Arising Enterprise Blockchain in Asia: What Can We Learn?

Transcript

okay good good good morning everybody Welcome to the sessions in this in this in this other room here in the in the audio Medi um let's kick off the conference here and uh I'm very pleased that I have Gary with me today h Gary just flew in from Hong Kong um he is CEO of terminal fre and the chairman of the web free Harbor in Hong Kong which an association nonprofit organization that is looking into the developments of blockchain Technologies in Hong Kong area or Asia in in overall and and you have been as well the former CEO of the South uh uh South China Morning Post uh

so as well uh yeah know from from a journalistic point of view definitely something you can probably give us as well some insights um about uh the major Trends in blockchain and Enterprise blockchain uh in Asia quickly about myself I'm Dennis flat I'm the chair of the Enterprise blockchain working group at the crypto Valley Association we are always looking for good Enterprise use cases it's it's a tough environment we're going to talk about that in a second um and uh yeah in that context uh welcome Gary thank you so much for having me and thanks for getting lost upstairs I assume that that's what happened everyone got lost up here exactly good oh that door's locked

that may be why very good good yeah g so what are the kind of major trends that you see for Enterprise blockchain Solutions in in in Asia I imagine that the trends we're seeing in Asia may not be too dissimilar from what's going on in other parts of the world because obviously especially when it comes to crypto and digital assets it's also borderless uh but the three primary trends that we are seeing right now with Enterprise blockchain applications in Asia the first is very Financial Services heavy and I think this is the boring part of Enterprise blockchain is a significant shift towards uh regulated onchain

assets um and this is being driven a lot by both retail which has then led to institutional interest in uh exposure to crypto uh and therefore Regulators are actually spending a lot of time figuring out what on chain assets actually will mean to the traditional financial industry so that's a that's a major major major shift but boring the second uh Trend that we're starting to see is um increasingly we're starting to see a shift to at least private public blockchain um but a lot more Enterprise activations on Purely public blockchains uh and that is relatively new and

because of that shift there are several blockchain ecosystems that have a lot of exposure in Asia who are spending a lot of time on the core technology side building up Enterprise toolkits and Studios so that Enterprise grade corporate applications can exist on public blockchains we can dive into that a little bit deeper later and then the third one on the regulation side we have moved Beyond just the basic regulations on licensing for virtual assets trading platforms uh we have moved to more of the foundational things that make it so that corporate use cases can scale long term we're talking about Interlink Network models right so cross protocol assets how do we handle that how do we handle those cross protocol ledgers

we're talking about identity which is a a big part of my my day job uh we are talking about custody and data privacy as well so those ancillary I would say kind of M2 Next Level regulations is increasingly the focus of the Asia Enterprise blockchain ecosystem yeah what what what what would be like say the the most promising use cases that you that you see at the moment so really in for Enterprise blockchain in Asia what what is hot what is hot in Hong Kong am I allowed to talk about Finance or is everyone going to fall asleep let me spend like 45 seconds on finance and then we'll move on I promise but I can't not touch on finance because not only am I uh you know in Hong Kong

and it is one of the great Capital markets in the world but that is actually where a lot of the foundational Innovations coming from in Asia um and it is all about real world asset tokenization and regulated stable coins those are the two primary things right security tokens that are regulated as Securities but they are a as you put it earlier digital twins of real world assets on chain and also stable coins that are not cbdcs but actually fully self- custody uh composable stable coins that are tied to national uh um uh currencies and the regulatory Innovation are people trying to get in and they just locked out we can keep that door open I

certainly don't mind yeah don't mind yeah it's not too much noise yeah it's okay we're loud enough yeah exactly um and so so uh a lot of the focus on the infrastructure side is going to be what right now is on the rails that connect Financial systems between traditional finance and Defi and it's so much more complicated for those of you who are in the financial industry sector you know and and Dennis you know this because you've worked on this for many years it's so much more complicated just than just connecting assets right there are a dozen different things that need to be connected and there are standards that need to be set and their regulations and policies um and so this is a lot of the work going on in Enterprise blockchain

in in Asia but beyond that the stuff that is far more interesting um a couple of projects that I have been intimately involved in which are actually a growing to scale the first is identity identity is so foundational to the long-term scale of blockchain for just normal use cases and especially Enterprise grade use cases um and in Asia there are heavy government initiatives uh to Define standards for decentralized identities or digital identities that are on chain and it ends and starts or starts and ends I should say with setting verifiable credentials that bring the concepts of privacy from the traditional

