Asia And The Future Of Cryptocurrency Seen From 2018

Technology is more ubiquitous than ever. The upsurge of connectivity has also contributed to an increase in digital banking that appeals to a cross-generational segment that grew up using online banking and apps rather than using brick-and-mortar banks.

Besides global, local, and even regional companies are going beyond their traditional sectors and the boundaries between all these players, their platforms, and offers, are rapidly blurring.

Cryptocurrency is one of these new disruptions to the banking sector. In the last decade, Bitcoin and other cryptocurrencies such as the Ethereum –all underpinned by the blockchain technology– have emerged as an alternative to the current, debt-based financial industry.

However, since their inception, cryptocurrencies have been met with a unique mix of scorn, fear, and mockery.

Of course, there will always be speculators, but this goes beyond that.

There seems to be a genuine interest by many on this form of currency. Crypto is a purely digital currency still to be regulated, and yet it has already gained the interest of hundreds of thousands of people around the world who decided to invest and risk money on it, I find that very interesting.

The Financial Stability Board released a report that found bitcoin and cryptocurrencies do not currently pose a material risk to the global financial system.

What does this mean for the future of cryptocurrencies in the world?

The FSB, with members from the G20 major economies and the European Commission, said it plans to monitor cryptocurrency assets in the world’s largest financial systems to quantify the potential impact crypto adoption could have on the financial system.

For instance, in June 2018, while financial regulators across the world were cracking down on bitcoin, the Swiss Financial Market Supervisory Authority (FINMA) decided to encourage digital currencies, issuing guidelines on Initial Coin Offerings (ICO).

Among the guidelines, the FINMA clarified how standards around anti-money laundering and security regulations could be applied to cryptocurrency.

Blockchain technology could be the new way transactions are made, and if Switzerland wants to keep its rather special position in the banking sector, it needs to disrupt its systems before any others to attract investors.

In fact, The Swiss recently voted to shift its financial industry into something akin to the blockchain economic system, but the initiative lost spectacularly –but it won almost 25% of those polled, which is a lot if you consider cryptocurrencies’ relatively young history.

This initiative, known as the Sovereign Money Initiative would have barred banks from electronically creating debt-based money when they lend beyond their deposits, preventing financial institutions from electronically creating money.

In the meanwhile, Switzerland cryptocurrency adoption still advances and the Zug valley is becoming a global hub for crypto and blockchain development, but before the trend changes, I believe we still need to educate people about money and how currency works before expecting to entirely disrupt the world’s entire financial system.

Similarly, Singapore has been opening to cryptocurrency over the past years and issued a statement that regulated cryptocurrency exchange and ICOs.

To bitcoin investors, Singapore represents an attractive target because of its position as an international trade and financial node, which is also putting the Asian country in a dominant position from which to see the future of bitcoin, especially after China and South Korea are still pondering their stance on cryptocurrencies.

Besides, now that cryptocurrencies volatility has increased since last year, the interest of establishing crypto-based financial structures has also increased, and the countries that adopt crypto as an active first will stay at the forefront of the blockchain technology.

That’s one reason behind many Asian countries hoping to cement their status as the new crypto tech hubs and are starting to nurture blockchain and cryptocurrency-related businesses.

Asia already began the blockchain revolution and while European and American countries are still trying to figure out how to use blockchain and failing –take the Venezuelan Petro as an example– Asia is solidifying its position as the new crypto hub.

What are the main methods to trade crypto?

Let’s say that you read the introduction to this article and you thought, “Yeah cryptocurrencies are the future; I’ll take a look into it.”

You go to the internet and start looking, but what are you looking for?

First, you need to know that there are two methods to trade crypto: fiat exchange and pure exchange. The first allows you to exchange regular currency for crypto and the second allows you to exchange your crypto for other kinds of cryptocurrency.

If you’re a beginner, you may want to start with a fiat exchange service and use either a bank account or a credit card. Coinbase is currently the largest fiat exchange house.

If you bought, let’s say, Bitcoin and you want to exchange it for Ripple or Etherium, you can use a pure exchange platform like Bittrex. This platform supports many coins and since it has many users, you can always find others to exchange your cryptocurrency.

Last, check if the exchange you’re using is regulated, if it’s been hacked, and if it’s got a solid customer support. You need to be careful and remember, never store your crypto on an exchange and keep them in your wallet.

What makes Asia the perfect place for a crypto-based disruption?

Mainly that many regions are already prepared for blockchain-based innovation. With astounding mobile phone usage, some even are skipping credit and debit cards, going straight to digital payment platforms.

Also, while in the U.S. the average crypto investor is willing to spend $1,000 in cryptocurrency, in Hong Kong, China, and the Asia Pacific region the average investor is willing to invest as 10 times that amount and sometimes more.

At the same time, South Korea has rapidly become one of the world’s largest bitcoin, crypto, and blockchain hubs. The country is also home to one of the biggest cryptocurrency exchanges, Bithumb.

From that standpoint, blockchain technology presents the opportunity to disrupt the current banking paradigm, especially in Southeast Asia, where only 27% of the population has bank account access.

And since one of the cryptocurrencies’ main promises is offering people a place to store their money by being their own bank, the adoption is growing rapidly, mainly because all that it takes to access to digital currencies is a smartphone, which is ubiquitous in South East Asia.

Blockchain is disrupting the region’s payment systems. For instance, many entrepreneurs are now using cryptocurrencies as an alternative to traditional systems. For instance, there is a fintech firm that offers Ethereum-based loans to small to medium enterprise, providing loans directly to user wallets.

What’s more, research from Morgan Stanley indicates that China, Hong Kong, and South Korea are countries where most of the bitcoin transactions take place. This means, that despite all their restrictiveness the Asian markets are expected to, somehow, nurture cryptocurrency and many conventional financial institutions are eyeing fintech as a potential economic boon.

Lastly, one of the reasons most of the Asian markets are ready to adopt crypto is because their governments have acknowledged the sheer influence blockchain will have shortly. More than that, they have issued policies that aim at regulating and paving the road –with government control, of course– for blockchain-based transactions to thrive.

Virtual currency and all the related blockchain technologies will be part of our lives sooner than later, and the APAC region has proved to be the ideal incubator to test-drive new blockchain initiatives, provided, of course, that its governments establish favourable conditions for this to happen.

In the end, no one knows what the result will look like. But one thing is sure: the impact of blockchain and cryptocurrencies in the world will be huge, and the disruption is just starting.

Today, Asia starts the race with an early advantage when it comes to adopting blockchain. Also, the region is looking to sensibly regulate the market and educate the population to help people understand the currency and the implications of a digital financial model.

By engaging with innovation and innovators, the region is not only getting a foothold on what could be the next financial revolution, but it’s also ascertaining its position as a global player in the world economy. If Asia succeeds and manages to ensure a dynamic and decentralized approach to blockchain and cryptocurrency, the benefits will likely transform the region.  

So, watch the space: risk takers may win a solid foothold in the future market.