Singapore’s Blockchain Ecosystem - An Industry Report

Blockchain is rapidly becoming the key to managing and monetizing large data sets. Singapore has become a magnet for this new wave of innovations, showing how Blockchain-based applications can transform industries—as long as the right policies and enablers are in place.

We live in an information age, where data is fast becoming the new oil. The increasing volume and detail of information captured by enterprises, the rise of multimedia, social media, and the Internet of Things will fuel exponential growth in both the stock and flows of data. But like oil before it, data is useful only because of what we can do with it. Just as the invention of combustion engines unlocked the value of oil during the first industrial revolution, how exactly big data can be managed and monetized will be critical to productivity and innovation in this Fourth Industrial Revolution. Blockchain and distributed ledger technologies (DLT) like smart contracts are the combustion engine for this new industrial age.

ConsenSys examined the blockchain innovation landscape in Singapore across three broad domains—finance, healthcare, and smart solutions. The report explores various case studies in each domain to illustrate how blockchain is being used to create value. For example, licensed securities exchanges in Singapore are using blockchain to create liquidity in the private markets. As companies refrain from public offerings to pursue longer private life cycles, the need for capital efficiency, and liquidity in private markets also becomes more pressing. Harnessing big data in the public sector has enormous potential, too. Decentralized patient records on the blockchain can offer greater security against data breaches, as well as faster processing of insurance benefit claims. The research offers three key insights.

1. Singapore possesses a regulatory environment that has been consistently pro-enterprise, and supportive of emerging technologies like blockchain. For over a decade, Singapore has ranked among the top three countries on the World Bank’s Ease of Doing Business Index. Generous government grants exist to encourage companies to adopt new technology and expand globally. The Singapore Government also launched the Smart Nation Initiative in 2014 to create solutions that will change the country using infocomm technologies, networks and big data.

Additionally, the Monetary Authority of Singapore actively encourages experimentation by partnering with private industry in experimenting with cross-border payments using blockchain and distributed ledger technology. OpenCerts by the Government Technology Agency (GovTech) and IMDA’s Blockchain Challenge are other examples of the Singapore Government taking a lead on exploring the use of emerging blockchain technologies for practical use cases. As early as 2016, the MAS established a regulatory sandbox to enable Financial Institutions (FIs) and other companies startups to experiment with innovative Fintech solutions in an environment where actual products or services can be offered to users within a well-defined space and duration. Innovators in the regulatory sandbox stand to enjoy relaxed regulatory requirements which they would otherwise be subject to. Singapore’s transparent, open and forward-looking regulatory strategy of “running alongside innovators” balances the need for regulatory oversight while embracing the upsides technological advancement.

2. There are three broad ways in which using blockchain can create value. Firstly, blockchain’s distributed ledgers allow for different stakeholders in a value chain to participate, and interact on a harmonized ledger. For instance, hospitals and insurance companies can have access to common database of patient records to verify, and instantly process insurance claims. Second, as organizations create and store more transactional data in digital form, blockchain technologies’ ability to maintain transaction histories can provide performance information on everything from product inventories to counterparty risk in debt markets. The ability for marketplaces to monitor themselves opens new possibilities for reducing risk and identifying performance gaps. Lastly, blockchains can be used to further enable the fractional ownership of assets deeper and more extensively than what traditional capital markets have been able to do.

3. Collaborations are the key to competitiveness in two ways. Firstly, blockchains can allow better vertical integration between different firms within any given value chain, as in the case of logistics. Horizontal collaborations also allow competitors to more easily transact with each other like in the case of trade finance. Secondly, collaborations between incumbents and newcomers are gaining popularity. Contrary to the early expectations of many blockchain enthusiasts, incumbent firms in each sector today are more receptive towards adopting new technology to avoid disruption. Large banks, as well as private companies are looking for ways to partner with solutions providers to improve their operational efficiency through the use of blockchain technology. Established firms provide market access and a testbed for smaller, emerging innovators. These partnerships are critical for both incumbents to stay competitive, as well as for new tech companies to gain market traction.

Read more about Singapore's Blockchain Ecosystem in the Industry Report.