Last year saw cryptocurrencies explode into the mainstream.
Bitcoin was the headline-grabber, with a whole host of virtual currencies and payment-related events flying along in the slipstream. These ranged from NASDAQ announcing plans to offer bitcoin-backed futures contracts. Through to Dogecoin – a ‘joke currency’ conceived from an internet meme – reaching a $2 billion market capitalisation.
At the start of 2017, bitcoin prices were under $1,000. By the end of the year, prices were nudging $20,000 – a 1,900% increase. However, the start of 2018 has seen many cryptocurrencies’ value decline, dramatically in some cases.
Naturally, opinion is split as to whether this is a correction or a crash. Either way, the pace of change has left many analysts scratching their heads as they try to work out why.
The APAC effect
Within APAC, a succession of regulatory decisions appear to have an impact. The 1997 Asian financial crisis remains uppermost in the minds of governments and financial bodies.
China was one of the first countries in the region to take action. In September, the government banned bitcoin trading and Initial Coin Offerings (ICO).
In Australia, central bank’s message talked of Bitcoin as a ‘speculative mania’. Soon after, reports began surfacing that Australian banks were freezing accounts linked to cryptocurrency purchases.
Singapore’s central bank expressed similar sentiment. “The Monetary Authority of Singapore advises the public to act with extreme caution and understand the significant risks they take on if they choose to invest in cryptocurrencies.”
In a neighbouring street, attitudes are markedly different. Ducatus, a Singapore-based cryptocurrency firm, has opened its own café. Where ‘café life meshes with the crypto life’ and coffees and environmentally friendly goods are for sale. Payment can be made in its eponymous virtual currency or bitcoin. Cash isn’t accepted (although there is a Bitcoin ATM onsite).
Confidence in blockchain
There has been qualified support in Hong Kong, where investors are permitted to use licensed companies to buy and sell. Regulators have also asked for more clarification to help fintech startups, and support growth in areas of blockchain, AI, and ICOs.
Blockchain in particular looks set to drive innovation in Hong Kong. That’s where Deloitte, HKMA and five major banks, including HSBC and Hang Seng Bank, launched a Regional Blockchain Lab, the third in the world after New York and Dublin. This is a blockchain-based platform which will be used for financial trading.
Data centres at the heart
This enthusiasm for blockchain should be of little surprise to anyone operating in the financial services industry. Creating an open ledger offers the potential to eliminate the need for reconciliation and settlements. Along with speedier and more transparent payments. Accenture estimate blockchain technology could save investment banks up to $12 billion a year by 2025. While this study found ‘88% of Asia-Pacific respondents said they view blockchain as important or critical to the future of their industry’.
Of course, taking full advantage of these technologies requires the necessary data centre infrastructure. Because in this environment, milliseconds equal millions in profit (or loss). Analysts need instant access to high volumes of financial data, along with powerful tools for crunching and uncovering the insights buried within. Where successful high-volume, high-value trading relies on low-latency networks. The growth in blockchain and virtual currencies will only accelerate this demand for next-generation data centres.
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