When the Commission published its 2015 white paper on virtual currencies and bitcoin, Guoga saw the opportunities that this new digital technology offered for managing finances in the future. “I became an early adopter of the technology. To experience it myself, I participated in the industry by investing.” With this experience, he feels he could “definitely contribute to the discussion on blockchain.”
Guoga, whose life reads more like that of a James Bond character than a political nerd, was a Rubik’s cube champion in Lithuania before the age of 11, spent his formative years in Australia. From the age of 18, he started playing professional poker. At the same time, he studied accounting and finance and, after graduating, worked in investment banking in Asia.
When he moved back to Lithuania, he established a series of successful companies. To 2011, Tony G, as he is known in the poker world, was calculated to have won up to US$4m. Along the way he also married one of Lithuania’s top models.
Elected in 2014, the Baltic MEP says, “I came into politics to change Europe for the better.” He adds, “I wanted to have more meaning in my life and be able to do something outside of business and playing poker.” Building upon his past experiences, he says, “I felt that I had a good perception of how things worked and I thought I could contribute in a positive way.”
In the last few years he has been organising a major yearly ICT and entrepreneurship conference in Lithuania titled #SWITCH. Previous speakers have included Commission Vice-President for the digital single market Andrus Ansip, Commissioner Vytenis Andriukaitis, and representatives from companies such as Microsoft, Amazon, Google, Facebook, and Uber, to name but a few.
Therefore, his interest in blockchain and its potential should come as no surprise. According to its champions, blockchain is an incorruptible digital ledger of economic transactions that can be programmed to record not just financial transactions but virtually everything of value.
For Guoga, this brings the advantage of making transactions “more transparent, where everyone can see everyone’s position, so in effect making sure checks and balances are carried out all the time. Based on this factor it offers many advantages.”
Like all new innovations, it’s still not a sure bet to financial success.
Bitcoin, the most famous virtual currency based on blockchain technology, in December 2017 was valued at €17,800 per coin. Such was the speculative hype surrounding the cryptocurrency that companies not related to the technology that added blockchain to their company name saw their stock price jump. This included an iced tea company that renamed itself “Long Blockchain.”
The speculative bubble surrounding the virtual currency was compared to the 17th century investment mania in tulip bulbs in the Netherlands. As with all bubbles, it burst, and the price crashed to a mere €6600 per coin.
Guoga admits it was overvalued at the time, and believes the current market price is the correct value. “I’m glad that the bubble burst. The price is two thirds lower than what it was at its peak, which I think is healthy. There could be a further correction, which doesn’t really matter.”
For the Lithuanian, the bitcoin market is more about the development of the technology and less about its financial value. He emphasises that blockchain and bitcoin “can empower lots of people to help change the world, by funding their projects. That was the whole idea behind the innovation.”
Despite current interest from financial investors and the EU, cryptocurrencies have been associated with organised crime operating on the dark web. Even although it is used by criminals, the deputy is quick to defend the technology, saying, “Obviously that’s a risk, but I ask people: Where do most organised crime funds come from, crypto-currencies or US dollars? What is being used to trade in illegal arms and drugs?”
He points out that the value of trade in criminal activities using cryptocurrencies is still much smaller than those of government-recognised established ‘paper’ currencies. “In fact, with blockchain technology there is the advantage that since there is a digital trail, this makes it harder to launder than traditional, paper cash.”
For Guoga, the key opportunity about blockchain is not currencies, “It’s more about the creation of smart contracts and in those smart contracts, we can put assets, such as real estate. Where in the future poor people all over the world can own assets like rich people can now. It’s an easy way of purchasing assets virtually.”
Though blockchain has many exciting innovations, Guoga admits there are challenges for its widescale use. “One of the biggest challenges for cryptocurrencies is how they become securitised, like other financial assets. Trading should be fair for everybody. This will be a step forward. Once this phase starts, people can buy real things with their cryptocurrency.”
Another challenge is scalability, “at the moment the cost of doing transactions is still expensive.” But he stresses, “there is still a lot of innovation to happen and that’s exciting and fascinating.”
The lack of a regulatory framework is also holding back its wide scale use. However, Guoga believes that “we don’t need to rush into creating legislation, I think for now, as little regulation as possible is good. Let’s just observe and see.
“The European Central Bank has been good and proactive. A lot of the central banks in each member state have also been good in terms of the warnings on the risks of cryptocurrencies. I think investors are now aware and this is better than having regulation that bans everything.”
The deputy is confident that blockchain has the potential for the EU to compete with the US in global equity and security markets. “This will be an innovation which Europeans can lead on, having assets securitised in cryptocurrencies could be the next big wave within the finance industry.”
Blockchain could also be used by political and government institutions to empower citizens, such as “registering cars and houses. Storing digital health documents which you can also be encrypted. The cryptography within blockchain technology can be used in artificial intelligence and can keep machines in check.”
When it comes to the digital single market strategy, Guoga backs his fellow Baltic Andrus Ansip on his achievements so far, saying his leadership “has been very strong and very good.”
But he wishes more could be achieved. “Obviously, we’d like to see more done, there hasn’t been enough, but then that’s the nature of bureaucracy in Europe, which is a very slow-moving machine. We have a long way to go to becoming a digital single market in Europe, though I’m hoping to see more progress soon. I expect most of the bigger results and plans will come in the next Commission, as we’re now coming to the end of a political cycle.”
Commenting on the Facebook scandal on using private data in political campaigns, Guoga says, “The behaviour of Facebook was totally reprehensible. I don’t think anyone wants to see such a company have so much power and possibly interfere in European politics in the future. They may even have already have done so.
“We don’t know what’s happened, we need to have more details. Maybe even on Brexit, if they had some influence, we should look at all of this and see if Facebook is liable.”
He is confident that “European lawmakers will take a very close look and see if any appropriate action needs to be taken or any fines be given.
“Everyone is concerned, even someone like me who is very liberal in principal wouldn’t want companies broken up. We consider this a serious problem with Facebook and I think we will have to look at this issue and they may need to be brought to justice.”
Although he is a campaigner on improving the business conditions for European tech companies, such as reducing red tape, he accepts that people are now becoming fearful of the growing size and power of tech giants like Apple, Facebook, Amazon, and Google. “I think everyone is fearful. No one wants to see trillion-dollar companies. They will be become bigger than governments.”
“Europe is not ready for such powerful companies to have so much influence. I think there will be some adjustments over time.” He does not rule out fines, like those Microsoft received from the Commission, having been found guilty of abuse of its dominant position in the market according to EU competition rules.
Though currently a member of the EPP group, when he was first elected he was a member of the ALDE group. “I switched from ALDE because my political group in Lithuania were no longer in power. It was purely related to domestic politics. I’m now proud to be in the biggest and the most powerful political group in Europe.”
Even although he has switched political groups, he is still very respectful of his Liberal colleagues, saying, “ALDE a great group and I get on very well with group leader Guy Verhofstadt. I still know lots of people in ALDE.”
He admits there have been challenges in adapting to the world of EU policymaking. “Dealing in politics, I always knew that it was frustrating and slow, with lots of different groups with vested interests. But on the poker table, you expect things straight away and here you must learn patience. It’s been different and a steep learning curve.”
Despite his political career and interest in blockchain, Guoga is still not ready to fold on his interest in cards. “I shall never give up poker, I will keep playing as much as I can in my free time.”
First published by The Parliament Magazine, 23 04 2018