Blockchain is the engine that powers cryptocurrency economies and their respective Initial Coin Offerings (ICO). As the demand for coins and cryptocurrency exchange soared, regulations among the many leading nations of Asia were quick to scramble delay orders in order to slow the superlative expansion of coins in an effort to place a semblance of regulation as governments were caught off guard in the demand for coins as alternative currency.
2017 was a banner year for cryptocurrencies in Asia as the demand for an alternative digital currency has barely scratched its surface. With Asia’s millennial population that are as digitized as their western counterparts, the cryptocurrency market is sitting on a regional goldmine as the population of Asia with China, India and Southeast Asia are consumers that are open digital wallets and digital coins.
Outside the demand for cryptocurrency in Asia, Blockchain, the engine that makes it possible for cryptocurrency to operate seamlessly, has a smoother path when it comes to government acceptance as innovation within its core technology of distributed ledger is proving to be an asset when it comes to the development of the leading Asian economies.
Blockchain in China: Key Governance leading to Standardization
China’s Ministry of Information Technology and Industry has stated that the standardization of Blockchain is among its top priorities in 2018 as the ministry is forming a committee that will oversee, develop and deploy a standard framework on how Blockchain should be utilized in the country.
Within the government, Blockchain will also be utilized as a disruptive force in curbing bureaucratic red tape in order to make ideal government functions be transparent, accountable and more streamlined through Blockchain’s distribution of transparent transactions among parties. This is the agenda of the Hangzhou Blockchain Research Institute, a subsidiary of the People’s Bank of China (PBoC) as the organization launched a Blockchain platform that aims to facilitate the development of intellectual property rights. The platform also sets an ideal process for transparency through user identity, the certificate data, and digital credentials, whereas the platform can track verifiable and audit-friendly registry information based on public service information.
To date, the Hangzhou (Zhongchao) Blockchain Technology Research is recognized among the world leaders when it comes to Blockchain based patents as the institute has filed over 22 Blockchain patents.
According to the Global Blockchain Enterprise Patent Rankings 2017, published by IPRdaily, out of the 100 companies that have applied for Blockchain patents, 49 were filed by Chinese companies while the United States count as second with the most patents filed with 23 patents.
Banking and Blockchain in Japan
Japan is one of the most important trading markets in Asia alongside Hong Kong, Beijing and Korea. With a great history of monetary performance, the country has a stable credit rating for decades. When it comes to Blockchain, Japan is positioning itself as an early adopter for Blockchain enabled banking and finance.
Blockchain and banking is gaining rapid traction in Japan. Recently, the big three banks of Mizuho, Sumitomo Mitsui and Mitsubishi UFJ Financial is working with leading IT firm, Fujitsu on a Blockchain enabled Peer 2 Peer payment system for a live payment transfer system that is a part of a larger Blockchain enabled banking ecosystem encompassing personal and utility banking.
Furthermore, over 61 banks in Japan have formed a working pact with Ripple consortium in order to improve the optimal processing performance of local banks.
The Blockchain system was developed by Ripple and to be adopted as a test case by 61 banks lead by SBI Net Sumishin Bank, Suruga Bank and Resona Bank. The trio will be the staging ground for the Blockchain application that will enable the instant settlement of day to day banking transactions. The application, expected to be known as “Money Tap”, is geared to go live in the fall season in Japan.
Meanwhile, the Japanese Bankers Association (JBA) has declared that it is working on behalf of its 252 recognized banks in developing a common Blockchain payment system that will be the successor of Zengin, the current clearing platform.
Moving over to the brokerage, real estate and securities, over 18 leading Japanese brokerage firms have formed a consortium in order to enable Blockchain technology to be deployed in property brokerage. Lead by SBI Holdings Unit and Ripple Asia, the consortium will set the groundwork for Blockchain.
Blockchain in Korea: Blockchain Gains in Big and Small
In Korea, the concept of Blockchain was never in doubt and instead, businesses big and small were willing to embrace it based on the efforts of giant corporations and fintech startups that are pushing Blockchain into commercialization – faster than most western countries.
According to South Korea’s Finance Minister Kim Dong-Yeon, “Blockchain has the capability to revolutionize the world”, and coming from a high ranking official within the government, it is a clear indication of the country’s resolve to enable Blockchain in order to further develop the country’s tech leadership in the global stage as businesses, corporations, tech giants and the government, have the common goal in effectively utilizing Blockchain to push the boundaries of applied technology.
Leading the finance transition to the era of Blockchain is the Korean Financial Services Commission (FSC), as the organization has announced a plan this year to enable Blockchain across the channels of payment systems, communication technologies and data privacy. Speaking to the press, the FSC stated that much of the focus will be on the Blockchain utilization for banking and insurance in order to streamline the verification process by removing cumbersome, redundant process stoppers while all the more securing client information.
