Part 1
“ASEAN is known as the region of the future and opportunities.” An opening remark from Sutthipun Nujjaya, Deputy Managing Director at C asean, welcoming the audience to the launch of the OPEN-TEC event, “Unlock Your Business with Blockchain, an event launched by TCC Technology. Sutthipun revealed that the upcoming year 2019 will unveils many collaborative gatherings of ASEAN leaders to push forward development policies that will be the key drivers for the region’s socio-economic growth and prosperity. And with Thailand being the Chair of ASEAN in 2019, Thai businesses and entrepreneurs should try to reap this benefit with all the support provided by the Government.
“C asean is a center of collaboration, community, creativity, and culture. We have always been a promoter for the prosperity of ASEAN in all aspects, from business, arts and culture. You may wonder why is Arts and Culture important? But we believe that Arts and Culture is the root of our existence. And without a thorough understanding of our roots, we will not be able to grow and prosper sustainably. Information shared today will create an inspiration and a shifting point for technology industry, the country and the ASEAN region.”
OPEN-TEC Insights by Waleeporn Sayasit
Waleeporn Sayasit, Director of the Corporate Communications Division, T.C.C. Technology Co., Ltd. disclosed that the OPEN-TEC initiative was inspired by TCC Technology in its pursuit creating learning society for people within the organization, and extend the benefits to public to create sustainable community.
The event’s discussion will revolve around Blockchain Technology. Leading companies in Thailand are beginning to embrace Blockchain Technology, applying it to their current businesses, referring source from ICORA. Those not involved with the IT Industry may wonder how this development is relevant to their lives. Waleeporn gave an analogy comparing Blockchain Technology to the development of the Internet decades ago. When the internet was first launched, nobody expected that it would become an integral part of their lives. But overtime, the internet began to gain relevancy in people’s lives, and eventually became ubiquitous. This progression is predicted to be a mirrored journey for Blockchain Technology.
Korn Chatikavanij, Former Minister of Finance, was quoted from Crypto Asset Revolution Class #1 saying that in fintech world, five most influential technologies consist of Machine Learning, Chatbot, Blockchain, Internet of Things and Cryptocurrencies. Blockchain and Cryptocurrencies are among the top five. Waleeporn then progressed on to tell the stories of Cryptocurrency, Initial Coin Offering (ICO), and Blockchain.
Story#1: Cryptocurrency
Cryptocurrency is a medium of exchange in the Virtual World. While many hope it would pave the way to borderless global exchange and new opportunities, Cryptocurrency has been crowded by many negative news headlines such as the Ponzi Scheme, scams, and hacking issues. This causes a lot of doubts in its real potential, which in turn causes its growth to slow down. Yet on the positive sides, there are many people who still believe Cryptocurrency will disrupt the current world of physical financial exchange, driven by four major global demands. Below are the reasons why cryptocurrency is popular.
Although some people may misinterpret and use the terms Bitcoin and Blockchain interchangeably, it is important to note that Bitcoin does not define Blockchain. Bitcoin is a cryptocurrency that utilizes Blockchain Technology but does not represent Blockchain as a whole. There are many different types of cryptocurrency, Bitcoin is one. Waleeporn also introduces many different cryptocurrencies such as Ethereum, Litecoin and other alternative coins.
With Cryptocurrency, you can either be on the trading side or on the mining side. On crypto trading, we can either buy or sell via cryptocurrency exchange. There are over 4,000 Cryptocurrency Automated-Teller Machines (ATMs) in the world, as cryptocurrencies are becoming more widely accepted. Many online businesses are beginning to accept cryptocurrency as a form of payment. On the other hand, crypto mining requires high computing power, solving highly complex mathematical problems in order to verify transactions.
The landscape for Cryptocurrency in Thailand involves many different regulatory parties such as the Bank of Thailand, Securities and Exchange Commission, Anti-Money Laundering Office, the Revenue Department, to name a few. These are the regulatory bodies governing “Digital Assets” in Thailand. Digital Assets can either be a digital currency, or a digital token. Cryptocurrency falls under “Digital Currency”, and is a medium of exchange via online channels. On the other hand, digital tokens are tokens or coins issued under 1. ICO process OR 2. Utility token which specifies the right to use products or services OR 3. Investment token which specifies the right to participate in an investment.
On the global landscape, Cryptocurrencies are becoming more favorably accepted in many countries like U.S., Canada while some countries like China remains the only country where crypto is illegal.
