Determining the Future of Blockchain
Traders looking to make a quick buck have already discovered crypto currencies years ago, but what are the business opportunities in crypto currencies and blockchain according to insiders?
Governmental support for blockchain including crypto currencies, could determine to a large extent the business opportunities in Europe and Asia. On 14 and 15 June Chengdu hosted the Global Blockchain Conference China (GBCC). According to Invest in Chengdu, citing the Sichuan Provincial People’s Government, 268 of the 299 Fortune 500 companies were based in Chengdu in January 2016. Now this finance, technology and manufacturing hub welcomes the blockchain community to its grounds.
The reasons for the summit were numerous according to the website of GBCC. “According to statistics, 24 countries are putting great investment in the development of blockchain technology; more than 90 central banks have started discussing the development and application of blockchain technology; more than 90 multinational companies have joined blockchain consortia.
Over the past three years, the total amount of venture capital on blockchain has reached USD 1.4 billion, which produced more than 2,500 blockchain technology patents. In China, the development of Internet finance now has become a national strategy. The State Council also included the development of this core technology — blockchain into its 13th Five Year Plan as part of information technology planning.
Therefore, in the era of such a big bang, in response to the development of the country and the world, the First Global Summit Forum of Blockchain as to be held in Chengdu, Sichuan province, China.”
Additional to the State Council adding blockchain to its IT-planning, the People’s Bank of China also plans to issue a digital currency “as soon as possible” according to Cryptocoins News reports from last May. And finally, the opening ceremony of the 2017 China International Big Data Expo was addressed by China’s Vice Premier, Mr Ma Kai and the Premier Mr Li Keqiang sent a congratulatory letter according to PR Newswire.
These developments from the government and the state-owned bank,
foster hope among blockchain and cryptocurrency enthusiasts in China that the government will support further development.
Even though there glooms hope, the government has regulated crypto currencies heavily. Last February the biggest bitcoin exchanges BTCC, Huobi and OKCoin were requested by China’s central bank to prohibit cryptocurrency withdrawals, CoinDesk reported. And China Digital Times reported in 2014 that government authorities ordered media not to cover the Global Bitcoin Summit 2014. Reportedly the message included the following instructions: “Do not hype bitcoin”.
Additionally, entering the Chinese or Asian market requires the right contacts. “We are interested in partners in Asia that could help us open doors and know the Asian market. You really need someone to help you set up a business and meet the right people in Asia,” says Mr Manual Lains, CEO of BitSpace and BitGate.
BitSpace is a Norwegian incubator and accelerator for blockchain startups and led by the brothers Manuel and Christian Lains. Their first spin-off is BitGate which connects digital currencies with traditional ones starting with “an exchange service between the Norwegian Krone (NOK) and the cryptocurrency Bitcoin (BTC)”.
BitGate is in the process of paving the way for the cryptocurrency industry in Norway, operating in an adverse regulatory environment and dealing with unresponsive government entities. “Last February the Norwegian government finally abolished the 25% VAT charge on bitcoin. Before that decision they viewed bitcoin as an electronic service. This was a huge problem and it really destroyed the bitcoin industry in Norway for years.
We have received no communication from the government at all even if we have forwarded several requests for guidance. Our lawyers have tried to obtain guidance from the Financial Supervisory Authority about how to operate the BitGate service in Norway, without success. The lack of support makes it difficult to succeed in innovation of new areas with the current regulatory framework.” said Mr Lains.
There are also places around the world where innovating in the blockchain sphere is much easier. “Well-known places to develop bitcoin businesses are Isle of Man, Malta, Switzerland and Luxembourg. The Swiss canton of Zug is even referred to as a ‘crypto valley’. Wellknown places in Asia are Thailand and Bali.
We also look at Africa to set up something new. In Europe and the western world, we need to battle with the existing system. In Europe everybody is already banked and identified. African financial infrastructure is not that strong, or governments are not that trusted by the people, making these good places to build out new structures. This is also the case for some parts of Asia.” according to Mr Lains, who also emphasises that blockchain is here to stay and governments and companies alike should embrace the developments.
“Right now, we’re in a transition phase. With BitGate we’re not attacking the current economy, but replicating it and making a soft transition possible. Crypto finance and other decentralised developments on the blockchain will happen. There’s no stopping it. On the other hand, currencies won’t be replaced over-night. That’s not how it happens.
The question is, if it’s going to be a soft transition or a rocky one. Companies that embrace the developments will have a competitive edge compared to companies that lag behind. Additionally, they will have the ability to compete with startups on equal terms, but only if they act now.”
A common critique of crypto currencies is their volatile nature. The value of Bitcoin for example went from USD 3,014.29 on 12 June 2017, to USD 2,278,89 on 15 June 2017 according to CoinDesk. “Whether the price of a bitcoin is USD 100 or USD 10.000 doesn’t matter that much to development of the industry,” voices Mr Lains and Investopia seems to agree.
Investopia concluded in September 2014 that while many technical and regulatory problems still need to be worked out, and currently participating in the Bitcoin currency system is somewhat akin to living in the “Wild West,” it is realistically conceivable that a robust Bitcoin currency system will be developed and likely garner worldwide support by the masses over time.
By now, at least some industries seem to have come to grips with the developments in blockchain. According to Bloomberg the financial industry in Asia is becoming aware of the inevitability of blockchain and crypto currencies.
Asia’s financial industry is lining up behind Blockchain, an emerging fintech to promise friction-free, peerto-peer transactions to help banks and new challengers cut costs for transferring money and other assets. Asia’s Blockchain startups may gain share in the global market after fintech funding surged to $10.5 billion in the first nine months of 2016, more than double the $4.3 billion for full-year 2015. China’s comprised over 90% of the region’s total, thanks to fundraising by internet giants.
As support grows for blockchain across industries, governments slowly move from impeding to fostering developments and startups continue to come up with innovative utilisation of the blockchain, the business opportunities across the world rise accordingly.
Upper left: A winning team: Manuel Antonio Pettersen Lains and Christian Lains (two rightmost) with Oslo FinTech team.