When it comes to Fintech, the FSC has also released an agenda to democratized digital payments that are powered by Blockchain, for the small to medium business markets where consumer information will be regulated through defining their extent in collection. By putting a focus on consumer data, the FSC believes that these regulations will stimulate more “app to app” payment environments based on hybrid Blockchain systems. According to the FSC, the enabled P2P and App 2 App payments will replace credit card fees while banks can still charge transaction fees if customers or businesses choose to utilize their Blockchain powered payment system.
When it comes to telecommunications, Korea Telecom plans to utilize a Blockchain system for its overall network architecture and security. Dubbed as “Future Internet”, one of its key services is to launch a Blockchain powered data roaming service that is working alongside global operators such as US-based Sprint and Japan’s tech giant Softbank. Korea Telecom will also utilize Blockchain to secure client and business information over a Blockchain secured network, which is designed to stop the reliance on OTT third party services.
Blockchain in the Philippines: The Invisible Blockchain Innovators
The country has a rich history of quickly assimilating technology through direct investments based on the offshore equities made by big businesses and top tech companies that are currently operating in the country. When it comes to Blockchain, the company that stands out to the Blockchain enabled financial ecosystem is Satoshi Citadel Industries (SCI), which recently got a boost on its funding from the Kakao Corporation investment pledge.
With a thriving population whose median age is around 23 years of age, the Philippine’s digital generation is more open to the format of e-commerce and digitized wallets based on Initial Coin Offerings (ICO). While e-commerce and mobile shopping has thrived into a multi-million peso industry in the Philippines, its millennial population will soon be able to shop, sell and exchange coins basing on cryptocurrency economies that are powered by Blockchain. One such company is Bilibit, an ecosystem powered by Ethereum’s ERC20 coin that enables streamlined, flat and lean transactions through peer to peer payments that eliminates third party fees. Through smart contracts, deal consolidations are powered by “smart contracts” that are self-executing and self-storing based on a secure exchange between agreeing parties.
Despite the innate technology adoption of the country, over 80% of the population is “unbanked” meaning, that significant portion has no formal access to banking services according to UnionBank. While millions of people reside in Manila, the metropolis capital of the nation, a large population is residing in the island provinces of Luzon, Visayas and Mindanao. Often, rural banks are less equipped when it comes to IT and Computing compared to their metropolis counterparts.
UnionBank, seeing the need for rural banks to catch up on infrastructure, IT and banking process automation is fielding a test trial of enabling Blockchain within its banking system and extend the platform to rural banks. Unlike traditional IT and Server components deployed by banks, Blockchain as an extended platform with a massive deployment of distributed ledger that extends towards rural banks — it becomes an instant solution that can upgrade the modern banking capabilities of rural bank.
As an early test case, four rural banks have partnered with UnionBank in order to develop the framework and groundwork of Blockchain enabled banking – that will not only modernize the banking capabilities of rural banks, but also extends its banking services to the rural population – thereby concept proofing the architecture to support the growth intake of banking clients based on the rural population. Through Blockchain, rural folks are assured of a modern and secured safekeeping of their personal banking information – which is still considered a privilege by the most developed countries.
In enabling Blockchain in banking, UnionBank will also be upgrading and improving the credentials of its inhouse IT and Development team in maintaining the Blockchain architecture and its extended application towards rural banking.
UnionBank is also the first Philippine based bank to be certified and recognized by VISA as a partner based on its B2B Connect, a Blockchain enabled payment system that allows seamless cross-border payments. UnionBank joins a select few of the VISA recognized partners that includes Commerce Bank in the United States, Shinhan Bank of South Korea, Sberbank in Russia and United Overseas Bank of Singapore.
Expect Blockchain to rapidly transform the banking practice of the nation’s top flight banks in the near future due to the accord set by the Philippine’s Bangko Sentral ng Pilipinas (BSP) and Monetary Authority of Singapore (MAS). Under the agreement, the chartered members of each country’s banks can jointly develop, test and deploy Blockchain enabled banking to enable cross-border payments not only within the region, but also globally. In this working consortium, network partners such as fintech companies of both countries can pool together a deep knowledge bank on the best practices and advances of Blockchain technology in the banking, business, commercial, startup and fintech industries.
Blockchain has a great potential in disrupting and significantly improving the country’s governance, business, commerce and fintech. DynaQuest is also a recognized BPO and ITO company that is working with global businesses in support of Blockchain transition through turnkey solutions such as consulting, knowledge building, networking and resource procurement. This year, DynaQuest will be working with ASEAN based organizations on health information management, banking and insurance in starting Blockchain.
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