The blockchain ecosystem in Asia is a diverse and cutting-edge one, matching the region’s bustling and entrepreneurial activity in tech development, the high level of dynamism and adoption by consumers, and the growing power and scope of its economic centres.
At the forefront of central bank-issued digital currencies
The deputy director of the payments unit at the People’s Bank of China (PBoC), Mu Changchun, recently revealed that the Chinese digital currency has been in the works for years, and is almost ready for release.
As an intended replacement for banknotes in circulation (M0 monetary supply), this would be an unprecedented development for both the state and the private sector, as well as increasing the strength and use of the Yuan in international monetary markets.
This move would also directly compete with the Libra initiative, led by Facebook and supported by a wide consortium of private, western companies. China has continuously invested in blockchain technology and holds the highest number of patents pertaining to cryptocurrency and blockchain (more than 1,060, as of 2018).
Chinese direct investment in foreign startups developing blockchain and digital currency has been increasing at a fast pace, mirroring the comprehensive investment strategy in emergent high-tech and other high growth sectors.
The Chinese Silicon Valley
The city of Shenzhen is highly regarded as the technology capital of China. Part of the Pearl River Delta region, it is one of the most densely urbanized regions in the world and a future megalopolis.
It is highly connected to both the mainland and the economic hub of Hong Kong, enjoys the status of a special economic zone, and is home to Chinese tech giants such as Huawei, Tencent, BYD, ZTE, and DJI.
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As part of its long-term plan for economic development, Shenzhen will serve as a hub for research and development (R&D) and new innovative applications such as artificial intelligence (AI), digital currency research, mobile payments, and its associated regulatory ecosystem.
The broad Asian market context
It is not solely China investing deeply in blockchain and digital currencies in Asia. Many other developed nations in the region are competing fiercely in the space, despite the perceived downturn in cryptocurrency market valuations.
Indeed, many local projects believe this is the perfect time to build and expand. While many western nations are currently passing hostile or constraining regulations and with several projects shutting down, downsizing or relocating, Japan, South Korea, and Singapore hold high hopes for the inclusion of blockchain and digital currencies in their existing economic systems.
While China focuses heavily on the foundational technology aspects of blockchain, with its institutionally led initiatives, and less on the cryptocurrencies as a direct vehicle of investment (ICOs are officially banned), the ecosystem elsewhere in Asia is considerably more diverse, both in the weight of private and public initiatives, as well as the scope of projects.
Both retail investors and corporations have embraced crypto assets with enthusiasm, and the region is home to many projects and some of the world’s top cryptocurrency exchanges.
With an increasing number of establishments in Asia accepting or integrating cryptocurrencies in their services, establishing partnerships and pushing for broader consumer adoption, paired with favourable and self-regulatory measures for startups, the region is aiming to become the top destination for entrepreneurs in the crypto ecosystem.
This competitive attitude stems from the early understanding of crypto assets as a game-changing innovation with disruptive potential, which could greatly benefit the economy.
The potential for cashless transactions and cross-border money transfers at low costs is especially appealing given that Japan and South Korea rely heavily on cash transactions and reiterates their pressing need to modernize their financial systems if they are to catch up with neighbouring China.
As we see the push for even larger investment funds allocations, with the announcement of Softbank’s Vision Fund 2, with more than 108 billion dollars of capital, the investment in blockchain startups and digital currency projects is sure to reach new heights.
Expanding towards the East
As the recent 5th Oversees Industry Fair in Shenzhen saw blockchain companies take to the stage in front of an audience of hundreds of delegates and tech leaders from the Chinese market and awarding innovation in the space, it is evident that there is great demand and recognition of the technology, developments, and investment potential in the region.
While many developments still lay ahead in the coming years, one thing investors, corporations and the Chinese government acknowledge is that: the future of virtual currencies is already here and is “unstoppable.”
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