This post is part of CoinDesk’s 2019 Year in Review, a collection of 100 op-eds, interviews and takes on the state of blockchain and the world.
Michael Ou is CEO of CoolBitX, a blockchain security company and creator of the first hardware wallet that enables bluetooth-to-smartphone pairings.
In 2019, it became clear that Asia was moving ahead in cryptocurrency and blockchain adoption and application. Because of internal and external drivers, Asia has been setting the pace in turning ideas in the blockchain space into reality.
Investors in China, Japan, and South Korea are being driven into crypto markets by global and regional trade wars, currency devaluation, and tight government control of individual assets. Global trading platform, eToro, has found consistent spikes in bitcoin activity during key moments of the US-China trade war.
In May, after China announced a tariff hike on $60 billion worth of American goods, and investors immediately moved to divest their wealth elsewhere. The number of new bitcoin positions soared 139% (along with a 108% rise in new gold positions). The increase in both new gold and bitcoin positions has been consistent as the trade war between both powers has continued — with bitcoin witnessing more significant benefits than the precious metal. It seems that amidst increasing uncertainty upon the global economic stage, bitcoin is reaping the benefits.
Additionally, in 2019, Chinese consumers were the greatest users of Tether—using the stablecoin to transfer their yuan across borders, free from government supervision and sanction. While the Chinese government doesn’t allow yuan trading on domestic exchanges, Tether has allowed Chinese consumers to partake in global cryptocurrency markets—with up to 99% of bitcoin spot trades conducted using Tether according to Chainalysis.
Established Markets: Where Fintech Innovation is Commonplace
Korea, Taiwan, Hong Kong, and Singapore are established hubs for digital payments adoption and fintech innovation. In the first 9 months of this year alone, investments into Singaporean fintech companies exceeded $1 billion USD, with the Monetary Authority of Singapore stating that this was the result not only of local startup activity but also international fintech companies using Singapore is a base for global expansion.
China is perhaps the first country to be in a position to credibly claim “cashless” status. A 2017 Penguin Intelligence study has shown that 92% of inhabitants in China’s top cities use WeChat Pay or AliPay as their primary payment method. In addition to their prowess within the fintech space, the more traditional markets of Asia’s leading economies have been dubbed as the next bastion of economic growth globally, with the
Financial Times predicting that by 2025 we will have entered into a new “Asian Century”. With regional fintech players dominating digital payments, one would question whether crypto can compete and find a foothold to demonstrate its use as a digital payments system.
Global instability has provided opportunities for alternative assets. The Chinese economy and the Yuan are continuing to trend downward amidst a trade war with the US.
Hong Kong’s financial sector is suffering the consequences of increased political instability and security risks within the country. Hong Kong’s stock market was the world’s worst performer in Q3. Meanwhile, fraught relations between South Korea and North Korea, as well as Japan, are doing nothing to improve investor confidence in the capital markets, hurting the value of national currencies.
With stability increasingly in question, traditional investors and institutions are looking at cryptocurrencies as a means to hedge their assets and diversify their portfolios, creating capital flows into the digital assets space, which has been largely insulated from the knock-on effects of regime instability and international trade conditions.
Emerging Economies: Growth Without Trust
Blockchain and cryptocurrency has a different sort of role in emerging economies, like Philippines and India, where trust in local institutions remains low and new systems and structures created in the crypto markets can bolster feeble financial infrastructures. finance.yahoo.com