Taiwan’s Role in the Asian Blockchain Ecosystem
In recent years, blockchain technology has experienced a massive upswing in popularity across the globe. We have seen research and development of the technology reach a wide variety of countries and industries.
The Current State of the Asian Blockchain Ecosystem
Easily one of the most exciting areas of blockchain technology is Asia. Although the United States currently leads in blockchain project development and investment rounds, the People’s Republic of China (hereafter referred to as PRC/China), South Korea, Singapore, and others have experienced massive growth in blockchain development and have fueled energetic and dedicated local blockchain communities.
South Korea has the highest trading volume of cryptocurrency per capita, with numbers six times higher than the United States and thirty times higher than China. Ethereum especially has seen massive popularity — some days, over 45% of its trading volume comes from South Korea. South Korea has long been a hyper-connected society. The government has fueled competition in the internet services industry and subsidized internet infrastructure, leading to extremely fast internet speeds, wide connectivity, and affordable pricing. This connectivity, along with their historically good financial trading infrastructure, has allowed for this cryptocurrency boom to take hold. Recently, the country has seen large amounts of “reverse-ICOs,” or pre-existing, non-blockchain companies pivoting into the blockchain ecosystem with an ICO.
PRC has become the world’s cryptocurrency mining hub. Over 70% of Bitcoin hash power comes from China, mostly due to its cheap electricity costs and large coal sources. Outside of mining, consumer interest in cryptocurrency is very high. China has also seen the development of many large-scale blockchain ecosystem companies like Huobi and Node Capital, which encompass and develop a wide array of blockchain products, like exchanges and funds. Many new and creative blockchain technologies and algorithms are also coming out of China, like FCoin’s transactions-as-mining model.
Singapore’s importance in the global financial system cannot be understated, and it has become a haven for ICOs due to its open regulatory oversight. Determined not to hinder the development of blockchain technology, the Singapore government has stated that it only wants to regulate the potential negative effects surrounding ICOs, not ICOs themselves.
Overall, the Asian blockchain market is dominated by three main powers — South Korea, a global liquidity provider, PRC, a center for mining and creative development, and Singapore, a regulatory ICO hub. In addition, the consumer sentiment for Bitcoin and other cryptocurrencies is much higher than it is in the West. These factors make it central to the future of blockchain.
Opportunity in Taiwan
Recently, at the Asia Blockchain Summit, Taiwanese congressman Jason Hsu stated his thoughts and goals for turning Taiwan into a “blockchain island”. Taiwan has been late to get into the blockchain game, but with the allure of the Asian blockchain market, regulators like Jason have been motivated to make the push. Taiwan has a long history of producing computer chips and other technical hardware — Binance CEO Changpeng Zhao called Taiwan the “home of Bitcoin” at the Asia Blockchain Summit, referring to the high number of Bitcoin mining chips produced in Taiwan.
According to Jason, Taiwan has many characteristics that make it ideal for becoming a blockchain haven. First, he mentions Taiwan’s technological talent. Historically, Taiwan has been a center for exporting electronics and other technical products, with its flagship product being semiconductor chips. The technical knowledge that’s present in its workplace could be pivoted towards blockchain technology. Secondly, Taiwan’s unique size allows it to be flexible from a regulatory perspective. Zhao echoed this statement, mentioning that small-sized regions like Taiwan have different cultures — in tighter communities, people care more about reputation and bad behavior becomes less common. Smaller regions make regulation easier to institute and adapt over time. Their regulatory systems are simply more maneuverable. Thirdly, Taiwan’s political and socioeconomic situation. It has the small size that allows it regulatory flexibility, but it also is large enough to be a key player in the Asian economy. This “not too hot, not too cold” environment could be perfect for fostering blockchain development.
Jason has several ideas for pushing blockchain in Taiwan. First, he wants to make sure Taiwan is able to develop and implement an innovative regulatory framework, especially around ICOs. Taiwan has been late to the game compared to other Asian companies, but this could prove to be only an advantage — giving Taiwan the opportunity to see what has and has not worked. Secondly, Taiwan needs to develop an all-around policy to implement blockchain across different sectors. Jason’s visions of the future of blockchain are grand, and he is passionate about its use cases in food provenance and digital assets. Thirdly, Taiwan needs to cultivate talent in blockchain and attract international skilled workers. Fourthly, set up special blockchain economic zones. And finally, Taiwan needs to build and implement robust and effective Know Your Customer (KYC) and Anti-Money Laundering (AML) policies in order to prevent against money laundering and other bad financial behavior in cryptocurrency.
If these policies are implemented successfully, Taiwan has a good shot at becoming a center for blockchain development and innovation within Asia.