Source: https://media.ibinex.com/docs/Global_Cryptocurrency_Market_Report_2018.pdf?fbclid=IwAR2ZXoFjZDxELqu9Ncrfu9wJa3lBkjwXISQMax7oSn-391szHnTk_z6lcUU
Story #2: Initial Coin Offering (ICO)
Initial Coin Offering, shortly referred to as ICO is the fund-raising mechanism. It could be the Crowdfunding on Cryptocurrency with underlying Blockchain technology. It is a channel for investors on a micro, crowd level to invest in new businesses by purchasing “tokens”, or some form of rights to the business in a secured manner through the use of Blockchain Technology.
Story #3: Blockchain
Waleeporn called “Blockchain” the “Super Girl”. If we look at the current system we are living in, we would realize that we are living in a centralized world, where the ledger for our trust system lies at the central point. Blockchain is revolutionizing this scenario by distributing the ledger away from the center for increased transparency.
Source: https://www.lpea.lu/
Blockchain is considered the 5th Disruptive Computing Paradigm; a progression from Main frame to PC, Internet and Social Media respectively. In fact, if TCP/IP is considered the First Layer of Internet, Blockchain is the Second Layer of Internet. While the First Layer of Internet allows for instant transfer of information (Internet of Information), Blockchain is creating a pathway for “values” to be exchanged (Internet of Value).
Source: https://www.evry.com/globalassets/insight/bank2020/bank-2020—blockchain-powering-the-internet-of-value—whitepaper.pdf
Internet VS Blockchain
Source: Crypto Asset Revolution Class
With the new pathway to value exchange, we are starting to see more big players stepping into the Blockchain game. Ant Financial, an affiliated company of the Chinese Alibaba Group, is a good example of how the Giants are stepping into play in the realms of Blockchain. Although China itself bans cryptocurrency, blockchain, on the other hand, is favorable. Other Giants we see stepping into the Blockchain space are IBM and Microsoft, for example. Thailand has several use cases of Blockchain among large corporations, particularly in the Banking industry under the Wholesale Central Bank Digital Currency (Wholesale CBDC) Project. We are beginning to see the emergence of Thailand Blockchain Community Initiatives. Throughout the discussion today, thought leaders and key players in the Blockchain Community will be sharing their experiences in an open discussion with the audience on the floor.
ICO and Blockchain in Panel Discussion By OPEN-TEC, ICORA and Bitkub
Attending the panel discussion moderated by Waleeporn today are Asst. Prof. Dr. Karndee Leopairote, CEO & Co-Founder of ICORA, and Jirayut Srupsrisopa, CEO & Co-Founder of Bitkub, one of the leading Blockchain startup companies in Thailand.
What are your companies’ background and what was your first experience with Blockchain like?
“I first encountered Blockchain after I graduated from college. And, it was in Shanghai when I first heard of Bitcoin. Then, I came upon an interesting article written by Marc Andreessen that got me hooked on blockchain technology. It was also the same article that inspired me to start my first crypto company in Thailand.” replied Jirayut.
Cryptocurrency was in its early stages when Jirayut launched his first company making it one of the crypto pioneers in Thailand. Yet, the Bank of Thailand was quick to dismiss the idea of Bitcoin and warned people against Ponzi schemes warding off many risk-averted investors. But despite the rough waves of negative news and criticisms, Jirayut’s first company successfully managed to get through. And just recently, he founded his second company, Bitkub, which is a cryptocurrency exchange company that provides a marketplace for trading digital assets and is one of the first companies to be granted a license to operate by Thailand’s Finance Ministry.
Asst. Prof. Dr. Karndee Leopairote, a former Managing Director at C asean and now CEO & Co-Founder of ICORA, has always been working in the field of Future Foresights. ICORA is the fruit of her research work that stemmed from a strong belief that the future world will inevitably face drastic changes. “I came across the book, Blockchain Revolution. From that moment on, I got hooked on Blockchain and the concept of P2P value transfer. Then, I stumbled upon this new channel of investment for Venture Capitalists – ICO, when I was having some discussions with some friends from Harvard. It has always been my goal to become a veteran in the startup community. And it is my passion to push for a new track in financial innovation.”
How is ICO different from the traditional way or Initial Public Offering (IPO)?
Asst.Prof.Dr. Karndee responded to the question saying that if she were to answer this question a year ago, the answer would have been slightly different. She compared the difference between IPO and ICO. While IPO is an exchange of shares, ICO, on the other hand, often comes in a much earlier stage and could be a source of funding for your business in a phase before you would even consider having an IPO. Asst. Prof. Dr. Karndee further explained that ICO is not replacing IPO, but is complementing it. Unlike IPO, during the ICO process, you are not losing your company’s shares. Instead, what you are asking from your ICO investors are ‘contributions’ to build your business. The ICO ‘contributors’ are doing ‘investment participation’ where they are trading for business rights, not the shares. Furthermore, ICO is currently being traded via cryptocurrency that allows free flow of fund transfer from anywhere in the world which automatically opens the gateway towards Peer-to-Peer Crowdfunding. “With cryptocurrency P2P crowdfunding, we immediately see a vast opportunity for foreign direct investment in such a way that traditional FDI cannot keep up.” Asst.Prof.Dr. Karndee explained.
