But what exactly are these digital assets, and how are they traded?

What is an NFT?

NFT stands for Non-Fungible Token.

Something that is “fungible” can be exchanged with an equivalent item — for example, a $5 bill with another $5 bill.

Here’s an explainer by Tech Wire Asia on how they’re different from cryptocurrencies.

Cryptocurrencies, which use a digital public record of transactions called a blockchain, are fungible.

NFTs are digital items that can be bought and sold using this blockchain technology. But they are not fungible, making them a different type of asset.

Some have sold for millions, including an NFT by digital artist Beeple which went under the hammer at Christie’s in March for an eye-watering $69.3 million.

Some of the most coveted NFTs are released via collections of thousands of unique individual cartoons, such as the Bored Ape Yacht Club.

They are seen as intrinsically cool by their owners, who enjoy boasting of their purchases by displaying them as their social media avatars.

The tokens aren’t necessarily images, though: on several websites, such as Decentraland and The Sandbox, you can buy virtual land in NFT form.

Critics say investors are spending money on meaningless items, but supporters insist that NFTs are much more than digital trinkets.

Some predict that using the blockchain to record the ownership history of an item will eventually become much more widespread, revolutionizing how we think about property.

How are NFTs traded?

Like cryptocurrencies, NFTs are traded (bought and sold) on specialized platforms. OpenSea is the best-known NFT marketplace.

A sale does not necessarily involve the transfer of the object depicted by the token.

NFTs of famous paintings have been sold, for example, but the buyer does not receive the painting.

What changes hands is a certificate of ownership of the NFT, registered on the blockchain The certificate must be kept safe in a digital wallet, which can take various forms.

The wallet might be accessed via Metamask, a free internet browser extension, or a secure physical device. It might also take the simple form of a code printed on a piece of paper.

To purchase an NFT, the wallet must contain enough of the relevant cryptocurrency — for example, ether (ETH) if the person is buying a token on the Ethereum blockchain.

With a little technical know-how, it is also possible to make, or “mint”, your own NFT.

Ultimately, NFTs are digital contracts, with certain rules embedded such as the number of copies available for sale.

What are the risks?

Trading NFTs involves technical processes that are sometimes misunderstood — and that can lead to investors not knowing quite what they are dealing with.

Every interaction with the blockchain involves fees to pay for “mining” — the hugely energy-intensive computer calculations needed to verify each transaction.

Thousands of users might rush to buy a much-coveted NFT as it’s minted, and they have to pay the fees even if they walk away empty-handed.

Some buyers use bots to try to ensure that they get their hands on a token, which makes the market even less accessible for newbie investors.

“A very small group of highly sophisticated investors rake in most of the profits from NFT collecting,” blockchain data company Chainalysis said in a recent report.

And it added that NFTs are often sold at a lower price to enthusiasts who have helped to create hype for the project.

“The data suggests that NFTs are far from a surefire investment,” Chainalysis concluded.

with additional reporting by Jules BONNARD for Agence France-Presse

The post Want to trade NFTs? Best beware the risks appeared first on Tech Wire Asia.

But what exactly are cryptocurrencies, and why are they so popular here in Asia?

Tech Wire Asia explores.

Cryptocurrencies: Their science explained

Cryptocurrencies are essentially digital or virtual currencies secured by cryptography, which is a class of security techniques that encrypts data to ensure only the receiver and the sender receive them. 

While not impossible, cryptography-secured information can be exceedingly difficult to “hack” into or be tampered with. This thus makes cryptocurrencies almost impossible to counterfeit or double-spend and hence are seen as secure. 

This security feature of cryptocurrencies is primarily based on the nature of the technology powering them — blockchain. 

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A blockchain is a highly secure, decentralized database system that stores records of data in a cryptographic format. Unlike normal databases, blockchain data created by users (transactions) are not stored in a central location (like a data server).

Instead, they are stored on the machines or systems of the people who create the data, across a network. As creators store that data themselves, they ‘own’ their data, thus the system is considered ‘decentralized’.

Normal data stored on data servers risk being accessed and/or manipulated by the data server owner, or may even be lost due to accidents; also, it may be difficult to have a record of these events.

However, with blockchain, every transaction created and recorded is permanent and secured with a cryptographic ‘lock’, and the transaction is broadcasted to everyone who owns copies of the blockchain. It is immensely difficult to hack into it to change transaction details, hence why blockchain is transparent and trustworthy.

Cryptocurrencies: Their popularity explained

Popular cryptocurrencies such as Bitcoin (BTC) are exceedingly lucrative because of their privacy and security features, as well as their high valuations.

Cryptocurrencies are also often decentralized, meaning their transactions cannot be traced or linked to individuals, hence offering privacy for their owners.

Importantly, this also means that cryptos are virtually immune to interference or manipulation by governments.

As such, they can understandably be in competition with centralized currencies, such as fiats issued by central banks. 

In May this year, financial giant Goldman Sachs reversed its previous anti-crypto stance, declaring that cryptocurrencies are, indeed, viable as an asset class. 

However, the prices of cryptocurrencies such as Bitcoin are extremely sensitive to the smallest of movements in markets, economies — and even to influential people on social media.

Bitcoin’s long history of price volatility has seen it grow from barely US$1,000 per coin into the tens of thousands.

It reached its peak valuation this year when it hit a record US$68,521 per coin.

You can think of cryptocurrencies as high-risk, high-value investments — able to rise to insanely high valuations but also crash so hard.

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Even so, that has hardly made a dent in its popularity.

Earlier this month, the value processing of popular crypto Bitcoin had surpassed that of Paypal’s — even making up a chunky 27% of Mastercard’s transactions.

