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Blockchain poised to change way of doing business

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By Krista A.M. Montealegre
National Correspondent

TOKYO — Bitcoin has hogged the headlines for its price volatility and cyberheists, but the promise of the emerging digital currency lies in blockchain, the disruptive technology behind the cryptocurrency.

“Bitcoin is not an investment scheme. It is a new kind of technology,” Miguel Antonio C. Cuneta, co-founder of Philippine-based SCI Global Ventures, Inc., said during the Philippines-Japan Investment and Cryptocurrency Forum organized by Japan Cashless Association and Noah Foundation at the Four Seasons Hotel here on Sunday.

Bitcoin’s value had been going up since it was invented in 2009, peaking at almost $20,000 apiece in December. It had then plunged below the $10,000 mark amid concerns of increased regulation in South Korea and China, but the price has stabilized around $10,000 per unit.

Cryptocurrencies like Bitcoin are not regulated by any state or central bank.

They rely on cryptography to secure and verify transactions as well as control the creation of more units.

While much of the craze for now centers on the price, the potential is in the technology underlying cryptocurrency known as blockchain, where transactions are better secured by a peer-to-peer network of computers and can be verified.

Blockchain is poised to change the landscape of finance, governance and banking, the same way the Internet has disrupted telecommunications, media and publishing sectors, Mr. Cuneta said.

Noting that an undeveloped payments infrastructure and sheer size of the unbanked can enable Southeast Asia to become a cryptocurrency and blockchain hub, Mr. Cuneta said: “Technology wants to solve a problem. In Southeast Asia… you have a lot of problems…We’re hungry. We’re thirsty for options.”

The global financial crisis in 2008 led to increased regulation that raised the hurdle to opening and maintaining bank accounts.

But now, cryptocurrencies have allowed users to bypass conventional financial channels.

The Union Bank of the Philippines, Inc. is one of the more aggressive banks in embracing technologies like blockchain to do business.

“It is important for people (and) organizations in mainstream activities to get on board even if it is just a learning system,” UnionBank Chairman Justo A. Ortiz said.

“If you wait for the perfect environment to appear, you’re going to meet perfect competition.”

UnionBank is also empowering rural banks like Cantilan Bank in Davao through blockchain, giving them and their customers access to universal banking products.

“For rural banks, blockchain isn’t just about being included in the financial services industry. It may well be the answer to their survival because they are going down,” said Ramon Vicente V. De Vera, head of fintech business group at UnionBank.

Blockchain technology is also used in various applications in the Philippines. Coins.ph allows users to pay bills, buy load, buy Bitcoin and send money even without a bank account, while Salarium Payments offers a program that seeks to improve the efficiency and accuracy in managing payroll systems of companies through a self-service portal.

Likewise, non-profit organization Noah Foundation hopes to create a “crypto-empowered” Philippines through the use of its own tokens in the ecosystem of its services and projects. Noah Foundation Director Josef Werker is leveraging heightened interest in the Philippine market with the sale of Noah Coins to Japanese investors through an initial coin offering (ICO), involving sale of a virtual currency to the public to raise capital for start-up companies or funding projects.

Japan is the global leader in the development of cryptocurrency markets after becoming the first country to regulate exchanges at the national level, a stark difference compared to crackdowns in South Korea and China.

The digital token can be used in a number of projects that Noah is developing in the Philippines such as a mixed-use resort development on the undeveloped portion of the Dakak Beach Resort in Zamboanga del Norte, an organic agriculture program for farmers in Mindanao and a real estate project that will form part of Horizon Manila, an upcoming 419-hectare central business district on reclaimed land, according to its Web site.

Zamboanga Del Norte Rep. Seth Frederick P. Jalosjos, whose family has partnered with Noah Foundation for the Dakak project, does not believe that regulation can get in the way of unlocking the potential of this technology, saying that the emerging industry “can be monitored but it can’t be stopped.”

“We are holding their (regulator’s) hand while we are taking a step forward,” Mr. Jalosjos said.

The Bangko Sentral ng Pilipinas (BSP) and the Securities and Exchange Commission have moved to regulate cryptocurrency transactions and ICOs to protect investors and reduce the risk of fraud. The BSP introduced in February last year Circular No. 944, regulating virtual currency exchanges — not the cryptocurrencies themselves — by requiring them to be registered and to install internal controls against money laundering. So far, the central bank has authorized two virtual currency exchanges: Betur or Coins.ph, and Rebit.

In the Philippines, virtual currency transactions have been steadily growing, averaging over $8.8 million per month.

“The regulation has evolved with us,” Coins.ph Founder Ron Hose said.

“The regulators in Philippines know we need to drive financial inclusion.”