What are the advantages and disadvantages of different Blockchain platforms like Ethereum, Stellar, etc.?
Jirayut described how Bitcoin was considered the first open-source decentralized public blockchain technology using first application protocol. Then, he further discussed Ethereum as another type of Blockchain which is a generalized platform that enables other decentralized applications to be built on top of Ethereum blockchain. Before Ethereum was launched, there were only over one hundred digital currencies in existence. But after it was made available to the public, the number of digital currencies has reached over 2,000 with new ones frequently appearing. He added that each platform has its own advantages and disadvantages. You just need to acquaint yourself with how each of them works.
Speaking of the Stages of Development, what is your view on the regulation conditions revolving around ICO?
Asst.Prof.Dr. Karndee replied, “The year 2018 was considered a very significant year for the change in ICO landscape. It was the year when both private and public organizations were all trying to learn as much as they can about this new development. And, we have witnessed rigorous collaborative efforts between these organizations. We owe it to JFIN, a subsidiary of listed company in Thailand who launched an ICO project to test the market during the time when the regulations concerning ICO were still obscure. After JFIN’s initial efforts, we started to see new regulations for digital assets to roll out.”
The general areas surrounding ‘Digital Asset’ are Exchange, and Broker or Dealer. The Securities and Exchange Commission was one of the first regulatory bodies to get involved in setting the boundaries for ICO. This is due to the findings that 97% of ICO-funded ventures failed in the past because of frauds and business failures. However, since token exchange could be more efficient and pave the way for the application of new technologies, it is evident that ICO tokens are considered to be a huge improvement from the conventional IPO procedure.
For an IPO, regulatory bodies require companies to have all the resources ready such as lawyers, auditors, etc. With such tight regulation, we are starting to see more and more Thai startups opting to be registered in Singapore as the Singaporean regulations are more business-friendly in raising funds via ICO. Thus, it is important that Thailand’s regulatory bodies recognize the importance of balancing public security and innovation.
What about the stages of development for Blockchain?
Jirayut responded by laying down the stages of blockchain development in four phases. The 1st phase (Internet of Money) is Bitcoin which is a transactional protocol. Then, the 2nd phase (Internet of Asset) is Blockchain Beyond Finance where blockchain is applied across all major sectors including banking, supply chain, and healthcare. For instance, Walmart is using blockchain for their food traceability system to track their on-shelf products back to their producers or manufacturers. It is also being applied to the bank’s e-KYC processes as well as in the healthcare industries’ data management system. Moreover, blockchain is beginning to disrupt the Real Estate market with its new manner of property purchase via fractional ownership.
The 3rd phase is the Internet of Entities. Increased automation will enable more autonomous organizations to become decentralized and the introduction of Smart Contract will allow many industries to become automated self-regulated entities.
The 4th phase is about inter-operable ledger or value web where many web platforms can exchange value online beyond monetary value. In this phase, all cryptocurrencies will speak the same language, thus, making transactions seamless and frictionless. Jirayut further elaborated how in the future will virtual points earned from mobile online games could potentially be exchanged for goods and services in the physical world with the help of blockchain technology.
Asst.Prof.Dr. Karndee added that when you talk about value, many people would immediately think about gold and money. But in fact, there are many different forms of value. Value can be in the form of health and wellbeing; it could also be in the form of social profile. A good example is China where ‘good deeds’ can be rewarded with ‘social credit’. Applying blockchain to these alternative form of values could open up more opportunities for socio-cultural revolution and innovation development.
What influence do you think ICO or Blockchain has on the economy?
“With just ICO alone, the economic impact is already huge. As I’ve mentioned earlier, ICO opens up new channels for crowd-financing in a borderless manner, which equates to foreign direct investment. And this is only one aspect of blockchain. So, if you would explore more on blockchain, it could allow you to access many more opportunities.” Asst.Prof.Dr. Karndee said.
