Hong Kong’s Role in Distributed Ledger Technology
A white paper by the Hong Kong Financial Services Development Council (HKFSDC) is examining how Hong Kong can develop its blockchain capabilities to serve the region.
According to the paper, Hong Kong, with its large financial sector and its strategic role vis-à-vis Mainland China and the world, has the potential to take on an important role in distributed ledger technology (DLT). Investment in DLT would be a crucial step towards preparing Hong Kong across a broader front for a more technology-intense future.
Bitcoins are an example on how blockchain works to encrypt financial transactions. Blockchain’s proposition is of a ledger which is distributed rather than centralised. The technology allows the ledger (transaction record) to be distributed – meaning that each participant has a copy – rather than centralised, and the ability to write to the ledger is distributed as well.
In the region, Singapore is establishing a blockchain innovation centre and is eyeing a role as the Southeast Asia hub. Mainland China is focusing on blockchain for finance; the central bank has formed a team to consider blockchain as a possible technology to develop digital renminbi (RMB).
In Hong Kong, exploration of DLT has begun. The Cyberport and Science Park are providing support for technology start-ups; work has commenced on DLT proof-of-concepts (PoCs).
However, there are shortfalls in innovation and technological capability, and the all-important ecosystem is not yet functioning, said the paper. It adds that Hong Kong needs to act decisively to secure a role for itself in a DLT-enabled future.