Additionally, an increasing number of investment funds and banks are now adjusting their services to make crypto trading more accessible to investors, too. 

The popularity of cryptocurrencies in Asia

Cryptocurrencies are so popular here that recently, Mastercard teamed up with three leading cryptocurrency service providers in the Asia Pacific and launched their own crypto-funded Mastercard payment cards.

In Singapore, more people are trading crypto or using them to pay for goods or services as more places accept cryptocurrencies as payment.

In Thailand, the Siam Commercial Bank had also recently acquired a 51% controlling stake in local cryptocurrency exchange operator Bitkub Online. 

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Down under, cryptocurrencies have overtaken gold for investments, spawning more neobanks and pushing the government to better regulate their use.

Even the Commonwealth Bank of Australia recently announced that it was providing crypto trading services.

On the other side of the coin, however (pun unintended), some countries appear to be obsessed with pushing back against cryptocurrencies, partly because of how harmful it is for the environment (especially bitcoin mining), can facilitate criminal activity, and increase crypto scam activities, among others. 

Case in point: China’s longstanding ban of any and all crypto activity in the country. 

Observers, however, argue that China’s dogged pursuit of wiping out crypto is likely because they pose a threat to the government’s push for their own sovereign digital currency (CBDC), the digital yuan.

India, which banned cryptocurrencies in 2018, has softened its stance a little as the Supreme Court overturned the ruling in 2020. It will, however, be pushing for stronger regulations soon.

So why is Asia so obsessed with crypto?

Firstly, Asians love digital payments — arguably buoyed by the lockdowns resulting from the global Covid-19 pandemic.

And yes, including, and especially, China.

As compared to the rest of the world, the adoption rate of digital (especially emerging) payments is better in Asia, according to Mastercard Asia Pacific’s executive vice president, digital & emerging partnerships and new payment flows, Rama Sridhar.

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Some of these emerging payment methods include QR code payments; e-wallets; buy-now-pay-later (BNPL); CBDCs (central bank digital currencies); cryptocurrencies, and biometrics among others.

Asia also has a high population of consumers who operate across borders, whether via online purchases or physical travel. As such, there is a higher expectation by consumers here, as opposed to the West, to have more seamless, global, and interoperable frameworks for payments.

The Asia Pacific, especially ASEAN, is home to the largest number of underbanked and unbanked populations, meaning to say, they either do not have bank accounts or do not use financial and credit services by banks.

Furthermore, typical investment options such as accessing shares and stocks are often out of reach financially for many, due to the high starting costs involved. 

And the thing about cryptocurrencies is that they are virtual/digital, borderless, do not require a high amount of initial financial investment, and importantly — aren’t bogged down by the usual red tape from banks. All you need is a digital wallet to hold your cryptocurrency, a crypto exchange in your region, and you’re good to go.

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Conversely, transacting digitally with a bank account, for example, can be quite a hassle, in that one needs to create that account, which takes time; deal with app limitations and service downtimes, and other complexities of banking services.

In the Asia Pacific, governments have taken notice of the immense popularity and demand for cryptocurrencies, so much so that APAC leads the world in cryptocurrency regulation.

Asian consumers are ravenous for faster, safer, and less-hassle free payment options, something which cryptocurrencies can offer, aside from other real-time payments.

Understandably, all these together make it attractive to Asian crypto owners to transact, own and/or hold financial assets. 

So what’s the takeaway, then?

Well, if you’re intending to do business in Asia, it might be wise to consider accepting not just digital payments, but cryptocurrencies as well — and sooner, rather than later.

The post Why is Asia so obsessed with cryptocurrencies? appeared first on Tech Wire Asia.

This industry’s growth has resulted in more and more people getting involved in this sector. These startups are helping local businesses to adopt new technologies and adapt to ever-changing market conditions. 

For years, the country has been at the forefront of financial innovation, from cryptocurrencies to blockchain technology, e-commerce payments, and digital identity.

From pioneering internet banking to the first country to embrace cashless transactions by using the Electronic Funds Transfer at Point of Sale, Kiwis were on the cutting edge of financial innovation early on.

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Innovation hub of fintech companies

The answer is simple: Many Kiwi businesses have embraced the digital revolution and leveraged technology to drive innovation in their industries. The country ranks fourth in the world for internet speed, with an average connection of 12.1 megabits per second (Mbps). 

The country is second only to the United States in venture capital funding for fintech startups. Fintech companies have raised more than US$500 million in venture capital funding since 2013, making it one of the top countries worldwide in this respect.  

New Zealand is currently seventh place in the Asia Pacific, in the global fintech rankings 2021, powered by Mambu. It is 14th globally for fintech strength compared to 20th and 15th, respectively. The report puts a spotlight on New Zealand’s financial technology ecosystem and showcases the country’s achievements in fintech over the last year.

The tech sector in New Zealand

According to the country’s Ministry of Business, Innovation, and Employment (MBIE), the tech industry has grown, and between 2018 and 2019 profitability grew three-fold.

The tech sector in 2019 created 2,148 new jobs, created 555 new companies, and employed 114,000 people, 

MBIE tech industry data revealed that the top 200 Kiwi tech export companies had experienced an increase of US$705 million in revenue over five years.

Fintech companies in New Zealand

Fintech companies in New Zealand have been proliferating over the past few years, and it is expected that firms will grow twice as much as traditional banks by 2020. 

The MBIE report said that the country’s top fintech exports included Pushpay, Xero, Invenco, Vend, and DataTorque.

Healthtech, agritech, and gaming

Healthtech companies generated US$1.9 billion in revenue and grew at a rate of about 9%. In comparison, MBIE data showed that IT services exports exceeded $4 billion, with key markets in the United States, Europe, and Australia.

