OSL and Taesung to co-host seminar early in 2020
In 1944 “Colossus”, the world’s first electronic computer, started work in the British code-breaking centre at Bletchley Park, inaugurating the “Digital Revolution” – the ongoing process of social, political and economic transformation brought about by the shift from mechanical and analogue electronic technology to digital electronics, with the adoption and propagation of digital computers and digital record keeping.
The Digital Revolution went through four phases, data processing, personal computers (stand-alone computers powered by local software), network computing (the internet), and cloud computing (access to information, applications, communications, and storage over the internet).
The fifth phase, which may upon us, is likely to be the blockchain phase – creating the so-called “Internet of Value”, transforming the world of business.
First step for Sri Lanka
Sri Lanka took a step towards participation in this, latest phase of the Digital Revolution, when Lawfirm Taesung of South Korea, on 23 December signed an agreement with investment facilitator Opportunity Sri Lanka in Colombo.
“We hope to have some good partnership between Opportunity Sri Lanka and our law firm in South Korea,” said Lim Jung Hoon, Representative Attorney spoke to OSL-THE Investment Magazine after signing the agreement on behalf of Taesung. “We will promote business between Sri Lanka and Korea and I will introduce companies which have some interest in investment, but need some help, especially in Sri Lanka, and we will give them legal advice. In this area, the best partner we could have is Opportunity Sri Lanka.”
The area of interest is blockchain, the technology underpinning digital cryptocurrencies, such as Bitcoin, Litecoin, and Ethereum. Cryptocurrencies are virtual or digital money, taking the form of digital tokens or “coins”, the “crypto” part denoting to their complicated cryptography, allowing them to be generated, stored, and transacted securely and anonymously.
Cryptocurrencies have gained in importance since Bitcoin’s introduction by “Satoshi Nakamoto” in 2009, and governments’ interest in them has been growing.
In 2017, the Venezuelan government launched its own cryptocurrency, the Petro (Petromonedar), to trade in petroleum, with a view to bypassing sanctions imposed by the USA. It uses the Petro in funding part of its Gran Mision Vivienda Venezuela programme to build five million houses by 2025, and in paying Christmas bonuses to government workers and pensioners.
Venezuela was followed early this year by the Marshall Islands, which introduced the Marshalese Sovereign (SOV), apparently in an attempt to reduce costs of migrants’ remittances, which account for 12-18% of its economy.
Meanwhile, in July, Cuba announced it would consider applying Bitcoin in national and international commercial relations, in order to deal with US-imposed sanctions. An online cryptocurrency exchange, Fusyona, is already enabling Cuban small and medium enterprises (SMEs) to bypass sanctions.
In September, Alejandro Cao de Benos, the official in charge of North Korea’s cryptocurrency conferences, told web infotainment channel VICE about that country’s preparations to launch a cryptocurrency to resist US-imposed sanctions.
News agency AP reported in December that President Hassan Rouhani of Iran, who legalised blockchain-related activities in August, has proposed creating a Muslim cryptocurrency to cut reliance on the US Dollar, as well as to endure the vagaries of the market.
More than cryptocurrencies
However, blockchain is much more than just cryptocurrencies. It can deal with a broad range of applications, to which its structure suits it.
Blockchain is a structure of data, which has been called an “open digital ledger”, stored in a distributed network, able to record, efficiently, verifiably and permanently, transactions between two parties. It has high integrity, resisting modification of data, because the technology allows the distribution of digital information, but not it’s copying. Each transaction, or “block” is signed digitally, to assure its authenticity and prevent tampering.
“Why is blockchain very important?” asks Lim rhetorically. “Blockchain has the ability to decentralise immensely, and can give a good chance to the poor, to the ones with no power.”
Unlike a traditional, centralised database, under a single administrator, a blockchain is duplicated across many computers – it is decentralised – making it transparent, and participants may verify or audit transactions independently and cheaply.
“You cannot change the Blockchain system with power; it is made secure, and trusted, and then the system will provide justice, and a stable system for society.”
