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David Lee: Serve the underserved

last updated 21 August 2017

Professor David Lee Kuo Chuen, author of 'Handbook of Digital Currency', shares his views on the country’s cryptocurrency scene.

By April Zara Chua

20170821 david lee main

Photo credit: David Lee


Cryptocurrency has been slowly building momentum since its introduction in 2009, and investors who saw its potential then are reaping its rewards now. According to CoinDesk’s Bitcoin Price Index, a bitcoin was valued at less than US$1 in early 2011, but has now skyrocketed to about US$2,000 to 3,000. It’s only a matter of time before cryptocurrency hits the mainstream in Singapore.

But what is cryptocurrency exactly? Simply put, it’s money in a purely digital form. To keep it safe and secure, transactions are encrypted and cross-audited by a decentralised network. Examples include Bitcoin, Litecoin, Ethereum, Zcash, Dash and Ripple.

IMpact spoke to David Lee Kuo Chuen ­– entrepreneur, professor at the Singapore University of Social Sciences, and author of Handbook of Digital Currency – to get his thoughts on the cryptocurrency scene in the country.

How has cryptocurrency affected Singapore’s trading economy?

Cryptocurrency currently has a limited impact on the Singapore’s trading economy. However, the cryptocurrency community has created a good number of startup jobs and has put Singapore on the map as one of the best destinations for cryptocurrency and blockchain startups.

Is cryptocurrency a threat to banks and other financial institutions?
Successful cryptocurrency companies are not competing for the same business areas or clients as the financial institutions; they are trying to complete the imperfect financial ecosystem. The underserved segments, such as immigrant workers and small- and medium-sized enterprises (SMEs), are the ones that benefit from the services offered by some cryptocurrency companies.

How long do you think before Bitcoin filters down to consumer level?

Bitcoin is not in the mainstream in Singapore yet even though it has been around since 2009. However, it has become a legal payment system in Japan since 1 April this year. Many are expecting that about 260,000 merchants would use the network, making it the highest volume of trading of cryptocurrencies outside China and Korea.

While you can purchase air tickets, book hotel rooms and buy goods by Bitcoin online, there are a few places in Singapore where you can do that physically. Bitcoin vending machines and cafés using Bitcoin as a form of payment have mostly been tourist attractions. You can find those vending machines in Chinatown, Tiong Bahru (by Bitcoin Exchange) and soon in Orchard Road (by DZL).

What can companies do to build a more inclusive digital currency ecosystem?

Companies should have the mindset to serve the underserved. Building a blockchain ecosystem to reach out to needy in the region can be sustainable and profitable. Blockchain is successful because it is created to benefit the users rather than squeezing the next cent out from them. It is by serving the underserved and providing free services that value is created.

To transform, companies should consider the following: how to complete rather than to compete, open source rather than chasing IP, benefitting rather than squeezing consumers, being inclusive rather than being exclusive, having a global mindset rather than thinking local, and building new business models rather than protecting incumbents.

Companies also need to watch and plug into China, which has mastered the skills of scaling, financial inclusion, and user experience. It will dominate the blockchain industry because of its size and capital expenditure on research and development.

What can companies learn from current successful interoperability schemes? Any example of this in Singapore?

The most powerful feature of blockchain is the sharing of asset ownership. No amount of capital or technology can do what blockchain does: enhancing collaboration and enabling parties to work efficiently together in a decentralised and innovative environment.

In Singapore, a startup called COMIT does cryptographically-secured multi-asset instant transaction network. Their product, TenX card, takes the form of a physical card or a mobile debit e-wallet card. It can be funded with Bitcoin, Ether or other blockchain assets.

TenX payment facilities can be used in Singapore and in approximately 200 countries. Users and businesses can exchange their blockchain assets seamlessly from one user to another in a decentralised manner, removing any risk that is usually associated with current centralised solutions.

Where do you see Singapore’s digital payment economy moving into?

Singapore is a small country and the only way it can grow is to be as open, inclusive and global as it can be. Cross-border payment is where the growth is but payment itself is just a service that does not yield good returns. That's why Singapore's digital payment strategy must be one that provides additional services, such as wealth management, insurance and investment banking.

The largest growing online market will be Southeast Asia, as it is relatively new to the payment scene and has a young population. Grab, Alipay, WeChat, and other global payment companies are all eyeing this region, which has 660 million people with smartphones – most of which are unbanked. If Singapore can capitalise on its position as a supplier of capital to the underserved and unbanked, and as a provider of assurance and wealth management service to the needy, it can be a service centre to the region.

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