The agritech industry has become a significant player in the global economy, with exports increasing each year. The New Zealand government has prioritized helping this industry grow by investing heavily in research and developing funding from public and private sectors.

This investment is now paying off as innovation abounds across all areas of agriculture, including plant breeding/genetics, precision farming, and animal health.

New Zealand has the highest rate of gaming technology adoption globally, with 54% of NZers owning a smartphone compared to 32% globally. The country also boasts one of the highest social media usage rates at 83% and is home to some 500 million connected devices, including game consoles, personal computers, and smart televisions.

The post Fintech companies making an impact in New Zealand appeared first on Tech Wire Asia.

In fact, its perceived value is so immense, that Palau became the first country in the world to make it their nation’s first digital currency. 

But are stablecoins really that stable? Tech Wire Asia explores.

Firstly, what are stablecoins?

Stablecoins are a class of cryptocurrency that attempts to offer price stability, backed by a reserve asset, in a 1:1 ratio.

Theoretically, the monetary value of stablecoins is pegged to more “stable” external assets, such as the US dollar, or the price of gold, silver, or oil.

Its 1:1 ratio then means that the value of the stablecoin that’s pegged to the reserve asset would remain the same. As such, its inherent value should theoretically not be affected by external movements (with the exception of the reserve asset), unlike that of cryptocurrencies.

Stablecoins also purports to offer the same private, secure, and decentralized features that cryptocurrencies have, making them highly desirable, particularly to those who value privacy and security.

You can think of them as comparable to fiat currencies backed by the central banks of countries, hence are able to retain their value in a more consistent manner.

So in theory, stablecoins are desirable for investments as they marry crypto features such as convenience, privacy, and security — with a lack of valuation volatility. 

Furthermore, they are speedier to transact with (as opposed to other digital payments), are more accessible to the masses unlike traditional stocks and shares, and aren’t bogged down by high service fees typical of other kinds of digital transfers. 

Cryptocurrencies vs stablecoins

Popular “mainstream” cryptocurrencies such as Bitcoin, Ether and XRP are exceedingly lucrative because of their perceived privacy and security features, as well as their high valuations. 

Cryptocurrencies are also often decentralized, meaning their transactions cannot be traced or linked to individuals, hence offering privacy for their owners. However, the downside is that cryptocurrencies are the currency of choice for many kinds of criminal activities — and obviously a huge problem for governments around the world.

Nevertheless, this also means that cryptos are virtually immune to interference or manipulation by governments. 

However, unlike stablecoins, the prices of cryptocurrencies such as bitcoin are extremely sensitive to the smallest of movements in markets, economies — and even in response to influential people on social media.

You can think of cryptocurrencies as high-risk, high-value investments — able to rise to insanely high valuations but also crash so hard.

Do stablecoins live up to their name?

As we’ve established, stablecoins are perceived as possessing the desirable privacy and security features of popular cryptos, without its valuation volatility. 

But is that truly the case? 

The BIS asserts that this may not be entirely accurate.

Firstly, the term ‘stablecoin’ is neither internationally recognized nor are held to established international standards.

Secondly, stablecoins exist in an ecosystem comprising multiple inter-dependent entities that hold different roles, technologies, and governance structures. 

Thirdly, there’s virtually no international classification standard or authority to definitively ensure or certify that the stablecoin you own is what it claims it is. 

The lack of a unified — or centralized, if you may — international or governmental authority to verify, enforce and ensure compliance to international standards casts doubt on the ability of consumers to be protected from potential abuse by private stablecoin organizations. 

As such, due to a lack of established standards and regulations, entities selling them may not be fully held accountable for the failure of their stablecoins. 

According to Jean-Philippe Serbera, Senior Lecturer at Sheffield-Hallam University, a huge question remains about whether stablecoin producers have enough financial reserves to maintain the fiat ratio of 1:1 during times of crisis.

“These 1:1 ratios are not automatic. They depend on stablecoin providers having reserves of financial assets equivalent to the value of their stablecoins in circulation, which adjust with supply and demand from investors,” said Serbera, in a commentary in The Conversation.

Serbera also highlighted the contradictory claim of how stablecoins are decentralized, but are ironically, still ultimately controlled by the organizations that issue them.

For example, the popular stablecoin Tether is owned and controlled by Bitfinex. USDC is owned by Circle, Bitmain, and Coinbase. Binance USD is owned by Binance, a crypto exchange.

It should be noted that Tether was fined US$41 million in October this year over misleading claims that it was backed by the US Dollar. Its parent company, Bitfinex, was separately fined US$1.5 million for “illegal, off-exchange retail commodity transactions in digital assets”.

Are stablecoins a threat to economies?

Countries are on high alert about stablecoins now, although they’ve always kept a close eye on the movements of these cryptocurrencies for years.

Regulators fear that, in times of crisis or when owners are afraid that stablecoin issuers would go under, people would start cashing out coins all at once, hence potentially destabilizing other financial markets as a result.

To address that, the US Treasury released a report on stablecoins last month, urging the government to regulate stablecoin operators the same way banks are.

As reported by Nikkei Asia, Japan imposed new rulings this month that stablecoins could only be issued by banks and wire transfer services.

Earlier this month, US state agencies called for urgent legislative action to limit the issuance of stablecoins to insured depository institutions. Their working paper highlighted the risks of stablecoins to the broader financial system, and urged more prudent regulation of the currency, reported Reuters. 

As we can see, stablecoins appear to hold the same kind of risks as other crypto assets, on top of potential disastrous risks to the greater financial system.

They may also not appear to really be what they seem — hence why critics are still wary of its claims of superiority to more stable assets.

But how does it fare in comparison to cryptocurrencies?

