Blockchain is having its day. Some even believe that it could prove to be as disruptive as the steam engine, electricity, or the internet. And whereas the former two liberated labor power, blockchain’s value might more resemble the internet: reshaping how information is shared.
Many also see it as a mechanism for creating new structures of trust. And if that is true, it will have far-reaching influence on every industry.
But what exactly is so innovative about blockchain and the “decentralization” it represents? To help answer that question, PingWest recently held one of its own SYNC talks in Singapore, hosting two roundtable discussions with experts from Singapore and across Southeast Asia—not to rehash questions about ICOs, but to get to the bottom of what blockchain technology could really do, where it might be applied, and how it might transform businesses.
In the first discussion, we were joined by NG Peng Khim, head of the institutional banking group at DBS Bank, and Sagar Sarbhai, head of regulatory relations in APAC and the Middle East for Ripple.
Simply speaking, blockchain is a ledger for all, and a distributed one at that. And (partly) because information is shared, no one can cheat. In technology today, behind every digital product is a database that stores user information, transactions, and other information. Blockchain means that such databases can be “decentralized” so that every member related to the database can jointly record, share, and store their information.
And that decentralization is a blow to the old models of record-keeping—but it’s not perfect, at least not yet.
To many, finance is the natural and ideal field for applying blockchain, but it’s not the endpoint for the technology. For Sarbhai, “There is no doubt in my mind that blockchain is one of the most transformational technologies in the world today, but we still have a long way to go.”
Beyond finance and cryptocurrency speculation, Sarbhai observed that blockchain is already being put to use in maintaining civic and legal records: Estonia, for instance, has put its entire land registry on a blockchain. Elsewhere, blockchains are being used for logistics, shipping, and personal identification and verification. Especially in cross-border transactions, the cost of settling accounts can be surprisingly high. In the past, that has always required two banks to keep matching records, so that any changes and updates to records tend to be slow as they have to be repeated across each record holder. But with a blockchain, both sides of a transaction are able to reference a single, unalterable, unforgeable record, speeding up processing while lowering costs.
But blockchain technology is complex, and existing systems need to make some changes in order to adopt it.
NG Peng Khim stressed that the advantage of blockchain is its ability to link to separate ecosystems. In logistics and shipping, for example, it allows multiple companies operating across multiple countries and customs regimes to streamline their records processing and verification, cutting transport time, and thus the risk and expenses for their backers. Invoice systems likewise can be simplified and made more transparent at the same time, reducing the possibility of counterfeiting or double invoicing. And blockchain can do all that while maintaining a degree of privacy for customers, even as outside banks and other institutions access their data.
Sarbhai also noted that Ripple is currently researching a new protocol, called “Interledger,” that can link different ledgers. Sarbhai said that Ripple is already using it in Africa in partnership with the Gates foundation to help link together mobile payment services.
There should be no doubt that blockchain’s most practical, and perhaps even most valuable applications, are in logistics and record-keeping. But it is still cryptocurrencies that garner the most attention, even though, as many have already learned, they are a double-edged sword. And while they may have made overnight fortunes for some, for others they’ve become a once-in-a-century crisis, earning comparisons to such primordial economic fiascos as the Dutch tulip bubble.
In the second roundtable discussion, we spoke with three leaders of cryptocurrency projects: the founder of MailTime and of MDT, Huang He; Sophie Guan, project lead and founding member of Odyssey; and Herbert Sim, director of global operations for Huobi.
All three speakers cited significant, but often overlooked, applications and advantages to blockchain technology.
Before getting into the cryptocurrency field, Huang He was the founder of MailTime, which, in his own view, made for an interesting progression: with email, there is always a risk of information being forwarded and exposed when you don’t want it to be. But with the addition of blockchain, risks of such leaks can be controlled.
Sophie Guan sees blockchain as part of the sharing economy, every sector of which has its own standards for operation. But in a decentralized yet still standardized system, the abundance of information about Airbnb houses or Mobike rides becomes easier to track and verify.
And Herbert Sim noted that, compared with traditional securities exchanges, cryptocurrencies have lower barriers to entry, “because we operate 24 hours a day.”
But for traders, the question that matters most is always how to identify the right time to trade.
Huang and Guan both were of the view that, before investing in a given currency, an investor needs to examine the entire market and assess the overall state of supply and demand. When the market as a whole is rising, it’s an ideal time to invest.
But opportunity and risk go hand in hand. So how can investors find reputable companies? Sim argued that investors should choose a secure virtual wallet, try to gauge whether or not a blockchain project makes basic business sense, and then vet the backgrounds of the team behind it. In a sense, even with a technology that promises to radically revamp every corner of the financial world, the fundamental commonsense principles of investing still apply.
Blockchain may be having its moment in the limelight, and there’s no shortage of hype around it. But one thing that all of our guests could agree on is that it’s no flash in the pan. The essential technology is much more than just betting on cryptocurrencies, and there’s still room for it to grow, and new and more practical applications to be developed. Inevitably, the hype will pass, and public attention will move on. But blockchain looks to be here to stay.