Wed, Oct 17, 2018 – 5:50 AM
IN BOTH Asia and the West, regulatory uncertainty surrounding blockchain abounds. And yet, despite this lack of direction, Asia is establishing itself as the clear leader in the race to provide the first blockchain use cases for businesses ranging from well-known tech giants to small to medium enterprises (SMEs).
Not one to wait around for regulatory bodies to make up their minds, projects in the region have largely ignored fluctuations in the trading market, and have pushed onwards and upwards to provide a test bed for the first real-world blockchain applications.
Throughout Asia, a number of projects have made leaps and bounds in the fields of private data management, with some also opening up P2P markets for previously un-monetisable elements of gaming and social media. For example, there are projects developing platforms that allow the sale and purchase of game licences, which used to be bound to a single account. Within social media, camera apps that allow filters to be developed and purchased between users are also in the late stages of development. Similar services that were once owned by giant industries and delivered at high prices are now becoming available through new blockchain applications and development.
The success of Asia-based blockchain projects is largely in part a result of the region’s “innovate first, regulate later” mentality, which has fostered the creation of formalised platforms with proven mainstream applications. When compared globally, Asia’s more lenient regulatory outlook towards Initial Coin Offerings (ICOs) – a crowdfunding process in cryptocurrency – is an excellent example of this, playing a major role in allowing startups to fund once lofty concepts through grassroots investment.
What used to be of interest to large institutional investors is now also becoming interesting to the masses.
Everyone has a stake. With increased financial support, Asian blockchain projects have been able to position themselves ahead of their Western counterparts by developing technology that has piqued the interest of Big Tech and mainstream corporate conglomerates. However, ICOs remain a contentious subject with regulators – and for good reason – with many government agencies, especially those in the United States and also in Asia, in disagreement on how they should be allowed to proceed.
Regulatory bodies in the US have adopted a particularly risk-averse approach to the market, instructing participants on the formal classification of cryptocurrencies as assets, and directing cryptocurrency exchanges to formally register with the US Securities and Exchange Commission.
International blockchain projects have been dissuaded from operating in the country for fear of inadvertent infringement, and US-based projects remain uncertain about their future once regulatory standardisation takes effect. Investments that do occur in the US are more institutional in nature, largely centring on major multinationals researching, but not implementing, blockchain technology.
And while the news that JP Morgan and Facebook are experimenting with blockchain integration is a positive indication of its future viability, it’s unlikely that these departments will culminate in tangible blockchain applications in the near future.
Asian markets, by contrast, are more open to this process, and have allowed small-scale blockchain platforms to test out new initiatives prior to imposing regulatory scrutiny. These classifications vary by country, but as a general rule, government agencies have taken a business-friendly approach to blockchain regulation.
Japan was one of the first countries in the world to recognise bitcoin as a formal currency, and has since continued to emphasise its intention to become a hub for cryptocurrency business in the region. And despite recent legislative confusion, almost every large conglomerate in Korea is developing infrastructures around blockchain.
To name a few, Naver – the Google of Korea – has plans to launch its own exchange; Kakao – the WhatsApp of Korea – is developing its own blockchain platform; Hanwha has created a marketplace that would connect businesses with blockchain solutions; Samsung SDS is showcasing a finance platform that manages digital identities and financial transactions on top of blockchain. In Korea, there is a clear separation between the government’s regulatory actions and how the corporations are accepting blockchain. Even China, a country which historically implemented a blanket ban on cryptocurrency trading, is still one of the largest crypto markets and supplier of crypto developers.
As a result of this technological perseverance, many SME companies in Asia have been given the opportunity to grow their infrastructures and create formalised decentralised applications (dApps), capable of competing with mainstream corporate giants.
A wave of tech community fandom and increasing interest in the region has led to the cultivation of top projects, turning promising concepts into physical tech with demonstrated use cases. What’s more, Asian venture capitalist firms such as Signum Capital have worked to bolster the latest projects in the region, bringing the likes of Ziliqa, TCC Protocol and Republic to the forefront of the global blockchain community.
These projects, among many others, have been some of the first in Asia to pioneer real-world applications that will likely set long-term global precedents.
As blockchain technology reaches the precipice of mainstream integration, Asian markets will continue to lead the pack in actualising once unattainable blockchain concepts. This past year has seen a rapid influx of capital flow into the industry, but substantive use cases have remained elusive. By year’s end, Asian SMEs and blockchain companies – complete with proven market applications – will spur further global interest from mainstream corporations looking to use blockchain to streamline cost efficiency and strengthen data security.
In time, these same companies, from their humble beginnings, will trigger economic opportunity that will touch every industry vertical.
- The writer is co-founder of aelf, a cloud-computing blockchain network.