Although Blockchain was first implemented by a bitcoin company to mark transactions digitally more than 10 years ago, it’s only recently that the distributed ledger technology which stores information about all the transactions taking place on the network, is being used by businesses involved in music, gaming, and fintech. With Asia-Pacific currently ranked the fastest growing market for blockchain in the world, according to a report by consulting firm PwC, which notes that 82 percent of executives in Singapore have reported blockchain initiatives are underway in their organisations, how has the city state become the leading light for Blockchain developments across the region?
The more you delve into Singapore’s tech circle, the more you hear the news of Initial Coin Offering (ICOs) launching in the city. In an ICO, companies create a digital token or coin, then sell it to investors in exchange for cash or more commonly, cryptocurrency, usually bitcoin or ethereum.
VCs invested SG$1.2bn in local start-ups in 2017 (KPMG) and Singaporean ICOs raised $418m in the same year (FabricVentures x TokenData). The number of initial coin offerings, or ICOs, has skyrocketed in the past two years as more companies flock to the new and controversial way to raise capital.
Whether you agree with ICO hype or not, it's not an insignificant amount to write off as just ‘noise’.
Globally, about $6.6 billion was raised through 217 ICO sales for the first quarter of 2018, a 65 percent increase from the $3.9 billion raised in the last quarter of 2017, according to market intelligence gathered by CoinDesk
How Tokenistic is Singapore?
Cryptocurrencies are underpinned by the blockchain technology, which is why at one time, ICOs were carried out mostly by blockchain start-ups. But many other types of companies are flocking to ICOs today, even if those firms do not have or require the use of the blockchain.
However, one in five ICOs may be frauds according CNBC— but investors are bullish on them anyway. Despite the high risks involved in launching and buying into ICOs, there can be significant payoffs for both founders that want to raise capital, and investors who want to make money.
Although many North American and European investors are getting cold feet when it comes to ICOs, Asia is seems to be buzzing with innovations and genuine enthusiasm for the solutions that blockchain technology and cryptocurrencies in general promise to provide.
The growing dominance of blockchain technology can also be attributed to the Singapore government’s policies. Since 2016, the Monetary Authority of Singapore has been working on a partnership with R3, a blockchain technology company, and a consortium of financial institutions on a proof-of-concept project to conduct inter-bank payments using blockchain technology. The country is also exploring the use of blockchain to link the National Trade Platforms to the trade platforms of other countries.
Blockchain technology and crypto-currencies still remain a grey area for many countries, which is not regulated by any authority. Although present regulation surrounding blockchain and crypto-currencies is rudimentary in the majority of Asian jurisdictions, this could change quickly as 2019 continues and 2020 draws closer. There will be an increase in the number of companies utilizing the technology and far more capital allocated to the blockchain space.