The new talk of the town, blockchain technology, has been taking rounds surprising the general public of what it can offer. Originally crafted to cater to bitcoin in its transactions, blockchain is now ultimately developing into internet’s successor, taking one step at a time in revolutionizing the financial industry and perhaps the world.
For those who are not quite familiar with blockchain technology. Here is a quick detour of how it works.
Supposed Person A wants to transfer money to Person B without transacting through banks but clever enough to want to have a record of the transaction. Person A might want to try blockchain.
Blockchain, as a ledger system and a database, records every piece of information about the exchange and then stores it inside a block. A block normally consists of three components – data, hash, and hash from the previous block.
The block now has the data of the exchange that took place. After the data has been stored, the block now creates a hash. A hash serves as the digital fingerprint of the block. It bears the identity of the transaction and is unique in all its forms. If the hash was in any way compromised or tampered with, all the other blocks in succession will also tamper. Leaving the entire blockchain useless and void.
The first block is considered as the Genesis block. As such, there will be no hash from the previous block since it is considered the very first record of its transaction.
The ins and outs of blockchain could be rendered as simple as that. Some countries have tried to adopt such technology. One of which is Switzerland.
Switzerland vs. The Philippines
Switzerland is heralded as one of the best proof of concepts of a blockchain-powered nation. In a study released by blockchain conference, Blockshow Europe 2018, Switzerland ranked first in a list of top ten European countries for starting a blockchain company. The study examined the regulations of 48 countries related to ICOs, cryptocurrency as a payment service, and taxation framework for cryptocurrencies.
With its historical strength in financial services, global network and community, talent, and flexible and competitive taxation program for blockchain, Switzerland has been among the pioneers in the implementation of blockchain technology. However, it is their advanced regulation that has allowed innovation and creativity in blockchain to thrive in Switzerland.
In her country, the regulations involving cryptocurrency are very liberal and principle-based. That is, regulations are more like boundaries rather than pathways. The technology and the communities behind blockchain are seen to be moving faster than what existing regulations can prescribe or faster than regulations can be drafted and enforced.
In the Philippines, organizations such as the Blockchain Association of the Philippines (BAP) have already formed to spread understanding and adoption of blockchain technology among Filipino entrepreneurs and financial technology (fintech) professionals. It also provides the said community with the information and guidance needed to implement this new technology in their industries. Though registered in countries like Singapore, a handful of Philippine-based companies such as Salarium and Loyalcoin have rolled out Initial Coin Offerings (ICOs).
The country’s Central Bank otherwise known as the Bangko Sentral ng Pilipinas (BSP) published Circular No. 944 or the BSP’s guidelines for Virtual Currency (VC) Exchanges. It is a six-page document which currently serves as the rules and regulations governing operations of VC exchanges in the Philippines.
Since then, the BSP has received around 30 applications seeking approval to operate as a virtual currency exchange in the country. As of July 2018, only two have been granted licenses – Betus Inc., which operates Coins.ph, and Rebittance Inc. of SCI Ventures which operates Rebit.ph.
Would blockchain thrive in the Philippines?
Experts have been hopeful in recommending such technology in regions it can be utilized fully. In fact, just recently, a luncheon discussion was organized by the Blockchain Association of the Philippines (BAP) at the Manila House Private Club to discuss with the selected members of the media what blockchain is and what pushing for its regulation in the Philippines would entail.
Among the respected experts present in the discussion were Crypto Valley Association (CVA)’s very own Cecilia Mueller-Chen, BAP chairman Justo Aboitiz Ortiz, Philippine Digital Asset Exchange (PDAX) co-founders YangYang Zhang, Nichel Gaba and Krystian Kucharzyk; Gorricetta, Africa, Cauton and Saavedra Law’s Atty. Mark Gorriceta and Satoshi Citadel Industries (SCI) Ventures Atty. Rafael Padilla.
Cecilia Mueller-Chen, one of the global forerunners in compliance and regulation when it comes to blockchain and the crypto economy discussed the approaches done in Switzerland to regulate crypto-currency.
Hailing from a country that encourages a liberal approach in regulating blockchain, she strongly believes that the Philippine government should allow self-regulating organizations (SRO) to monitor such technology instead of subjecting it to stricter rules that would stifle innovation in that field.
BAP chairman Justo Ortiz noted that in order for the blockchain technology to survive, there must be a “legal and regulatory clarity” to push for more players in the industry. Similarly, Atty. Mark Gorriceta also stated that a clearer set of rules would encourage Philippine-based companies to issue here in the country instead of doing so overseas.
Ortiz, along with the other experts, also expressed high hopes that the country would embrace and lead the industry of blockchain technology.
“I think the Philippines, because of the vacuum in other countries as people try to figure this out – has a real chance on being a leader in some of these technologies,” Ortiz said.
The invention of blockchain technology has proved to be revolutionary in a lot of aspects. When one hears of blockchain technology, one must know that it is more than bitcoin and cryptocurrencies. It is even more than financial transactions. The possibility of its future use would come across as endless. Just like the internet, it could be ground-breaking, progressive and transformative. But as of now, it is highly anticipated.