As far as the literature and expert opinions go, the value of stablecoins does appear to be a little less volatile than cryptocurrencies, but the key thing to note is that both are still inherently “unstable” in their own ways as compared to traditional investment assets. 

So don’t be too quick to jump on the stablecoin investment bandwagon — as with all other investment assets, always do your research first, and only invest when you have cash available to burn.

The post Are stablecoins better than cryptocurrencies? appeared first on Tech Wire Asia.

We understand that “non-fungible tokens” can be quite the mouthful, which is why it is almost often referred to by its abbreviation, NFT. But what exactly are they, how do they function and what are their benefits?

Tech Wire Asia will explore the science behind it, and debunk some common misconceptions in this piece.

So… what exactly are NFTs?

NFTs are essentially digital tokens that carry data and are stored in an immutable blockchain ledger. Its main purpose is to represent assets and prove their authenticity and ownership. 

Whether the asset exists virtually or physically, the record of its existence can be stored and accessed in a highly secure and transparent manner. This is because said record, by its blockchain nature, cannot be changed, edited, or tampered with (called immutability).

These assets can be virtually anything that has value — from artwork, rare jewelry, music, original scores, even the source code that spawned the World Wide Web.

When an asset with an NFT token undergoes a transaction digitally or in real life, the blockchain creates a new ‘block’ with the information of the new owner. 

There will be a chain of information for every transaction carried out, and traceability of ownership along the chain is easily done in order to establish the authenticity and provenance of the item. 

Blockchain: A refresher

Blockchain is a distributed ledger technology that’s applied in areas such as decentralized finance (e.g. cryptocurrencies), decentralized identity management, vaccine passports, and of course, NFTs. 

They are also applied in industries such as supply chain and media and entertainment, among others. 

Blockchains are essentially immutable (unchangeable) ledgers that stores records of things such as transactions, IP, ownership, and others. 

Blockchain ledgers are considered “immutable” because once data has been written to a block in its system, this record cannot ever be changed, edited, or tampered with.

According to “Blockchain: The Next Everything” author Stephen P. Williams, “The records are collected in groups, or “blocks,” and linked together in a “chain” by cryptographic codes. 

“The ledger is stored on all of the participants’ devices (called “nodes”) that have joined the chain. 

“Public blockchains of cryptocurrencies such as Bitcoin (BTC) and Ether (ETH), can be joined freely by anyone, and the transactions are visible to everyone (although identities can remain largely private).”

Are NFTs cryptocurrencies?

Short answer: No.

NFTs are not cryptocurrencies, although it is understandable to conflate the two. 

This is because popular cryptocurrencies such as Bitcoin and Ether are built on the same technology that NFTs are — blockchain.

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Unlike cryptocurrencies, NFTs do not innately possess monetary value — their existence is representative of items with varying monetary values instead (such as art, songs, property, etc.). 

This makes them economically non-fungible, whereas cryptos like BTC and ETH are fungible (can be traded and has innate value).

NFTs merely serve as a representation of a physical or virtual asset — akin to a certificate of authenticity, except in a far more secure manner. Hence the ‘token’ part of ‘non-fungible token’. 

The science behind NFTs

Aside from its immutability and uniqueness (no two NFTs are the same), there are three other unique properties of NFTs that allow them to carry out their intended function, some of which cryptocurrencies do not possess.

Indivisibility

A non-fungible token cannot be divided into sub-tokens (or sub-blocks). This is unlike cryptocurrencies like Bitcoin, whose monetary value is based on its difficulty in obtaining a single piece of a block. 

These blocks can then be sub-divided and have their monetary value split amongst multiple owners and have their ownership verified on the public blockchain. 

However, NFTs cannot be split (hence, indivisible) because it would be contrary to its purpose as a singular token of data information if multiple people are able to claim ownership. 

There can, however, be fractional “ownership” of an NFT, but only in concept (e.g. as a percentage share of the NFT) – the asset itself stays intact. 

Indestructibility

As the token asset is built on a blockchain, it is by nature indestructible, even if the asset represented by the NFT is physically destroyed. 

This is because the data (i.e. chain of ownership) stored on the blockchain will continue existing for as long as the blockchain platform exists. 

This then makes it useful to prove the history of ownership of a tangible or virtual object (such as a classical work of art) that may have been destroyed.

So this can, for example, be applied to make it easier to identify circulating fakes or to serve as a secure and indestructible record for archival purposes.

Provenance

The asset’s NFT-based ownership record will be maintained wholly on the blockchain it is built on. 

As such, every NFT that was created for an asset can be traced back to its origin.

This gives the blockchain owner the ability to verify if a physical or digital asset is genuine, even if it has been sold or exchanged hands thousands of times. 

So we’ve explained NFTs, what now?

As NFTs exist on blockchains, it is important to ensure that the NFTs you own are built by and operated by reputable services. 

An example of an established and reputable blockchain is Ethereum. And yes, we are aware that it might be confusing as its cryptocurrency Ether (ETH) is also often referred to by the same name.

However, Ethereum is actually a blockchain service provider (or platform) that builds NFTs and offers ETH trading among other services.

Most NFTs available today are built on the Ethereum blockchain, and can be traded on Ethereum-supported NFT “marketplaces”. These marketplaces facilitate transactions for NFTs. Some examples of Ethereum-supported NFT marketplaces include OpenSea and Mintable, among others. 

However, NFTs built on other blockchains, such as Solana, also exist. An example includes FTX.US. 

As you’ve learned, NFTs can serve as a secure way to establish the authenticity of an asset that’s digitally represented. 

As such, they’re highly applicable in industries where verification of assets is essential, such as auction houses and property management, and have other enterprise uses, even in cybersecurity.

