside of the DLT platform on which it was issued and may only be redeemed for funds on such platform directly by the issuer of such DLT asset: Provided that electronic money shall be excluded from this definition;
  • Whitepaper – is a document in such form and containing such information as specified in article 4 and the First Schedule.

E&S Group is a leading corporate & law firm offering various services with regards to ICOs. Feel free to contact us directly on +356 20103020 or by email at [email protected] to find out how E&S can help you in ‘making things happen’.

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