2019 will mark the tenth anniversary of the first deployment of blockchain technology. It was in 2009 that the still elusive Satoshi Nakamoto released the first version of bitcoin. Since then, the concept of blockchain was inseparably linked with the world of cryptocurrencies.
But the burst of the Bitcoin bubble seems to have resulted in a paradigm shift. While the popularity of cryptocurrencies may have taken a nosedive, the same cannot be said about the technology behind it at all.
For years proponents have suggested that blockchain has the potential to change virtually all aspects of human digital transactions and interactions. Now, thanks to the cooling effect of the bitcoin meltdown of 2018, the deployment of blockchain technology in other fields is taking center stage.
And one region that is fast becoming a hotbed of blockchain innovation is ASEAN. A decade ago, few would have visualised such a scenario. But as we enter 2019, nations in the region are getting ahead of the curve when it comes to harnessing the full potential of blockchain technology.
ASEAN is perfect for blockchain startups
The region as a whole has several unique features that set it apart from the rest of the globe. For starters, it is home to a tenth of the global population and ranks as the fifth largest economic bloc as well.
A couple of contrasting features make this massive market a favoured destination for hi-tech digital startups in recent years. Internet and mobile penetration in the region currently hover around 55-60%. The annual growth rate is almost absurdly high.
In sharp contrast, traditional banking services are still highly inadequate across the region. Individuals and SMEs do not have access to basic banking services. It is estimated that nearly 73% of the population has no access to banking.
These markets are perfect for alternative financial solutions based on advanced technology like blockchain. Unsurprisingly, the fintech sector is a major driving force behind the Southeast Asian startup scene.
ASEAN governments are setting an example for the rest of the world
The early proponents of bitcoin were often anarchists or libertarians who saw it as an alternative to government-controlled fiat currencies. There was a strong association of blockchain technologies with freedom from rules and regulations.
But a lack of regulatory oversight and governance left blockchain based deployments very vulnerable to instability and manipulation. It contributed significantly to the rise and fall of the bitcoin bubble.
As a result, it is precisely the opposite that is giving the ASEAN region an edge. Virtually all governments in the region have a positive attitude towards cryptocurrencies and have passed laws to regulate currency markets and exchanges.
Singapore positioned itself as a leading destination for Initial Coin Offerings (ICOs) when cryptocurrencies fell out of favour in places like Japan and Korea. It is also pioneering the use of blockchain in the energy sector, creating a deregulated market for electricity consumers.
Thailand unveiled cryptocurrency laws in 2018, paving the way for a regulated currency exchange market in the country. Even more ambitious are the plans of the Thai central bank to adopt blockchain for services like security settlement, international payments, and supply chain management.
Indonesia is yet another example of shifting government attitudes towards blockchain. Its tax system uses an application called Online Pajak, derived from open ledger-based technology to improve transparency.
The Philippines, Vietnam, Cambodia, and Laos have all welcomed blockchain-based ICOs to their local markets. By passing legislation that removes at least some of the ambiguity and confusion surrounding blockchain, ASEAN governments are harnessing blockchain technology to drive investment, and are setting an example for the rest of the world in the process.
ASEAN startups are at the forefront of innovation
Numerous incubators and accelerators have sprung up in countries like Malaysia, Indonesia, Singapore, and the Philippines in recent years. Unique startups that take blockchain technology beyond cryptocurrencies are springing up across the region.
Electrify is the name of the Singapore-based startup that has been making a lot of waves in the energy sector. By using a transparent digital ledger, the system plans to cut down the role of middlemen and reduce the cost of electricity.
Crowdvilla is a new home sharing platform based on blockchain tokens based out of Singapore. The real estate platform allows users to own shares of holiday homes and hotels across the world.
There are several startups harnessing blockchain currencies to provide banking and cash transaction services in the region. LaLa World is a wallet-based on ethereum that allows users to send cash anywhere using their mobile app.
An ASEAN-based global blockchain brand is on the horizon
There is a unique synergy at play in the South East Asian startup scene at the moment. The combination of an untapped market and a favourable regulatory climate has created a paradise for blockchain-based startups.
While most markets support ICOs, in ASEAN, we are seeing the technology being applied to new frontiers like fintech, payments, banking, rideshare, home share, and even the energy sector.
This is a clear sign of a stable platform for future growth in this field. Given the immense economic potential, this sector should find no dearth of investment in the coming years. We could very well see some global blockchain-based brands emerge from the region in the near future.