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?

Norway-Asia Business Review - - Norway Asia Business Review - ANRIKE VISSER

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.


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