Jirayut followed with a bold statement, “In the last twenty years, the internet has created digital abundance, but now blockchain creates digital scarcity.” The internet allows instant access to information on the digital platform where you can do real-time sharing of information anytime. Blockchain, on the other hand, digitizes value where each digital token could be a digital representation of both tangible and intangible assets. And when that piece of digital token is transferred, both its entity and value will also be transferred thereby creating digital scarcity. Moreover, as blockchain allows the digitization of more assets, it will also enable a more effective and efficient way of value transfer. Thus, the increased velocity of value circulation could significantly contribute to increasing the country’s GDP and economic value.
Asst.Prof.Dr. Karndee added that when speaking of economic impact, you should also consider social impact. One of the biggest pain points emerging in today’s world is for those entering the aging society. “Imagine life after retirement where you will continue to be spending money, yet the only value you can reap is from the monetary value of your home. Now imagine if you could apply the concept of asset tokenization to create new value tokens, and then you can monetize these value tokens for increased profits. This can be a new business model that would impact the future.”
Would you say that Thailand is ready for ICO and Blockchain?
“Believe it or not, Thailand is actually one of the first few countries in the world with a regulatory roadmap to embracing blockchain technology. We now have ICO Portal License and Broker License. To be honest, we are quite ahead. However, on the ecosystem side, we are way behind Korea and Japan. And in terms of ICO projects, we still have a long way to go.” Jirayut revealed.
Asst.Prof.Dr. Karndee added, “You first need to understand that ICO does not equal easy money. You cannot magically create money with ICO. So first, you need to ask yourself these questions before raising funds through ICO: what are the features you are offering, and what benefits are your contributors getting when they purchase your ICO.” Asst.Prof.Dr. Karndee suggested that for those planning to purchase ICOs, the best way is not to wait for regulations to come out and protect you, but to protect yourself by increasing your own knowledge and understanding of ICO. “There are two things you need to consider. First, how attractive is the token, and second, will the business be sustainable?”
For businesses, are there any specification on the business size or conditions for a business to adopt blockchain or opt for ICO?
“Blockchain is an open source system which means that permission is not needed to use the technology the same way permission is not needed to use the internet. And there is no definite size required for an enterprise to adopt blockchain, big or small. It all boils down to how fast your organization can adapt to this new technology.” Jirayut replied.
Followed by Asst.Prof.Dr. Karndee, “All types of business can adopt blockchain. You do not even need to be a tech company. But I would disagree with the comment on size, as I would have to say that size does matter in this case. If you are a small business, take note that we are still in the early days. You might need to take time to familiarize yourself with it and discover ways to apply it to your business. On the other hand, corporates can start to revolutionize their business with blockchain immediately.”
Could you elaborate on the ICO process for fundraising?
Jirayut commented that in raising funds via ICO, you would need the same things as required in a traditional startup fundraising. You need a business idea, a full-time team, and an advisor. It also includes preparing a white paper, setting your timelines and clarifying the currency or the type of blockchain you will be implementing. You have to get your smart contract ready and make sure that your conditions are clearly listed. Also, do not forget to set up your marketing channel well and prepare to go on an online roadshow in order to send out announcements to investors to notify them of your ICO launch. In addition, preparing a Yellow Paper on hand with your Executive Summary is very important, and if possible, a prototype or proof of concept must also be included. Furthermore, you should clarify your taxes and terms as soon as possible taking extra care on the use of terminologies as different terms could place you under different regulatory offices.
Asst.Prof.Dr. Karndee added that in the year 2019, you should look out for increased ICO or Blockchain infrastructure, from Real Estate to Supply Chain and Logistics, Media & Advertising, etc.
How should we unlock our business with Blockchain?
Jirayut began, “It depends on which industry you are working on. For instance, if you are in the retail business and you have loyalty points, you could use blockchain to digitize its value and bridge it with other value point cards.” Jirayut then further explained how Blockchain can help unlock new business opportunities when applied to different industries. In the Real Estate industry, blockchain can help unlock new customer segments through fractional ownership that would allow a single room to be owned by multiple owners and share profits from leasing or renting out the room. In the banking sector, blockchain can do real-time synchronization of accounting systems, maximizing communication and lowering operational costs. Therefore, depending on the industry you are in, blockchain can help unlock your business specific to the pain points you have.
Adding to Jirayut’s comment, Asst.Prof.Dr. Karndee commented that regardless of which industry sector you are in, one thing is clear in today’s world – every sector is moving closer towards becoming a FinTech company. “The key to unlocking your business really is to accept the truth that when you are playing new games, you cannot use old rules. Otherwise, you will be locked into your existing resources and processes, so before you can unlock your business, you need to be able to unlock yourself first before jumping into the new game.”
Let’s watch full session here
Continue to read Unlock Your Business with Blockchain (Part 2) below
