PETALING JAYA: Originally conceived as an effective means to facilitate cross-border transactions, cryptocurrencies have gained traction as an alternative asset class among investors.
Local digital asset exchange (DAX) Tokenize founder and CEO, Hong Qi Yu (pix) noted that both cryptocurrencies and e-commerce have seen astounding growth rates individually.
“Still many markets have not advanced in this area and have much potential for growth,” he told SunBiz, “But the increase of its use in ecommerce is certainly inevitable.”
In places such as the US, Europe, Japan and South Korea where Bitcoin has been accepted as legal, Hong pointed out that the adoption of cryptocurrencies in e-commerce in those markets has seen encouraging signs of growth.
In Japan, he said, more than 26,000 stores and the e-commerce platform Shopify accept cryptocurrencies and South Korea’s WeMakePrice accepts over 12 cryptocurrencies as payment on the e-commerce platform.
Outside Asia, he cited that studies have indicated that cryptocurrencies are gaining traction, with 40% of Americans familiar with the digital asset, saying that they are willing to use Bitcoin in transactions, while 35% of the respondents to a survey in Europe stated it’s the future of online spending.
The founder of Tokenize agreed that cryptocurrencies need a real-world use case to gain mass adoption and e-commerce is a natural fit for this purpose.
“The rapid growth of cryptocurrencies and the e-commerce industry puts the two on a path of intersection, on a path to crypto commerce. I personally hope to see this boom by 2022,” Hong said.
Furthermore, he said, there is rapid development in the segment and an intensifying race for digital currency supremacy.
On this front, Hong noted that China has started making inroads with the development and test of its new digital East Asian currency, to cut dependence on the US dollar, which would be backed by a basket of currencies, including China’s yuan, Japan’s yen, South Korea’s won and the Hong Kong dollar.
“With this reserve system to safeguard the funds, stablecoin transactions will be faster and incur less transaction fees, and have a net positive result on waste and inefficiencies tied to middlemen,” Hong explained.
With testing under way in Shenzhen and four other locations, he stated that cryptocurrency enthusiasts are excited to be part of the implementation of stablecoin when it arrives on these shores.
A stablecoin is a type of cryptocurrency designed to minimise price volatility. It is backed by a reserve asset, and may be pegged to a currency or price of a commodity.
In regard to the burgeoning competition among DAX operators, Hong highlighted that his primary concerns for users are the ease of use and safety of its platform.
“We know our clients will appreciate the way we differentiate ourselves with our personalised service and competitive price structuring,” he said.
To provide that extra peace of mind for its customers, Tokenize has engaged global financial insurer BitGo to insure all transactions via its exchange with a coverage of up to US$100 million (RM417 million) in value through a syndicate of insurers in Lloyd’s of London and the European marketplace.
Hong highlighted the initiative is backed by growing confidence in cryptocurrency as trading around the world has increased. “We believe that regulation, compliance, safety and security are keys to increasing consumer confidence in digital assets,” he said.
The effort put into the exchange over the years has paid off for the founder, as its trade volume in Ethereum is currently the largest in Malaysia with over tenfold the volume of its next competitor.
For the future, Hong shared that Tokenize is keen to participate and play a role in the development of stablecoins in Malaysia.
“As stablecoins gain popularity, we would be keen to work with the regulators here. We want to be at the forefront of blockchain development here in Malaysia and play a vital role in the innovation of this technology.”
