How Southeast Asia became a blockchain technology hub
Millions 'unbanked', high internet usage and government and investor support means blockchain is now integral to the region’s fintech framework
A unique regional mix of social and economic factors have combined to make Southeast Asia a rapidly developing blockchain technology hub.
First there is the region’s under-subscription to its banking network. A 2016 KPMG study showed that only 27 % of the 655 million who call Southeast Asia home held a bank account.
This contrasts sharply with the region’s high internet penetration rate. Data from the annual Kepios’ Global Digital Report said the average internet penetration for Southeast Asia in 2017 was 54%. Only Laos and Myanmar sat at below the 45% level while Thailand and Malaysia were both close to 80%.
This combination of unbanked millions and growing Internet access makes Southeast Asia a prime candidate for innovation in fintech – and many governments are also now showing support for such innovation.
Thailand is reportedly undertaking a major makeover of its state railway and postal service by combining blockchain and Internet of Things (IoT) technology.
The Philippines is employing blockchain technology to enhance, among other things, rural electrification. To help do so, the country’s government has joined forces with Shanghai-based Energo Labs to decentralize electricity storage and distribution.
Cambodia’s central bank is joining hands with Japanese company Soramitsu to build a blockchain-based payments system.
These projects, if successful, will further entrench blockchains in Southeast Asia’s technology framework. The increased involvement of venture capital and the appearance of numerous startups add to the region’s positive blockchain outlook.
These include Malaysian blockchain-based gold investment startup HelloGold, who in April received an undisclosed sum of first-level “Series A” funding from Silicon Valley venture capital outfit 500 Startups. Then there is Change, a Singapore startup that raised over $17.5 million via its Initial Coin Offering (ICO) to fund a blockchain-based finance app.
Also in Singapore, Bluzelle raised $1.5 million from various investment sources in 2017 to develop its “decentralized database” business while Coins.ph, a Filipino bitcoin-based mobile wallet, raised $5 million from a Series A funding process led by Naspers Ventures.
ICOs, despite recent bad press, have become a popular way to raise money, and the city-state of Singapore lags behind only the US, UK, and Russia in terms of the value of coin offerings.
The regional influx of investor money will only quicken the spread of apps and software that uses blockchain. Zach Piester, co-founder of Hong Kong-based fintech start-up Intrepid Ventures, probably speaks for many when he says Southeast Asia is “the center of the universe for us.”
Cahill Puil is the founder of blockchain and tech consultancy, Byte Media Group.
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