In an era of modernisation and digitalisation in tandem of a fast paced world, cryptocurrencies are quickly gaining popularity. This is especially true with the rise of digital entrepreneurs across the globe. Fortunately for these digital savvy entrepreneurs, rising prices and powerful tech-based consumer community, the landscape for cryptocurrencies is widening. This is in line with the emergence of other types of cryptocurrencies besides the pioneer Bitcoin.
Swift advances in this financial technology (FinTech) are also transforming the business landscape by creating added opportunities and challenges for consumers, entrepreneurs and regulators – especially in the ASEAN region.
Cryptocurrencies digitalising businesses
Cryptocurrencies scene in ASEAN although still in its early stages, have some promising ventures. When it comes to online financial transactions, cryptocurrencies like Bitcoin, Ethereum, Stratis, SIA, AntShares, NEO and TenX have proven to be a competitor for other electronic payment system such as PayPal, eGHL, Red Dot and Alipay. By digitalising business payments, businesses will be able to enjoy:
Reduced cost: Using cryptocurrencies can help lower per transaction fees than accepting credit cards and debit cards. With Bitcoin, businesses can reduce their fees to less than one percent because bank fees do not apply.
Identity theft protection: With cryptocurrencies, consumers and businesses don’t need to provide personal financial information. This provides an added layer of security can give everyone a peace of mind. Credit card thefts is a major setback on business transactions.
Reduced wait time: By accepting cryptocurrencies, business owners can have faster access to cash to keep the cash flow rolling.
Ease foreign payments: Since cryptocurrencies are global, it makes it easier for businesses to expand beyond borders without having to worry about the costly consequences. Many businesses are weary of going global because currency exchange and foreign transaction fees are expensive.
Increased competitiveness: A great way to make businesses more competitive is to expand into international markets. Adopting cryptocurrency can actually help businesses enter global markets. Additionally, doing so can help businesses have a competitive advantage against competitors who are less tech-savvy and have yet to embrace cryptocurrencies.
Digitalised businesses beneficial to ASEAN
Cryptocurrencies are bound to create a rippling effect of a financial revolution as the growth potential in ASEAN is tapped and roadblocks are hurdled. The region has both the talent pool needed to develop the technology, and a population with needs that could be addressed by it. ASEAN have an extremely skilled workforce that can identify and build cryptocurrencies solutions. The region also includes countries that are the ideal customers for many of these services – countries with relatively high smartphone adoption, a high proportion of unbanked, as well as significant expat and migrant populations. There's still a lot to be done to effectively tap these ideal customers.
Currently, it is popular as a speculative asset than an alternative currency. In Malaysia, for instance, investors use bitcoin to hedge against the depreciation of the ringgit. However, countries like Singapore (a known hub for technology and finance) are helping the growth of the digitalised currency industry in ASEAN. Cryptocurrencies in ASEAN will allow for cross-border transactions. Cryptocurrency transactions can be faster and cheaper than traditional channels because it eliminates intermediaries or bank fees and time constraints imposed by third-parties.
BitAsean (BAS), an Ethereum-based digital tokens – is the first and only ASEAN cryptocurrency. BAS’s market cap roadmap is targeted at US$1 million in 2017 to and hopes to achieve US$100 million by 2021. The mobile wallet version for BAS on Android and iOS will be available by end of 2017.
What’s stopping ASEAN entrepreneurs?
With the digitalisation of cash into cryptocurrencies, entrepreneurs worldwide are embracing cashless and borderless modernisation into their business transactions. In ASEAN, the cryptocurrency development has greater potential and can lead to a financial revolution with a rippling effect. However, challenges to widely adopt this digital currency among ASEAN businesses remain valid. Various factors and sentiments are stopping ASEAN from adopting cryptocurrencies usage in businesses:
Security issues: It can be a concern that cryptocurrencies allow consumers or businesses to conduct transactions anonymously. Aside from educating consumers on the usage, addressing concern over the security of this technology must be a priority.
Regulatory challenges: A major drawback to cryptocurrencies adoption is the lack of regulation surrounding digital currencies. It doesn’t fit into existing regulatory frameworks. Globally, there is an ongoing concern on how to classify and apply regulations for cryptocurrencies. It should protect the businesses and consumers, but not stifle the growth of the currency. However, there’s still light at the end of the tunnel. Singapore’s regulatory sandbox approach is a step in the right direction, Malaysia is looking closely at the FinTech space and Vietnam is researching to obtain a sensible regulatory framework.
Complexity: Not many understand the technology behind cryptocurrencies, hence consumers and businesses need to be educated on it. Awareness campaigns can be created to disseminate relevant information on cryptocurrencies.
Price volatility: One of the largest barriers to using cryptocurrencies is the price volatility. Cryptocurrencies have a fixed total supply, yet demand is uncertain and constantly fluctuating due to speculation. In order to use cryptocurrencies, businesses have to hedge their risks by charging consumers more. This defeats the purpose of cryptocurrencies, which was to offer a cheaper and flexible alternative to conventional payment methods.
Ignorance: It is viewed as an investment opportunity instead of an alternative for currency.
ASEAN at the global pedestal
For ASEAN in particular, embracing digital technology could prove the key to a more dynamic, networked and innovative region by 2025 – driving new economic activities and realising the full potential of its young demographic. This major digital transformation in terms of FinTech is aimed at turning ASEAN into a hyper-connected region where the pervasive use of technology is expected to bring expansion to the business marketplace and create a globalised platform; subsequently improving the nation’s quality of life.
As part of this initiative, the ASEAN pact is putting a lot of effort into developing the FinTech sector. The initial efforts to further encourage ASEAN in adopting this growing FinTech into their businesses is by educating them about cryptocurrencies to increase their confidence. The sooner businesses understand how cryptocurrencies work, the better they will be prepared for a rapidly evolving financial landscape.
The implications of cryptocurrencies are huge and this technology will democratise the global financial system so everybody has equal access. This is what will ultimately attract businesses and stimulate them to make the switch to cryptocurrencies.