Enterprise and financial world into the blockchain world now this is a concept that um as I travel around the world I realize that the crypto and blockchain communities around the world just don't frankly understand that there is a big difference between privacy and anonymity those two terms unfortunately in the web3 blockchain space are way too of often use interchangeably and that is what gets us into trouble that's why Enterprises cannot actually take blockchain seriously right now it's because we preference anonymity and we say blockchain is all about anonymity which is all transactions are public anyone can look at transactions but you

will never find out who executed those transactions that's the premise we live off of in the blockchain world never flies in the Enterprise world will never fly with Regulators never flies with government so we have to actually understand what privacy and the extension of privacy into the blockchain crypto World should look like to be able to protect individual identity on chain but to know that at the end of the day those identities still need to be revealed at times for enforcement and Regulatory action right so identity projects that are government and private together setting those standards are very big in Asia right now we are lucky in in Asia I'm sure I mean I'm in Switzerland one of the uh the the most

advanced countries in the world so I'm sure you guys have long lived with digital identities that are government identities but in a wait no there's no digital identity in no not not not really oh okay sorry for assuming um well okay then fine we are really lucky in Asia that in most of the advanced Asian economies whether it's Hong Kong or Singapore or Soul or Tokyo Korea and Japan we have long lived with government digital identities that can allow us to sign into government websites and applications and do everything on digital platforms and we're now shifting those to decentralized self- custody and so um so yeah so that's that's a huge use case

that the moment you launch it it's millions of people uh a second use case is actually about licensing we talked about this also downstairs about using uh public Universal immutable ledgers to be able to um to to to record ownership and provenance of assets and then figure out business models around that mhm about three years ago a archival standard was set out of Asia um and I was part of a a Consortium of of people in Hong Kong that did this it's now an ERC standard for um archival assets on blockchain and now that standard is

starting to be adopted by museums and archive owners people who own archives of photos music a bunch of other assets so that a digital version of those physical archives can be put on chain and then you buil an entire scale licensing platform around those archives so imagine Getty Images but transparently on chain MH so that's a massive Enterprise use case because we are talking about hundreds of millions of dollars of uh Enterprise licensing revenues that can move on chain just in the next couple of years mhm and then and a third example I'll use and then we can move on um is um supply chain financing we also talked about trade financing a little bit supply chain

financing matters a lot to Asia because Asia is still a big chunks of Asia are still developing which means construction as an example is still a huge industry across Asia um the problem with construction is that construction trade financing is tied up in six-month 12- month cycles and it makes it very very difficult especially postco for construction companies to do work because working capital is locked one of the reasons why working capital is locked is because there is no standard to how you underwrite the quality of construction and therefore how much financing you can give to construction companies so now companies across Asia and especially one in Hong Kong that is working across Southern China which is

still a massive construction field called River chain this company has now moved those uh those indicators of quality for construction and therefore the data that you need to do supply chain financing onchain uh it is taken supply chain financing from a 60-day cycle on average to 48 hours to provide financing and very quickly in the last six months already 800 different people uh parties companies are now part of this River chain okay which is built on a version of hyperledger so the scale that we're talking about is reached at a far greater velocity with these kinds of use cases in Asia it seems in other parts of

the world I think that is one of the biggest advantages in Asia that you have that that basically once you launch a solution the the the reaching the The Tipping Point when things are really taking up and and reaching scale is so much faster reached than whenever you are launching something here in Europe I think um because here of course yeah you have much more countries much more local regulations and and a lot of things that are are making it a bit difficult to do and I mean you just mentioned as well the supply chain finance and for me as an purist in Enterprise blockchain and that big enthusiastic person for about

