From the 4th to 8th March, Hong Kong hosted its biggest blockchain event of the year, the Hong Kong Blockchain Week 2019. Hosted by NExchange Group, the 3-day event saw more than 3,000 delegates, 120 speakers, 150 investors from more than 50 countries around the world come together to discuss the latest trends and developments in the blockchain and cryptocurrency space.
LATTICE80 was there on site to attend the event, though unfortunately only on the third day. Below we share with you some snippets from the day and some of our key takeaways:
Disclaimer: The contents of this article do not represent LATTICE80’s views and do not serve as our recommendations for the reader.
- Crypto may be increasingly seen as an alternative investment asset class
Despite the bearish sentiment surrounding the cryptocurrency markets, speakers at the event believe that major trends are still favourable for the future of crypto, both as an asset class and as a alternative currency to fiat.
For the year of 2019, Thomas Lee, Co-founder of Fundstrat, believes this holds true as can be observed from two major trends. Firstly, macroeconomic factors favour crypto, As the dollar index is expected to become weaker in anticipation of a more dovish policy from the Fed and Central Banks, emerging equities and crypto will be seen as alternative asset classes and can be expected to rise.
Another long-term trend that Lee believes bodes well for crypto is the coming of the millennial generation. Today, the average millennial is about 26 years old. Just as a basket of consumer stocks held since the baby boomer generation would give a 12x return today, a basket of internet stocks held since Generation X would give a 16x return, we would possibly see a similar correlation between the millennial generation and the crypto space. This suggests that the crypto is a long term play as an asset class.
2. Blockchain and crypto still have use cases for underserved markets
While the blockchain and crypto industry is has grown, it is still struggling to achieve mass market use. Therefore the topic of future blockchain and crypto mass adoption was also a hot one at the event.
When asked when they believed mass adoption of blockchain would happen, the views were diverse, with some suggesting several decades to some even saying it could happen in the next 2 years!
Regardless, Jon Malach, Co-founder of CryptoCurrencyNews.com and Advisor to UBuck Technologies also had his take on the topic. According to Malach, 83 million North American consumers continue to be underserved and have no access to mainstream financial services at all at the moment while. 63% of North American millennials today have no credit cards either. Merchants in the fields of online gambling, marijuana, and e-sports, have also been at the forefront of adopting crypto. What’s stopping corporates from other industries with regards to blockchain right now is that they have no coherent strategy for it. Bridging the gap from building the technology of blockchain and getting it to the customer is also a challenge for many of them.
3. Stable coins could be key to making blockchain and crypto mainstream
Similarly, stable coins were also highlighted as possibly key to making blockchain and crypto mainstream. For those of you who are unfamiliar, a “stable coin” is a cryptocurrency that is pegged to a stable asset,which could be something like gold, silver, or the US dollar. Such an arrangement thus keeps volatility at bay, encouraging practical usage as consumers do not have to be afraid of holding a currency that fluctuates greatly in value.
Malach commented that North American consumers tend to lend their credibility to corporates and their actions are heavily swayed by external talk. Therefore, when a huge bank like JPMorgan launched its JP Morgan COIN last month, consumers would all start to take note and follow suit into the crypto market.
While opponents of stable coins might critique to say that the pegging of the act of pegging stable coins to a stable asset that is centrally distributed, undermining the fundamental principle of decentralisation in blockchain, proponents argue that they are still distributed in a decentralised network and therefore still true to its nature.
4. Public education and content is paramount too
There was a common consensus that public education was key to encouraging greater adoption of blockchain and cryptocurrency as well.
Former Bloomberg anchor and current founder and CEO of Forkast News Angie Lau, likened the volatility of the crypto markets to the A-share market in China, which have seen similar ups and downs and made up mainly of retail investors.
As mentioned by Malach above, Lau reiterated how retail investors are particularly swayed by external sentiment and news sources, as many might not have a deep understanding of blockchain or the markets and are only in it to make a quick buck.
Misleading or sensational publications would thus create lots of unnecessary stir, loss and distrust. Channels publishing information about blockchain and cryptocurrency should therefore be responsible in playing their roles as better stewards and seek to provide informed and educational content.
5. Investors are generally shying away from ICOs
With the downturn of the crypto market and slowdown of ICOs, the relevance and future of ICOs as a fundraising and investment channel was also a hot topic.
While ICOs are not going to off the table any time soon, the general consensus and vibe is that ICOs are now regarded with greater caution. This was highlighted in particular by a panellist of investors during the How VCs Navigate Investment Opportunities in 2019 which comprised of Aleksei Antonov from Suicide Ventures, Sabrina Tachdjian from Unblock Ventures of LINE Corp, Haoren Yu from Fission Capital, and Jason Fang from Sora Ventures. It was evident through the presentation that VCs with a more traditional stance towards investments were hedging and limiting their ICO bets with a portfolio more heavily weighted towards traditional investments. Also, a common theme surrounding ICO investments was that the focus ought to be on their belief in the value, feasibility, business model, and execution ability of the team behind the ICO projects.
6. Don’t overhype STOs
As the buzz around ICOs die down, security token offerings (STOs) are a hot topic in the blockchain sphere these days and it was naturally brought up many times during the event.
Similar to ICOs, an investor is issued a crypto coin or token when they invest.The difference lies in that cryptocurrencies such as bitcoin or bitcoin cash are payment tokens that do not have an underlying asset. Investing in security tokens, on the other hand, represent an investment contract on an underlying investment asset that generate profits for their holders like stocks, bonds, funds and REITs. They may also pay dividends, share profits, and pay interests.
Because of the difference in nature, STOs will also face more compliance and regulatory governance unlike the less regulated ICOs, offering a somewhat safer investment option. As more jurisdictions step up to allow regulated STOs, it is no wonder that many have jumped onto the STO bandwagon.
However, many speakers have warned not to overhype STOs. Whether they are ICOs, STOs or IPOs, they are all but different means and avenues of raising capital for projects. Overhyping them would thus lead to unwanted speculation and bubbles that might lead to a crash again like the ICO and crypto bubbles.
Were you there as well at the Hong Kong Blockchain Week? If yes, do let us know what you think of it!