The post NFTs explained: Here’s why they’re not cryptocurrencies appeared first on Tech Wire Asia.

For the last few years, Thailand has constantly been ranked second in the world in terms of crypto ownership. In fact, it is estimated that over 3.6 million people or 5.2% of Thailand’s total population currently own cryptocurrency. Recognizing the potential, the country is now laying the groundwork to be a “crypto-positive community” and build a new tourism ecosystem that can attract more crypto millionaires to boost the country’s travel industry.

A Bloomberg report indicated that the Tourism Authority of Thailand (TAT) is currently working with the Securities and Exchange Commission, the Bank of Thailand, and Bitkub Online Co., the nation’s largest crypto exchange, to pave the way for the acceptance of digital tokens for travel, its Governor Yuthasak Supasorn said.

Thailand, like many other nations, still doesn’t recognize cryptocurrencies as a legal tender, hence it may take a while before travelers can actually start using Bitcoin, Ethereum and other digital tokens for travel. However, Yuthasak said the state tourism authority is laying the groundwork for its wider acceptance by the time global travel returns to normal.

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To give a context on how widely crypto is in use in Thailand, 9.9% of all the internet users in the country own cryptocurrency, data suggest. To top it off, BitKub, the dominant crypto exchange in Thailand, recorded a growth of 600% in 2020 alone.

Converging crypto and travel 

Yuthasak even told Bloomberg that TAT will also set up a new unit next year to handle the issuance of its own crypto coin, produce a wallet, and build a new tourism ecosystem. In fact, TAT has been looking into launching its own utility token called TAT Coin since September as part of a planned “crypto tourism” campaign. 

Basically, the initiative aims to attract crypto wealthy digital nomads and the TAT has been in discussions with the Stock Exchange of Thailand regarding TAT Coin’s issuance. According to a report from the Bangkok Post last week, the infrastructure behind the TAT Coin is “ready” to go and is now awaiting the green light from the Thai government.

Even the founder and CEO Bitkub Jirayut Srupsrisopa have urged policymakers to approve the rollout of TAT Coin. “Private sectors are ready to provide digital infrastructure, but we’re just waiting for the government to press the button by enacting laws, regulations or even policies to help facilitate digital asset markets.” Srupsrisopa believes the national GDP could grow six times if the crypto market is strengthened.

The Bangkok Post report also quoted Yuthasak explaining that the “cryptourism campaign” consists of “building a new tourism ecosystem which utilizes digital technologies to allow wealthy populations, including cryptocurrency holders, to channel their money directly to tourism operators without agents or brokers.”

Thailand is among the first jurisdictions in Asia to enact cryptocurrency legislations, regulating the offering of digital assets and opening its doors to crypto-related businesses. It was in early 2018 that Thailand began to adopt a more liberal and progressive stance towards cryptocurrencies, having legalized the trading of seven approved digital currencies. Eventually, over time, regulations continued to evolve into a more sophisticated framework, with the emergence of new offerings in the digital asset space, such as security tokens and exchanges.

The post Here’s what Thailand’s doing for crypto travel and tourism appeared first on Tech Wire Asia.

Case in point: Sotheby’s recently intended to auction off the source code files of the inventor of the World Wide Web, Tim Berners Lee, much to the delight, but also perhaps, confusion of many.

Sotheby’s, a high-end auction house, is one of the many players in the art scene who have jumped onto the digitalization train to reinvent parts of their businesses. Whilst NFTs have been somewhat popular in an on and off fashion, they have actually been around since the 2010s. 

Many still seem to have a very superficial understanding of what NFTs are, believing them to only be of use within the art, collectors’ or e-sports scene. However, they have far-reaching uses beyond those, and can actually be of importance to enterprises in surprising ways.

NFTs and blockchain

NFTs are essentially digital tokens that carry data and are stored in an immutable blockchain ledger. Its main purpose is to represent assets and prove their authenticity and ownership.

According to Blockchain: The Next Everything author Stephen P. Williams,

“Blockchains are immutable ledgers that store records of transactions, intellectual property, ownership, and more.

“The records are collected in groups, or “blocks,” are linked together in a “chain” by cryptographic codes. The ledger is stored on all of the participants and devices (called “nodes”) that have joined the chain. Public blockchains, such as bitcoin and ethereum, can be joined freely by anyone, and the transactions are visible to everyone (although identities can remain largely private).”

Blockchain ledgers are considered “immutable” because once data has been written to a block in its system, this record cannot be changed.

It is important to note that NFTs are not the same as cryptocurrencies. This was recently pointed out by Chinese financial giant Ant, whose subsidiary Alipay has come under fire by netizens confused between the two. Alipay allows and supports the auction of art using NFTs on its platform.

Unique properties of non-fungible tokens

NFTs are essentially digital tokens that carry data and stored in the immutable blockchain ledger. 

When an asset with the NFT token undergoes a transaction digitally or in real life, the blockchain creates a new ‘block’ with the information of the new owner. 

There will be a chain of information for every transaction carried out, and traceability of ownership along the chain is easily done in order to establish the authenticity and provenance of the item. As such, NFTs can serve as a secure way to establish the authenticity of an asset that’s digitally represented. There are three unique properties of NFTs that allow them to carry out their intended function. 

Indivisibility

A non-fungible token cannot be divided into sub-assets, because it would be contrary to its purpose as a singular token of data information if multiple people are able to claim ownership. This is unlike, say, a cryptocurrency like bitcoin, which can be sub-divided and have its monetary value split amongst multiple owners. There can be fractional ownership of an NFT, however, but only in concept (e.g. as a percentage share of the NFT) – the asset stays intact.

