BLOCKCHAIN GOING MAINSTREAM - HYPE OR REALITY?

Blockchain technology is being adopted by governments and companies around the world, but there are still some challenges for blockchain to go mainstream in Việt Nam, including limited interoperability, security concerns and lack of regulations, experts have said.

Blockchain is a type of digital ledger technology where data is stored in the form of “blocks” that are strongly linked together through cryptography.

Trần Thiện Duyên, CEO of Techfarm Technology JSC, told Việt Nam News that "blockchain technology is more than just cryptocurrency; it is a revolutionary way of tracking transactions".

By reducing information asymmetries and transaction costs, blockchain can help businesses, especially small businesses, overcome long-standing challenges related to scale, opacity and lack of business history, according to Duyên.

“While still in its infancy, blockchain is being adopted for a number of business uses and will likely serve a wide array of purposes in future.”

Nguyễn Đình Phúc, co-founder of blockchain company SotaTek, said many Vietnamese developers were talented and open to new technologies.

“They may soon help bridge the gap between business and blockchain technology in a short period of time. It is one of the great competitive advantages Việt Nam has compared to other nations.”

Challenges

However, one of the biggest challenges keeping blockchain from being adopted in the mainstream is limited interoperability - the ability to share and access information across different blockchain networks without intermediaries.

"There is no universal standard to allow different blockchain networks to communicate to each other, and blockchains use different encryption methods and so transferring data securely from one to another is hard," Phúc explained.

Duyên said this made mass adoption of the technology challenging, but developers around the world were trying to solve this problem with interoperability projects such as Polkadot and Cosmos to connect multiple blockchain networks.

Another problem is related to security despite blockchain’s reputation as being safe and secure. There have been several infamous crypto hacks, such as the hack to steal $625 million worth of cryptocurrency from video game Axie Infinity's Ronin network in March this year.

Decentralised finance (financial services that do not use traditional intermediaries such as banks) programmes are public and use open-source code, which is available for anyone to review.

"Hackers can study the code to find exploitable vulnerabilities and steal cryptocurrency," Duyên said.

Harpreet Singh Maan, CEO of Malaysian blockchain company Blocklime and chairman of ACCESS Malaysian Blockchain Association, said, “Blockchain is among the most secure ways of conducting business, and most of the hacks that are successful are often due to negligence, bad code practices and bad security procedures by startups/companies, and not a direct failure of the technology.”

More education on risk management and proper standard operating procedures should be provided to businesses, he said.

The lack of a regulatory framework is a hindrance as well as it plays a key role in helping blockchain go mainstream.

Nicole Nguyễn, ASEAN deputy chairwoman of Global Impact Fintech Forum, said, “Việt Nam is still taking a neutral stance on the technology itself, recognising the importance of blockchain in elevating the country’s position in the regional tech landscape.

“There needs to be a refined regulatory framework around blockchain to empower more mainstream applications in Việt Nam.”

Maan said regulatory frameworks were important, but if the regulatory regime is inexperienced in blockchain, they could hinder its development.

He proposed an open, collaborative and agile regulatory-based sandbox to help the industry evolve.

On September 23 and 24 a global blockchain conference, BUIDL Việt Nam 2022, will be held at HCM City’s Independence Palace.

Experts from Việt Nam and other countries will discuss developments in blockchain technology and the host country as an emerging blockchain hub, especially focusing on solutions to help the technology go mainstream.

Source: VNS