Blockchain is a real time, encrypted distributed ledger, which can securely record transactions for a variety of financial assets, and as such, its potential uses are manifold. It has hard-core champions within Hong Kong and those who are beginning to look into its uses, but, finds Katie Scott, it is still treated with suspicion by some while perplexing others.
Blockchain was been all over the headlines at the end of 2015. Goldman Sachs and The Bank of America both filed patents based around the technology and this news followed the launch of Linq, the Blockchain-powered system created by Nasdaq. Meanwhile, the London-based R3 project, which currently has the backing of 30 of the world’s biggest banks, has been attracting press by taking on talent from banking and tech giants including Google, Barclays and IBM. The R3 Blockchain is being tested for its suitability for facilitating everything from marketplace lending to processing syndicated loans, reports the Sydney Morning Herald, but head of market research at R3, Tim Swanson, says that the banks are taking “rightfully conservative approach” towards the system.
Conservative seems to be the stance here in Hong Kong. Chris Hitchcott is a web developer, co-founder of TAPevents and enthusiast of Ethereum, the “cryptocurrency platform and Turing-complete programming framework”. He says that people can be put into four categories: “Those who have already sold and are selling Cryptocurrencies, which includes tech researchers at major banks; the tight community of Bitcoiners and Crypto currency enthusiasts; those who are figuring out whether or not this thing is worth spending time to research; and finally the majority of people who I don’t think need to understand Blockchain (in the same way they don’t need to understand TCP/IP), and will only be persuaded once we have the first ‘killer app’.”
You snooze, you lose
Pindar Wong argues that it is “early days” for Blockchain technology in Hong Kong. Chairman of Internet infrastructure consultancy, VeriFi, as well as serving on the Digital 21 Strategy Advisory Committee of the Hong Kong Government, he says: “Hong Kong can move quickly once we can better understand the opportunity as it related to our context. By keenly observing what has occurred elsewhere (e.g. the NY DFS BitLicense), there’s the opportunity for lowering the upfront, first-mover costs and seizing a second-mover advantage.” However, Wong warns: “That said, we can’t wait too long as the space is so fast moving.”
Propelling growth is the increasing awareness of how many areas of business Blockchain could impact and how its reach extends far beyond finance. As Anju Patwardhan, Global Chief Innovation Officer at Standard Chartered, writes: “Blockchain… could spell huge change for financial services in the future. The semi-public nature of some types of blockchain paves the way for an enhanced level of security and privacy for sensitive data – a new kind of database where the information ‘header’ is public but the data inside is ‘private’. As such, the blockchain has several potential applications in financial markets – think of trade finance, stock exchanges, central securities depositories, trade repositories or settlements systems.”
Already, Startup Stampery, for example, uses Blockchain “to generate an immutable record of existence, integrity and ownership”, writes IBTimes. It is already being used by lawyers to certify documents and businesses looking to mark their Intellectual Property rights.
ANX International describes itself as “a one-stop shop for Blockchain technologies merging traditional payment networks with the new digital assets ecosystem”. Its offerings include blockchain solutions, payment solutions such as payment gateway and digital assets debit card and Next Commerce Solutions. Spokesman Jack Cheng says: “Companies around the world are starting to explore Blockchain solutions to create loyalty or incentive programs for sales and customer retention purposes.” He continues that a key issue for uptake seems to be an ability to separate the Bitcoin Blockchain from the other uses of Blockchain. He explains: “Bitcoins were the first application of the Blockchain. There’s been too much focus on the technology aspect of Bitcoins/Mining/Blockchain. This has slowed the overall adoption of these technologies as merchants and business are not technologists. We have seen that things must improve and be made simpler for businesses, and then consumers, to adapt. They are practical and looking for solutions that can help move their business forward or improve what they have today, and not necessarily what is the latest technology.”
Bitcoin is divisive. The cryptocurrency has unfortunate associations (Silk Road being the most notorious) and Blockchain, as its underlying technology, has become tarred by the same brush. Alternatives to Bitcoin, which include Namecoin, Colored coins and Metacoins don’t seem to have garnered the same level of press. Regulators seem unsure how to handle Bitcoin. In Hong Kong, Bitcoin is treated as a “virtual commodity” as opposed to currency. Wong says: “The biggest single change to propel the growth of FinTech in this city would be for commercial banks to make it easy to open accounts for Bitcoin and Blockchain-related businesses. I’m aware of many such businesses, from New York and London to Silicon Valley that would immediately establish a commercial presence in Hong Kong if that were done and bring in global business.” For Laser Yuan of BitCashOut, it is getting the support of retailers that would make the biggest difference to his business. He says: “The more people know about Bitcoin, the better our business will be. In order to get Bitcoin more popular, we need more shops to accept the currency so that people are willing to use it.”
For now, the business of regulating the world of cold, hard cash seems to dominate their time, says Larry Salibra, founder of crowdsourced pay per bug software testing platform Pay4Bugs and a founding member of the Bitcoin Association of Hong Kong. He concludes: “Speculating on the risk tolerance levels in Hong Kong, you won’t see many stepping into the as yet unregulated world of Bitcoin and Blockchain.”
Katie Scott is the former News Editor of Wired.co.uk in London. Now living in Hong Kong, she has written about everything from 3D nature documentaries to nanosatellites to the ramifications of Edward Snowden’s brief visit to the SAR, but is driven to find stories on innovation and innovators of any kind.