For many of us, especially those in the west, Asia has always been a land of enchantment, strong cultural heritage, unusual foods and unrelenting technology advancement. It is the latter that is now helping shape the nascent blockchain industry and its transformative applications in the financial world.
Asia is unapologetically marching forward as the new capital of alternative investments and digital financial assets and here is why.
It is no wonder that the father of bitcoin as we know it today bore an Asian name – Satoshi Nakamoto. A brief glance into the daily lives of people in Asia may surprise many because of a high rate of mass adoption of blockchain-based digital assets. By the time Silicon Valley caught wind of the blockchain, Asia was already embracing the good and the bad of digital assets.
If you sit down for a bowl of ramen in downtown Seoul, do not be surprised if you hear senior citizens decked out for a night on the town talking about blockchain and cryptocurrencies. South-East Asia especially has welcomed cryptocurrencies amid political turmoil and corruption scandals as a new way of living and an opportunity to start fresh for baby boomers, millennials, the rich and the poor. A recent survey showed that in South Korea one-third of all salaried workers are crypto investors. 80% of these investors made a profit, and about 20% saw an average return of 425% on their investment, according to the survey. The average Korean investor owned 5.66 million won ($5,260) in virtual currencies, Quartz reported. No wonder that some of the world’s largest cryptocurrencies originated in Asia.
Such openness to innovation and change promotes a much faster rate of mainstream adoption for digital assets compared to the rest of the world. Many in Asia have long recognized the freedom digital assets bring to their daily lives through outsized gains and superior ease of use.
Charlie Lee, the creator of Litecoin, spoke about this freedom that digital assets can bring to investors globally. “The cryptocurrency revolution allows you to be your own bank, so it’s important for people to understand what that means,” he said. “It means that you control your own finances, no one can stop you from using your own money,” he concluded.
Asia very quickly took the blockchain, not crypto stance in dealing with digital assets. This means that it didn’t equate blockchain with Bitcoin and other cryptocurrencies but instead treated digital assets as one of the many use cases of blockchain.
South Korea, for example, vouched to spend more than 1 trillion won ($870 million) on blockchain and other projects in 2019 solidifying its importance as an indispensable technology of the century.
Asian countries have treated cryptocurrencies with a lot more caution than they have treated blockchain. The ICO craze is partly to blame for it. Seeing how consumers were burnt by the fluctuations in cryptocurrencies and countless fraudulent offerings, many governments in Asia banned ICOs. China, for example, ended up banning all ICO-related commercial activity and South Korea pushed back without even introducing any special legislation.
A blockchain boom and a wave of security token offerings (STOs) is what followed. On the ashes of so many scam ICOs, STOs gave rise to regulatory compliant offerings and a new set of rules where digital assets were backed by real estate, art, bonds or stocks. Tokenized real-life assets have now become the symbol of blockchain-based financial instruments. VNX Exchange, too, offers tangible asset-backed financial instruments in the form of tokenized venture capital funds’ startup portfolios.
Asia has generally been cautiously optimistic about digital assets, the approach that stems from its Blockchain, not crypto philosophy.
Some countries, like mainland China, have been vehemently opposing cryptocurrencies. Singapore, on the other hand, has been very forward-thinking and a popular destination for ICOs. The city-state eventually introduced proper regulation to safeguard retail investors into digital assets from fraud.
Japan has been another example of a safe haven for cryptocurrencies, especially after it became one of the first countries to recognize them as money. South Korea has balanced widespread awareness of cryptocurrency issues with regulation that aims to protect investors, especially first-time investors that lack sophistication, from bad actors.
Asia has always been an international financial capital and a leading outpost of major technology advancements.
China has long been known for its chip manufacturing industry and electronics, while South Korea has become world renowned with its Samsung empire that spans multiple products, from mobile phones to 4K TVs. This environment is what has prompted the proliferation of digital assets through cryptocurrency wallets on ubiquitous mobile devices freeing thousands of people to take control of their own financial sutuation. Japan’s leading banks, including Mizuho, recently launched a new digital wallet called J-Coin Pay. While it does not rely on cryptocurrencies or blockchain, many view this technology advancement as a welcome sign for more digital wallets.
In addition to technology breakthroughs, Japan and China with their Japanese yen and Chinese yuan, have become fortresses of economic growth and two currencies recognized internationally and used for cross-border transactions. Many experts anticipate that the arrival of stablecoins in Asia is imminent.
China, Japan, Singapore are world renowned for their engineering talent and math wizards with an entrepreneurial streak.
Educational institutions take advantage of tech companies’ interest in their research, faculty and student bodies. In 2018, for example, The National University of Singapore (NUS), the oldest higher education institution in the country and among the top universities globally, announced a joint program with the University Blockchain Research Initiative (UBRI), an international program founded by Ripple. The initiative provides both financial and technical resources to education partners who work on various blockchain projects.
Even the Asian countries less known for their international financial and technology hub status vie to become the new magnet for technology talent and VC funding. In 2018 Thailand, for example, saw its startup ecosystem grow by at least 30% to 40% from the previous year. This number is projected to reach 50% in 2019. Not only that but Thailand today has three licensed crypto exchanges and just recently approved four cryptocurrencies for use as base trading pairs: Bitcoin, Ethereu, Ripple and Stellar.
In Asia digital assets attract talent, money and push regulators to make decisions that both favor entrepreneurs and protect investors from fraud. This, in turn, drives more funds, entrepreneurs and engineers to Asia. While the West is trying to decide how to regulate digital assets, the East is already changing the world.
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