Indestructibility

As the token asset is built on a blockchain, it is by nature indestructible, even if the asset represented by the NFT is physically destroyed. This is because the data (i.e. chain of ownership) stored on the blockchain will continue existing for as long as the blockchain exists.

Provenance

The asset’s NFT-based ownership record will be maintained wholly on the blockchain. As such, every NFT can be traced back to its origin, thus giving the blockchain owner the ability to verify if a physical or digital asset is genuine, even if it has been sold or exchanged hands thousands of times.

Practical applications of NFTs for businesses

Because of its ability to establish authenticity, provide complete traceability, and remain secure and indestructible, NFTs can be applied to situations where these properties are essential. Some of these include patenting, intellectual property, supply chain, and real estate.

Patenting

Patents are considered an illiquid asset of an enterprise as they are a form of intellectual property. A real-world use-case scenario of NFTs in patenting can be found with IBM’s collaboration with IPwe, an IP ecosystem platform. IBM will tokenize patents, which can then allow patent owners to commercialize their patents in an open, safe, and accessible trading environment.

Intellectual property

Corporations can possess multiple assets that have intellectual property rights, as can artists, musicians, or content creators. Similar to how NFTs are used for patents, the same can be applied for IP rights. Unlike patents, IP rights can be shared amongst different buyers, so the fractional ownership of the asset can be leveraged as well to allow enterprises to use it as an additional revenue stream. However, this is still an emerging market due to legal complexities around the world. There is, however, an NFT licensing framework developed by Kittycraft that can inform or inspire more serious licensing frameworks around NFTs in the future.

Supply Chain

Supply chains can comprise multiple touchpoints, where some would require traceability, transparency, and proof of ownership. Bangalore-based startup Koinearth developed marketsN, which implements NFTs for enterprises and supply chains. Benefits include better market visibility, trading of illiquid assets, and ownership transparency. With these features securing parts of the supply chain, it can help enterprises attract investors more readily.

Real estate

Real estate can be a very time and labor-consuming affair and has often been seen as a stagnant investment for large corporations, especially those with assets in different countries. NFTs can optimize this process by implementing it in infrastructural, architectural, or physical assets such as buildings, title/ownership deeds, and more. 

Since NFTs can be digitally represented, it would be easier to trace and track ownership and authenticity of the digitally represented asset from anywhere around the world. A real-estate startup Propy has already commenced operations using NFTs for real-estate transactions.

There is still room for NFT service providers to innovate further. With an increased understanding of its technology from the public and private sectors, coupled with progressive policies regulating NFT use, NFTs will gain more popularity and see encouraging market growth down the road.

The post NFTs and moving beyond the hype: Enterprise use cases appeared first on Tech Wire Asia.

Digital currencies are becoming increasingly sought after by governments and stablecoin is one way of doing it. Pegged to a market value, a stablecoin is like cryptocurrency. And one country that is hoping to create the world’s first government-issued national stablecoin is the Republic of Palau.

An archipelago of islands in Oceania, Palau has partnered Ripple to explore the national digital currency and its use cases with the XRP Ledger. The partnership will initially focus on developing strategies for cross-border payments and a USD-backed digital currency for Palau.

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This could see the implementation of the world’s first government-backed national stablecoin in the first half of 2022 for which Ripple would provide Palau with technical, business, design, and policy support. Meanwhile, exploring a USD-backed stablecoin and associated use cases—such as a corporate registry—on the XRP Ledger could provide a viable alternative to central bank digital currencies (CBDCs) for countries like Palau.

“As part of our commitment to lead in financial innovation and technologies, we are delighted to partner with Ripple,” said President Surangel S. Whipps, Jr. “The first phase of the partnership will focus on a cross-border payments strategy and exploring options to create a national digital currency, providing the citizens of Palau with greater financial access.”

Palau understands the potential for financial technologies, including blockchain, to transform its economy and position the country as a highly desirable country to do business with. The same technologies will also transform how its citizens access financial services and enable efficient cross-border remittances.

The XRP Ledger provides financial institutions and government bodies such as Palau the ability to fully settle transactions for fractions of a penny and in just 3-5 seconds. To date, more than 5,400 currencies have been issued and traded on the XRP Ledger via its integrated decentralized exchange (DEX) and custom token functionality that makes it easy to create, issue, and manage any asset—including stablecoins.

“We are excited to be working with Palau to achieve its financial and climate-related goals,” said James Wallis, VP of Central Bank Engagements at Ripple. “We have a wonderful opportunity to bring together our technology and experience with the unique characteristics of Palau to make a real economic and social impact for the country.”

As an established leader in the global climate debate, Palau chose Ripple because of its extensive experience in blockchain and building global payment systems, and the XRP Ledger because it’s carbon-neutral and 120,000x more energy-efficient than proof-of-work blockchains. What’s more, the XRPL provides significant benefits such as scalability, speed, and low cost.

Palau is just one of the many countries that are looking to leverage the benefits of cryptocurrencies. Earlier this year, El Salvador became the first country in the world to accept bitcoin as a legal tender. The country also just announced that it plans to construct a “Bitcoin City” near a volcano that will be funded by the cryptocurrency.

Nigeria became the first African country to roll out a national digital currency several weeks earlier while the Bahamas released the Sand Dollar in October 2020. Japan also recently announced plans for a new digital currency backed by bank deposits. The effort will involve the nation’s top banks and about 70 other companies and organizations.

The post Stablecoin to be Palau’s first digital currency appeared first on Tech Wire Asia.

Regardless of your take on cryptocurrencies, the fact remains that these digital assets are gradually becoming a significant part of the payments world. Simply put, cash will not remain king forever and that is what Mastercard –a leader in global payments– believes in. In fact, Mastercard has begun offering its customers access to crypto-linked debit, credit cards and digital wallets, as well as cryptocurrency-based loyalty rewards programs.

