Feb. 27 (NBD) -- Blockchain, which is the underlying technology that drives cryptocurrencies and is regarded as the next huge opportunity investors shouldn't miss, is garnering broad public attention, and stocks related to blockchain are becoming a sought-after among investors.
According to a feature published by People's Daily Monday (Feb. 26), some experts called for strong support for blockchain so that China can have an edge in the digital economy world.
A report on the development of China's blockchain industry in 2018, released by the China Blockchain Application Research Center at last month's World Economic Forum in Davos, noted China outperforms the U.S. in the growth of the number of patents and amount of financing related to blockchain. It also urged talks between industry practitioners and regulators to promote the formulation of a worldwide regulatory framework and rules.
In the respect of financing, foreign blockchain startups did better than domestic counterparts.
Veem, which ranked the tenth position in terms of accumulated amount of money raised, recently had an exclusive interview with NBD.
The company's CEO Marvan Forzley shared his insights on how to identify real blockchain-related companies and stocks, future development of blockchain technologies, and regulation of the burgeoning sector.
Formerly known as Align Commerce, Veem was founded by Aldo Carrascoso and Marvan Forzley in early 2014. It is the first global payments platform to use blockchain technologies, and has established a presence in nearly 60 countries and regions.
Blockchain to embrace fast growth
NBD: It has been about 10 years since Satoshi Nakamoto mentioned "blockchain" the very first time back in 2008, what are some of the primary achievements blockchain has achieved in the past decade? What do you make of it?
Forzley: There's been a lot of hype around bitcoin and other cryptocurrencies but the technology behind it, blockchain, is far more important and impactful. It's also just getting started. 2017 was a milestone year for blockchain with companies from Mastercard to IBM to Kodak looking into ways to use the technology. There has also been an explosion in applications, new concepts and new ideas on ways to use the blockchain.
NBD: What development stage does the current blockchain belong to? How long will it take for the current blockchain to be very mature, with high penetration rate and rapid derivation of actual projects? What kind of companies will have the leading resources/advantages of developing blockchain project?
Forzley: Some industries leveraging blockchain have matured more than others. For example, payments is an area where concepts have been well developed mainly because cross-border payments were one of the early applications identified as a ripe area that needs to be ripped up and replaced by something more modern.
Outside of payments, some of the concepts are emerging and other concepts are still mainly ideas.
In general, we believe the blockchain will do well in industries where the middleman added value by acting as a gatekeeper. We think the blockchain will disintermediate these type of actors and reduce friction in workflows that are cumbersome or have significant friction.
Regulations to be enforced and potentially expanded
NBD: What is the entry threshold for the current blockchain industry? How to set up a standard to regulate the industry?
Forzley: Blockchain was created as a distributed ledger to self-regulate. When it comes to cryptocurrency, we'll likely see some regulation developed by the government but the technology requires a different approach. Blockchain can be used by many industries including payments, insurance, healthcare, and others. Those industries are highly regulated and we'll continue to see those regulations enforced and potentially expanded.
NBD: We know that blockchain is the underlying technology of many cryptocurrencies including Bitcoin. However, we also noticed that many governments have banned or are planning to ban cryptocurrency exchanges. What do those governmental actions stand for, and what does this mean for blockchain?
Forzley: Blockchain is a technology and cryptocurrency is just one use of that technology. Whatever governments decided to do regarding cryptocurrency, we're already seeing a much bigger impact as a result of the technology behind it. For example, logistics companies are using blockchain to better manage the process of tracking and delivering goods. We work in payments and we've seen innovative efforts both on the B2B and consumer side.
We believe that regulation helps scale new technologies such as the blockchain and opens up the door for larger corporate players and wall street to be involved. The US Department of Homeland Security recently awarded a blockchain contract to potentially improve the security of IoT devices. The FDA is also looking into ways to use blockchain.
Lots of chances for blockchain in logistics, security and healthcare areas
NBD: Recently, there have been a lot of U.S. listed companies that changed the company name to Blockchain and saw their share surge. Among those kinds of companies, some have real blockchain business, but some are completely hyping. How should investors discriminate those so-called "blockchain-related" companies?
Forzley: As you saw, Long Island Iced Tea and Hooters were a few of the companies to jump on the blockchain bandwagon but it's important to differentiate between those companies using the buzz to benefit their business versus those doing innovative work with blockchain. It doesn't take much digging to identify which companies are purely using the term for monetary gain and most investors will easily tell the two types of companies apart.
NBD: Among companies that are doing actual blockchain business, what are some of the main areas in which blockchain technology can be truly applied? Is there any mature profit model/business model for the blockchain business yet?
Forzley: Obviously payments is a huge opportunity to implement blockchain. We see a lot of potential in logistics, security, and healthcare just to name a few areas.
Blockchain to change how we live
NBD: In the short and long-term respectively, what are some of the risks for companies with blockchain as their core business?
Forzley: The space is heating up. The key is to truly innovate not just when building on blockchain but when developing any technology. It's also important to not just build a blockchain company but rather a company that solves a real problem.
NBD: Warren Buffett, when interviewed with CNBC, said cryptocurrencies 'will come to a bad end' and he will never invest in cryptocurrencies. What do you make of his view on cryptocurrencies?
Forzley: I think cryptocurrencies will continue to exist but blockchain is the exciting part. Blockchain technology will fundamentally change how we function.
NBD: What do you make of Blockchain's future? Will it become the next "Internet"? What influence will blockchain have on our daily lives in the future?
Forzley: I do believe that blockchain is the next technology that will change how we live. The internet revolutionized the way we communicate and spread content around the world. The blockchain will revolutionize how assets are managed and transferred for any type of asset - money being one of the first use cases. We believe a model to securely transfer assets is a major milestone in the history of innovation.