Sveinn Valfells / Jul 23, 2019


2 min read

Law is protocol

In cyberspace “code is law” which governs many digital services. But cyberspace does not exist in isolation, users ultimately live in societies governed by laws and regulations set and enforced by governments. Laws and regulations are protocols which define the interactions of citizens and the companies that serve them.

When Monerium first started considering how to bridge fiat currency and blockchains, we began by researching legal frameworks for digital currency already in place.

An early board member, Gisli Heimisson, suggested we look at e-money for tokenizing fiat. His advice was right: the e-money directive in the EU is intended to serve as a “technologically neutral” license for providing an “electronic surrogate for coins and banknotes”. It is a proven digital alternative to cash in a major jurisdiction which already supports billions of euros of pre-paid cards and obviates the need of an ad hoc user agreement. Asset-backed, redeemable, and regulated, e-money is the best possible proxy for central bank digital currency and a perfect building block for decentralized financial services.

The two canonical blockchains, Bitcoin and Ethereum, both build on proven technology which pre-dated them. Bitcoin uses public-key cryptography and one way functions to perform core functions. Similarly, Ethereum is a decentralized application platform which builds on Bitcoin and virtual machines to allow custom digital assets to transact online through smart contracts.

At Monerium, we follow the lead of the inventors of Bitcoin and Ethereum. Hacking code and law, we have married blockchains with an established protocol for digital cash making fiat for the first time available to mainstream users of blockchains. Let’s make DeFi happen.