Enterprise blockchain I honestly I have to as well to say well there were great initiatives in trade Finance there was uh there was the the Batavia or we trade initiative there was the Marco Polo initiative but they all got busted they basically went went bankrupt and so I'm always searching for the for the things what are the key success factors for an Enterprise blockchain solution what would you do say what is the key success factors for an Enterprise blockchain solution I I might be answering a little bit further Upstream than what you're asking um because I think that the key here is what needs to happen for Enterprise block chain to scale and I

already mentioned this earlier but what we're seeing in Asia that really works is private Public Partnerships I don't know if that's a dirty term in Europe uh in Switzerland uh this idea of private public partnership but in Asia it's really the only thing that can move true compliance and policy forward and for blockchain it has been incredibly effective what I mean by that is that the private sector um comes up often times with the help of Consultants with a use case that is going to drive National economy and then a private cons uh private sector consor will then go to government and say and submit this and say Here's a proposal for something that is good for our city

or our nation we need this road map of policies and regulations to make this happen Asia is very very practical so when government officials generally speaking in the functioning jurisdictions in Asia see these kinds of private proposals often times they'll at least consider it and then when they do decide to act that's when the magic happens then you have a relationship between lawmakers and regulators and private Executives who come together and say this is for the good of everyone and so we're going to push for the use case that's the way that digital identity has being advanced in Asia that's the way that realwood asset tokenization and all of the regulatory sandboxes for that are being advanced in Asia and even this uh

trade Finance or supply chain financing example it was presented to government and for Hong Kong of course real estate Still Remains one of the top four most important industries in Hong Kong and arguably the most important thing that Hong Kong actually exports as expertise so what Hong Kong has done is as a government they have gone to the major uh developers and said and also the major banks that provide this kind of financing and say use this use this to Spur the speed of working capital in Hong Kong and then we can export this platform and our Capital expertise to the rest of Southeast Asia where Hong Kong developers and Hong Kong vendors um and and Constructors actually uh spend a lot

of time and energy so that that kind of partnership has worked really well um and we continue to pursue for new verticals of Enterprise blockchain growth we continue to pursue that kind of relationship with the with the public sector I just IM imagine how that would be so we would go to the European Union and ask them to to support something and then yeah I think it's rather difficult here maybe the European Union is not the way to go but at the very least from what I understand at the very least the Canton governments and The Regulators here in Switzerland are far more open to those kinds of discussions that's absolutely true that's absolutely true but then of course then very soon the the reach is the problem you know how big is the network how many participant so we see here in Europe a lot of here

in Switzerland as well a lot of Enterprise blockchain solutions that are just struggling with getting reach uh and I mean when you look at the examples I just mentioned Marco Polo or um the vrade network they basically went bankrupt because nobody wanted to participate in the network so building up a network is always about reach and I think that's definitely where the the Asia just pure to its size has a has a big Advantage yeah I mean China is a really we haven't even touched on China uh where you know crypto Mining and crypto trade is uh is illegal but people still are able to hold on to crypto and more importantly blockchain and blockchain advancement in mainland China is actually a national agenda which a lot of people outside of Asia don't know

um and China has put a lot of private and public money into decentralized networks for a bunch of very interesting use cases one one such use Case by the way and this is also a public private thing is that in China over the course of several the last few decades there's been an issue with missing children and it's such a huge country 1.54 billion people over this massive land mass and it's been really really hard because the the Registries of missing children and parents looking for missing children are all localized and so finally with blockchain for the very first time China created a National Registry that is um that is quote unquote private right as in like you identities are not revealed but is

National and and transparent that allows for parents looking for children to uh to to to effectively put there a a a hash of their DNA um on chain and then for children looking for parents to put a hash of their DNA and then it matches right and a lot of children have been returned back to parents um from the from you know they've been missing for decades because of this new registrar right so um it is scale the moment that something like that is launched we're talking about millions of people participating not thousands mhm and it is a True Value I mean that example is really shows you that is something new that was not existing before to doing a

digital twin of your of your DNA basically uh on on on the chain and then bring that that is that is a new new use case and new new use cases are always very very successful that's probably another thing that you can observe in in Asia because you probably have less Legacy than some of the European uh countries have and that of course makes it as well easier to roll out an entire new network and a new uh way of of inter oper interoperability or or work flows what do you think uh it potentially true in certain areas but I mean there is definitely Legacy in other ways right there is Legacy in in Asia there's Legacy in governance and uh culturally

driven Legacy that is actually sometimes just as hard as systematic Legacy to overcome okay well I thank you very much um for is uh wakeup call as well for for the European it was meant to be a wake up call this is not to say Asia is doing better than the rest of the world it's just that there specific use cases and reasons why their Traction in Asia that hopefully folks can be inspired by because at the end of the day this needs to be a global industry and so if Asia Rises it doesn't do us any good if the rest of the world uh can't participate so these kinds of uh services for discourse from different different parts of the world is really

really important so I'm glad that CVC is happening right now okay great thank you Gary thank you so much [Applause]