The race to which nations will become the front runner blockchain nations is heating up. A blockchain nation is synonymous with a country that has most blockchain based development taking place because of the myriad of factors, the major one being regulation. The idea is to ensure shift of power from traditional technology that have propelled major technological growth in the last few decades. For example, Silicon Valley is technological hot spot whereby some of the world’s mightiest technology companies were born because of suitable conditions that allowed their growth. Blockchain, being largely new and in early stages of development could follow a similar trend whereby locations that are friendly to clusters of blockchain development taking place are most likely to receive major attention and growth.
Majority of activities around blockchain are being done outside traditional technology hot spots. For example, Asia now has the upper hand in terms of cryptocurrency related activities such as; issuance of new coins, number of exchanges and amount of money raised. Japan, Hong Kong, and South Korea are leading the rout. The largest chunk of global crypto-investors come from the region.
In 2017, we saw billions raised through a new model of fundraising, Initial Coin Offering (ICO) . It is possible that the model could dynamically change the way startups in general all over are funded as we witnessed in the recently concluded #ICOSUMMIT2018 in Nairobi Kenya. With the decentralization of business funding and talent hubs are emerging all over the world in the race to become blockchain hotspots/hubs.
Governments, developers, entrepreneurs, investors, and enthusiasts know very well what this could mean for creating opportunities, spurring innovation and economic development. Some of the governments are putting steps, amid uncertainty in regulation, to ensure that their countries become the hotspots for blockchain based projects. Such areas will attract more talent, funding and viable blockchain projects.
Read about the top crypto and blockchain websites from Africa.
What are the ingredients for a blockchain Nation?
Cluster of Crypto and blockchain talent: this can start with existing personnel developing projects as well pipelines for attracting and developing talent. It is much easier for people with similar goals to work together and achieve success faster than people distributed in different locations. It creates synergies, knowledge flow and excitement that is crucial for growth. Already such is happening in Nairobi as it hots up to become a crypto hub, with activities such as EOS Nairobi developer classes as well as others in locations such as Bithub Africa.
ICO/blockchain nation sandbox: With a regulatory sandbox, authorities can relax certain requirements while startups are experimenting and testing their business model and scaling it. Authorities then monitor closely the developments and give swift feedback and modifications are made based on prevailing conditions that ensure all involved benefit. Since most of the blockchain activities operate in a grey area, an all-inclusive regulatory framework that encapsulates all startups under one roof would go a long way in setting the intention straight in supporting innovation. A regulatory sandbox would spell out aspects such as research, minimum requirements and other consultations that would guide all blockchain based activities within a certain jurisdiction. Already this is happening with recently announced blockchain task-force in Kenya with the aim of coming up with favourale blockchain roadmap for Kenya. Already the task force has started soliciting feedback from the community.
Verified online identities: it is very difficult to comply with KYC (Know your customer) requirements that companies are required to abide by if the majority of the citizens do not have verified online identities. Therefore blockchain startups end up using a lot of resources in order to verify identities of people they are dealing with. A government based online database that is hacking-proof would help blockchain startups abide by KYC and AML requirements at a faster rate. For example, in most countries in Africa, the national ID card is linked to nothing digitally and does not prove anything because all data is offline. Some of the online processes especially e-commerce related can be verified through simple ID card identification but this is not case because of lack of verified online identity.
What’s happening in Other Countries?
Estonia:: Towards the end of 2017, the government announced an Estonia based cryptocurrency called ‘Estocoin’. The coin would serve as a community token for Estonia’s e-residents. The idea is to allow anyone to become a ‘digital citizen’ of Estonia by simplifying the process of business registration in the country using Estocoin.
Malta is one of the countries positioning itself as a blockchain country by coming up with the broadest set of regulations in the industry so far that govern how brokerages, exchanges and asset managers operate. Some of the aspects of the regulations are: legal certainty, tax policy that permits international companies to pay as little as 5%. Subsequently, Binance, one of the largest crypto exchanges says it is planning to relocate its operations from Hong Kong to Malta and hire up to 200 people. The recently, Launched Neufund is also relocating to Malta saying that they are impressed by Malta’s vision for creating a blockchain ecosystem and would move there in support of progressive-thinking EU member state. Switzerland is a traditionally low tax country and it will be interesting to see how it embraces blockchain with hype around the so-called crypto valley in canton of Zug.