Earlier this month, the American-based multinational financial services corporation teamed up with three leading cryptocurrency service providers in Asia Pacific and launched crypto-funded Mastercard payment cards for the first time in the region. The digital asset service providers — Hong Kong’s crypto finance firm Amber Group, , Bitkub in Thailand, and CoinJar in Australia — have all begun allowing consumers and businesses in their respective market within the region to apply for crypto-linked Mastercard credit, debit or prepaid cards. Those cards will then enable them to instantly convert their cryptocurrencies into traditional fiat currency.

In a conversation with Tech Wire Asia (TWA), Mastercard Asia Pacific’s executive vice president, digital & emerging partnerships and new payment flows Rama Sridhar shared the company’s strategy in the digital assets space especially with its take on cryptocurrencies and central bank digital currencies (CBDCs).

Mastercard tapped into the western market first in offering cryptocurrency products and services. How has the acceptance been and how do you foresee it to be for the Asia Pacific markets?

From a global perspective, adoption rates for emerging payment options have always been better within the Asian region. There are however, a few reasons as to why Asia leads the world in this. Firstly, based on Mastercard’s New Payments Index conducted across 18 markets globally last year, 94% of consumers in the Asia Pacific region are considering using emerging payment methods this year. 

Mastercard sees the emerging payment methods are QR code, digital wallet, buy-now-pay-later (BNPL) payment, cryptocurrencies and biometric among others. That said, the desire and enthusiasm to adopt a new payment method in this part of the world is very strong. The second thing is a high population of Asians that completely operates across borders, whether via online purchases or physical travel. Therefore, there is a higher expectation for a more global, seamless, interoperable framework within Asia than most of the developed Western economies. Right. 

Which country within the Asia Pacific region would Mastercard reckon to be the most accepting of cryptocurrencies?

There are more consumers in Thailand and India that are very comfortable in using cryptocurrencies as compared to a very developed market like Australia. Even Vietnam and Indonesia are expanding at double digit rates at this point so putting these factors together only spells out well for emerging payment methods.

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That itself tells a story of Asia’s developing economies, where the cash runway is very high. Not forgetting how, according to the United Nations, over 60% of the world’s youth live in Asia-Pacific, which translates into more than 750 million young women and men aged 15 to 24 years. 

Now when crypto matures over the next three to four years, a lot of these play people would either be learning adults or have started their careers. In short, Asia Pacific is demographically set up for higher adoption rates and that is probably the best way to think about it. As it is, almost 30% of the global value of crypto transactions is happening in Asia so it is inevitable for the region to be global leaders when it comes to the future of money.

What was the tipping point when Mastercard realized it was time to accept cryptocurrencies into the payment network?

Mastercard’s philosophy on cryptocurrencies is pretty straightforward: It’s about choice. We are not here to recommend you start using cryptocurrencies. But we are here to enable customers, merchants and businesses to move digital value – traditional or crypto – however they want. It should be your choice, it’s your money.

Within the Mastercard network itself, we noticed a large volume of people using cards to buy crypto assets, especially during Bitcoin’s recent surge in value. We are also seeing users increasingly take advantage of crypto cards to access these assets and convert them to traditional currencies for spending.

Above all, we have and will continue to be very thoughtful about which assets we support based on our principles for digital currencies, which focus on consumer protections and compliance. Currently, we have over 30 crypto card program partnership and to be completely clear, not all of today’s cryptocurrencies are and will be supported on our network. 

But if you look at the stablecoins, which are either backed by a basket of fiats, or a single fiat, those are gaining significant acceptance. To top it off, stablecoins are more regulated and reliable than in the recent past and it’s those very same stablecoins that we expect to bring into our network.

Tell us more about your take on CBDC and  the “safe space” Mastercard provides for governments and private sector banks to figure out how those work?

Around last year, we announced this proprietary testing platform for central banks which basically allows for central banks to engage in a simulated environment where they can issue the currency and distribute it between banks, financial institutions and consumers in a virtual world to fathom how it could and would work in a real world. In doing so, it will allow banks to identify and strategize how to launch central bank digital currencies (CBDCs) and how to create the ideal regulatory environment. 

Truth be told, today, almost every central bank is actually exploring CDBC not just because they want to issue it immediately, but because it is leading to be a necessary part of the ecosystem. With that, creating the framework, the rules, and evaluating what is the best way to do it is just a timely move. And for Mastercard, anything the central bank does as principles, will automatically be the principles that we will assume. That is how we move on with our partnerships.

Across all of the developing economies, and in Asia in particular, going cashless is the main agenda for central banks. With that, many central bankers believe that CBDCs offer great potential to bring people into the digital financial system. 

The other other real agenda on central banks’ radar is transparency. Hence why every government and regulators are moving towards this direction. Yes, it’s not the only way to do it, but it is a good way to do it and it facilitates fast access to the currency for the populations, where the circulation of physical cash may be limited.

Do you think a CBDC future will dawn upon us sooner than later?

To aid digital transformation, financial and digital inclusion as well as remove cash, CBDCs are the way forward. Will it happen over the next two year or five years? Unfortunately, I can’t predict but I think there is a lot of framework and work that needs to be done. There will no doubt be a lot of debates between central banks — on the good and the bad of how things need to be managed. They will have to ensure that other existing payment ecosystems sit harmoniously alongside CBDCs.

The post Mastercard: The future of money revolves around cryptocurrencies, CBDCs appeared first on Tech Wire Asia.

In the Asia Pacific, blockchain adoption is getting increasingly popular as more industries are realizing its potential and benefits.

