HK expected to be at the heart of blockchain
Fraud-proof system of transacting money is expected to become ingrained in the fintech sector as a safer way to store all financial records
Hong Kong’s clout as a global financial centre means it can expect to play a major role in implementing blockchain – a fraud-proof system of transacting money on which virtual currency bitcoin is built – alongside London, New York and Singapore, according to a senior official at computer giant Microsoft.
Marley Gray, director business development and strategy, Cloud + Enterprise at the US tech giant says blockchain is expected to be implemented by banks and other financial institutions within three years.
Gray said the four cities will be the “hotbeds” of the blockchain financial services.
“They are the anchor points in which blockchain will be solved, and it will just grow from there.”
Microsoft launched Azure Blockchain as a service product last year, and is now working with R3, the company leading an international consortium of more than 40 financial institutions, on the design of distributed ledger technology, Gray said.
Earlier this year, the World Economic Forum said that 80 per cent of banks are predicted to start blockchain projects by 2017 and $1.4 billion was invested into the technology over the past three years. Ninety central banks are looking into the technology, it said.
A report by Hong Kong’s Steering Committee on Financial Technology has already highlighted how blockchain could be used in the city’s financial institutions to lower transaction costs and reduce suspicious transactions.
Benedicte Nolens, the head of risk and strategy for the Hong Kong Securities and Futures Commission, also said in June that blockchain had potential application in anti-money laundering and corporate action processing.
Traditional finance systems rely on middlemen or a centralised database to record and approve transactions, whereas blockchain stores information across an entire network that all players can access, Gray said.
But blockchain technology reduces the chance of fraud as transactions are transparent and it is nearly impossible to alter records, giving it strong potential for trade finance in Hong Kong, he added, claiming interest in the city for the technology was “rapidly gaining steam”.
Beyond financial services and trade, Gray said blockchain can also be used by health care companies to track records, by media firms to streamline rights and in fields such as real estate to transfer titles in a matter of minutes through a public home title record held on the blockchain.
It might also be used by individuals to create their own identity which they can then link to government identification or personal data such as health records.
The Estonian government has already signed an agreement with start-up Guardtime to secure all of the country’s 1 million personal medical records using blockchain.