Blockchain in Asia: Singapore’s project Ubin
Basically, blockchain is a digital database. To store transaction records, it uses cryptographically linked networks of peer-to-peer nodes, or blocks. The owner’s digital signature serves as both a validation and fraud prevention mechanism for every transaction in this ledger. It also serves to authenticate the transaction.
In reality, when new information is received, it is added to a new block. When the block is filled with data and is attached to the block before it, the data is chained together in chronological order. In other words, this technology enables the distribution and recording of digital information, but not its modification. It changes the function of banks, authorities and businesses by making financial transactions more economical, safe and efficient than current practice.
Blockchain has many advantages, including facilitating financial transactions. This will be especially true for countries in Asia, because the region already has an unprecedented digital propensity, with a high internet penetration rate of 88 percent (even up to 93 percent in more mature economies such as South Korea and Singapore). The continent is also known for having one of the fastest internet networks around the world. Therefore, a digital-friendly environment, along with high availability of high-speed internet, is more likely to be open to the development of blockchain and cryptocurrencies.
Asia is currently the third largest cryptocurrency market in our index this year, receiving $932 billion in value from July 2021 to June 2022. However, unique to this region is the fact that it sees most of its crypto activity happening on centralized services – CBDCs – development.
Not surprisingly, governments in Southeast Asia have supported this emerging technology. Countries such as China, Japan, South Korea, Indonesia, Vietnam, Thailand and Singapore have started or have already developed their own central cryptocurrency. For example, Singapore launched Project Ubin, a five-year project for practical experimentation on blockchain technology with industry and understanding how it can be applied to payments and settlements. It includes launching their own centralized token, which will be used for clearing and settlement of payments and securities.
This expansion of De-Fi financial infrastructure has so far resulted in improved liquidity and a boost in overall transaction efficiency in the country. Although still in a trial phase, the initial success of the project Ubin is also an indication that governments are more receptive to digital tokens and will resort to these tools more often. Cryptocurrencies are now a major commodity and they seem to be the way of the future. Therefore, the level of growing CBDC-related activity in Asia is a positive step in the right direction, and the region is seemingly positioning itself at the top of the cryptocurrency and blockchain movement.