Currently, there are already several blockchain use cases in the financial services industry and several other industries. Apart from banks, some manufacturing and logistics companies have also leveraged blockchain to keep track of their supply chain and ensure they have full visibility on it.

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What makes blockchain highly sought after in the financial services industry today is its capability as a decentralized distributed ledger.

The concept of decentralization essentially means that data is not held by a single entity, which makes it vulnerable to alterations or deletions without the knowledge of parties involved.

As such, blockchain technology can enable parties who might not necessarily trust each other to validate data in a series of cryptographically linked data structures (called blocks).

With blockchain, every network participant maintains a local copy of the ledger they can independently validate, which in turn, fully distributes and decentralizes trust.

While there are several providers of blockchain services, VMware Blockchain is an enterprise-grade blockchain platform that enables multi-party workflows. It uses advanced techniques such as byzantine fault-tolerant state machine replication, authenticated data structures, and integration with smart contract execution engines to enable customers to build and run decentralized multi-party applications.

To understand more about blockchain-embedded financial services, Tech Wire Asia caught up with Brendon Howe, VMware’s General Manager of Blockchain who explains how the company works with stock exchanges to implement the technology.

According to Brendon, blockchain is used to help transform transaction processes that can enable a multi-party exchange through the use of a decentralized application.

Brendon Howe (IMG/VMware)

“We built a platform that provides unique data sharing capabilities that can reinvent business flow that depends on extensive data sharing methodology. For example, the back-end office for traditional finance and banking, trade, registration, and such have any steps on reconciliation, fulfillment, and clearinghouses that require them to source the truth to reconcile with multiple parties and sharing of information. A data-sharing platform can bring more efficiency and eliminate manual processes,” said Brendon.

For Brendon, the financial services industry is a perfect starting point to show the true value of a product. The exchange industry, for example, witnesses millions of trades per day, making scale and performance crucial. The scale element of the use cases with blockchain plays well to the unique capabilities built.

Using blockchain as a decentralized platform, Brendon pointed out that VMware products in blockchain will be leveraged as well in the environment. He added that unlike the complexities of open-source blockchain, VMware will take full responsibility for the entire solution as a platform. Financial services would only need to focus on their business workflows and not the infrastructure.

“For the financial services, decentralized apps are new app initiatives. There is a reasonable amount of strategy and complexity in reinventing apps, be it business workloads or eliminating steps. It is our job to make the deployment aspect of this tech easy. We deploy on top of vSphere as well as provision and manage the nodes that comprise the ledger network in a matter of hours. It is easier compared to traditional approaches. We see this as the opportunity for customers to deploy and scale easily.”

Blockchain financial services in the stock exchange

Bursa Malaysia Berhad (Bursa) and the Australian Securities Exchange (ASX) are two exchanges in the Asia Pacific that are using blockchain technology. Bursa embarked on a dematerialization proof-of-concept to facilitate the dematerialization of securities certificates leveraging Daml smart contracts from Digital Asset and a highly scalable distributed ledger platform from VMware several months ago. The project aims to test blockchain-powered technologies’ efficiency and operational feasibility in the issuance of dematerialized securities certificates, with initial emphasis on Structured Warrants.

Bursa Malaysia estimates this initiative could improve the ease of doing business by reducing the reliance on manual work to create, manage and withdraw Structured Warrant certificates. The blockchain-powered proof-of-concept will aid in the simplification of Structured Warrants issuances. It provides a centralized source of truth to increase transparency, improve data quality, and reduce potential disruptions in physical transportation and in-person delivery throughout the eligibility life cycle.

In addition, the proof-of-concept employs electronic vaulting technology for data storage and transportation, as well as an e-signature method for digital certificates execution, resulting in improved Structured Warrants eligibility and issuance processing.

Meanwhile, as the world’s first blockchain-based stock exchange, ASX announced intentions to replace their clearinghouse settlement application, CHESS (Clearing House Electronic Subregister System) with a replacement application that is built on a distributed ledger. CHESS is the system used by ASX to record shareholdings and manage the clearing and settlement of equity transactions in Australia. It was world-leading when introduced in the 1990s, providing name-on-register functionality, electronic communications, and removing paper share certificates.

ASX built a new ledger with VMware and Digital Assets and believed there was a business opportunity for them to provide services on that platform which is broader than their traditional business use cases. They formed a new organization called DLT Solutions that is meant to provide ledger as a service for different types of customers within the Australian marketplace.

In the US, Broadridge Financial Solutions also partnered with Digital Asset and VMware to create a fully automated end-to-end repo service that supports the simultaneous settlement of cash and securities, removing risk from the process and significantly decreasing capital costs. The distributed ledger repo platform allows all transaction participants to share one single, real-time view of the entire trade lifecycle with one source of truth that automates repo agreement terms and adheres to market rules.

“A lot of banks and financial services around the world are looking at what ASX and Bursa are doing. This is an industry where the industry is shared and common ways to solve problems differently are looked for.  There is a lot of visibility on these early projects. The achievement comes with efficiencies. As applications are reengineered, processes are sped up, costs can be reduced, data sharing models can be expedited for new business opportunities,” added Brendon.

Brendon also believes that the future of blockchain, especially in financial services and other industries is still very much in its early stage. He believes that these new data-sharing models will enable enterprises to see distributed network information that is always trusted and secure.

As Brendon puts it, “It’s a powerful platform that reengineers how businesses run their operations. VMware can take a prominent seat in driving use cases and bringing the tech into the enterprise fold in such a way that we can accelerate a lot of growth.”

The post Financial services blockchain making a difference in APAC’s stock exchanges appeared first on Tech Wire Asia.