Blockchain technology can make a world of difference for Hong Kong companies
China’s central bank is studying new innovation that has the potential to keep information secure and create a permanent imprint to avoid fraud
Blockchain, the technology behind digital currency Bitcoin, could soon be the go-to technology for Hong Kong companies to solve non-financial problems like simplifying loyalty schemes, providing decentralised versions of Airbnb and weaning companies off Facebook log ins.
Essentially a distributed ledger, blockchain is a decentralised consensus resilient network which appeals to financial institutions as its transparent ledger is one of the most secure systems built to date. Yet beyond simplifying transaction records, it can be used to record loyalty points, rent accommodation or rid companies of their reliance on Facebook.
Bitcoin exchanges in Hong Kong are now repositioning themselves as blockchain solution providers to help companies access tools based on the technology.
“One of the most common uses right now is as a loyalty programme, so instead of issuing a coin, [a coffee shop] issues a point,” said Ken Lo, chief executive officer of ANX International, a Hong Kong-based blockchain services provider .
“Because it’s on the blockchain, you know the two points that [customer] has, he can’t copy and duplicate it and get more coffee and you have very low overheads.”
ANX was one of the first companies to bring a Bitcoin ATM to Hong Kong that allows people to directly load their digital wallets using hard currency. It has since expanded to debit cards linked to digital currencies and has more than 1 million global users, Lo said.
Central banks including the People’s Bank of China and the Bank of England have expressed interest in the use of blockchain technologies and digital currencies.
Hong Kong is also following suit and is considering the same for the financial industry, financial secretary John Tsang Chun-wah said in his annual budget.
Aurelien Menant, chief executive officer of digital currency trading platform Gatecoin said the start-up is working with banks to assist them in applying blockchain technology.
Gatecoin is one of the first companies to sell tokens for Slock.it, a start-up using distributed ledger technology to automate the sharing economy.
“You could have smart locks on your flat and do Airbnb without any human interaction and also they are looking at smart cars, so you could have an Uber service without any driver,” Menant said.
People wanting to rent accommodation fitted with a smart lock or other smart devices would pay for the service using a token and use a cryptographic key to unlock the device and access the apartment or car.
German start-up Slock.it relies on smart contracts issued through custom built blockchain Ethereum that are automatically executed by computers across a network and cannot be manipulated.
Ethereum has been described as a Bitcoin 2.0 as it allows transactions through its digital currency Ether and allows users to create programmable transactions known as smart contracts.
Speaking in Hong Kong earlier this month, Ethereum creator Vitalik Buterin said the technology was designed to handle a variety of applications, from trading electricity to rights management for creative industries.
Larry Salibra, co-founder of the Bitcoin Association of Hong Kong, is a member of the Blockstack community, which is building decentralised naming, identities and directories on the blockchain.
His own blockchain project, Nametiles, allows users to tag others by adding a snippet of code to a website which when browsed shows a person’s details including a photograph, biography and where to find them on social media.
Salibra said the Blockstack community is working on ideas such as using blockchain backed identities as an alternative to logging into apps using Facebook as over reliance on the social network means companies are vulnerable to any problems with the site.
“It would be awesome if there was a way you could log on with only knowing one set of username and password but in a way that different services wouldn’t know you logged on,” Salibra said. “It is not dependent on any one company and if that company’s server goes down your app will not breakdown.”
Despite his belief in the potential of blockchain, Salibra said user adoption remains a major hurdle.