This makes blockchain’s versatility stretch beyond cryptocurrencies. It may be used, for example in executing “smart” contracts (releasing automate payments of fulfilment of terms); maintaining shared, long-term, transparent and secure systems of records of assets; maintaining property “pedigrees” in land registries; maintaining healthcare providers’ patient medical records; auditing supply chains by tracing ownership of goods up to the source; verifying insurance coverage instantly; following up on enforcement of judicial sentences; and, diving into the political domain, enabling fraud-free, instantly counted, voting.
China, Japan, South Korea
According to Lim, “In the blockchain industry, the leading countries are China, which has made many AI initiatives in this area; Japan and South Korea.”
China, which has banned cryptocurrencies, has nevertheless adopted a law governing strictly the encryption of data, and especially blockchain technology. The importance attributed to the technology may be gauged by the speech, made in October by President Xi Jinping, as part of the collective study of the PolitBuru of the Communist Party of China on the development and trend of blockchain technology.
“We must take the blockchain as an important breakthrough for independent innovation of core technologies,” Xi said, adding that the technology has a wide array of application within China, ranging from business financing to mass transit and poverty alleviation. He said they should “clarify the main direction, increase investment, focus on a number of key core technologies, and accelerate the development of blockchain technology and industrial innovation.”
He pointed out the need to implement “the rule of law network” into blockchain systems, and proposed a top-down approach concerning implementation, calling for guidance and regulation, and extensive testing of the technology before implementation, with investment into training platforms and “innovation teams”. He also posited creating “Blockchain+”, a platform for personal development, including basic needs such as education, employment, food and medicinal safety.
“In South Korea, there are several uses for blockchain,” says Lim. “We never sold a lot in the Blockchain area, but Korea is a very fast country, especially in the IT area. Three years ago, we adopted Blockchain, and the young people got a good chance.”
Korean electronics innovator Samsung has come out with an electronic blockchain wallet, for use with its more recent mobile smartphones. This is now available in Sri Lanka.
He adds that the leading countries in blockchain finance are Switzerland, and Singapore – which is setting itself up as the world centre in this field.
Why Sri Lanka?
“South Korea is one of the top nations when it comes to innovations and technology,” says Lim. “It is a fast mover especially in the ICT Area. They move very aggressively into other countries. They want to enter into partnerships with other countries. Sri Lanka is the best place to break ground.”
But why Sri Lanka? He points out that it has a geographical advantage, with ease of access to the markets of South Asia, Africa and Europe. Because its business is based on the English language, it can communicate readily with other English-based markets.
“Sri Lanka is the perfect country. It has a potential to become a world pioneer in blockchain, to become the main beta-test area. It can develop into a fast mover, because it is an English-based country and need not go through the same processes as Korea. Korea had a lot of time to develop, many decades after the Korean War. It had to go through several developmental stages. Now, other countries do not need to follow that pattern, repeat that period. They can catch up, leapfrog forward, because the AI industry can do many things. So we have to find the best scenario.”
The first thing, he thinks is that the people, especially decision-makers, must know about Blockchain, because knowledge is important for that area – without knowledge they cannot make a positive effort, focus on one area to maximise achievement, instead of spreading their exertions over the entire field.
“For that, we need to give the people knowledge,” Lim explains. “I hope to have some seminars in Sri Lanka, perhaps for the first time, to give people an interest in blockchain, enable them to learn about it, about what it is, and how it can be a future industry.”
It will take some time to organise these first-in-Sri Lanka seminars, but the first, a two-to-three day affair, will probably take place within the second quarter of 2020, with the aim of establishing a blockchain association in Sri Lanka, on the South Korean model, as well as a blockchain thinktank, to develop the industry.
Lim expects about 50-100 overseas participants, including Blockchain Association members, and industry leaders and product owners from South Korea and blockchain leaders from other countries including Singapore and Sri Lanka’s immediate neighbours. “We want to have a seminar with worldwide leaders,” he says.
He expects to see Sri Lankan participation from the IT industry, the universities and from the legal and accounting professions, among others, reflecting the spread of blockchain capabilities. He emphasises the need for youth participation, given the novelty of the field, and the need for fresh talent and a fresh look at the opportunities inherent in the technology.
“With our help,” says Lim, “I hope Sri Lanka can leapfrog quickly, to become a fast mover like South Korea.”