Blockchain, cryptocurrencies, Non-Fungible Tokens (NFTs) are among the hottest and latest technological topics globally. There’s no doubt that the world as a whole is beginning to shift into a new era fueled by innovation that was brought on from digitalisation.
The concept of these technologies were probably only a part of one’s imaginations even up to 20 years back but the fact that it is becoming a reality means there are a lot of new opportunities to look out for in the market.
Just like everything else, there needs to be a better understanding of things before you make a jump into the industry. One should not just blindly leap into something that they are not entirely sure of, especially when it comes to financial investments because money doesn’t grow on trees after all.
During a recent talk titled ‘New Opportunities With NFT and Cryptocurrencies’ organised by Money Compass Media, the speakers invited touched on some happenings in the crypto world.
Kicking off was speaker Effendy Zulkifly, co-founder of Crypto Valley Malaysia and CEO of Blockworq Sdn Bhd, who spoke on the latest trends for Blockchain and Finance Technology (Fintech) that are important to note.
1. Transitioning into eco-friendly consensus mechanisms
Cryptocurrency mining is one of the methods an individual can obtain cryptocurrencies. Taking the example of the hottest cryptocurrency Bitcoin, it uses a model known as the proof of work (PoW) consensus mechanism.
A simple way to describe the consensus mechanism is that it is the rules that everyone in the crypto world agrees to when it comes to updating the blocks of transactions known as the blockchain. Bitcoin has a decentralised finance (DeFI) ledger that is updated by the crypto miners. These individuals need to be able to update the ledger for verification and they must provide answers, or proof, to specific challenges.
Due to the complexity of solving these challenges, it takes a lot of computing power and electricity. Some would argue that PoW isn’t so effective since it takes a lot of energy to create random guesses in order to solve the challenges.
Effendy reported that the act of crypto mining has contributed to illegal activities particularly electricity theft. Backed by statements from Bernama, Malaysia had recorded over power loss totalling RM2.3 billion over four years since 2018.
PoW also tends to create a lot of by-products especially since the mining rigs typically would last only for a few years.
In current times, as the world population is trying to transition into more eco-friendly methods, a concept known as Proof of Stake (PoS) is starting to gain traction.
Effendy explained that PoS is a blockchain technology that could be used to assist in lowering carbon emissions. The famous blockchain platform known as Ethereum is also a rising star within the crypto world due to its crypto (Ether or ETH).
According to him, ETH is intending to change its PoW mechanism into PoS, a change that Ethereum confirmed recently. The PoS Ethereum will be known as Ethereum 2.0 and the move has analysts optimistic on the price particularly on long term.
Less energy and less requirements needed to obtain the crypto means lower cost and increase in the amount of people venturing into the crypto world. Effendy also feels optimistic that the change to PoS is a good move for the industry.
2. Central Bank Digital Currencies (CBDCs)
COVID-19 has caused the world to rethink many strategies and policies and among them would be Bank Negara Malaysia’s (BNM) intent on speeding up their research into CBDCs.
CBDCs are recognised digital tokens issued by the central banks which are like cryptocurrencies.
Effendy explained that before the blockchain solutions were adopted, cryptocurrencies seem like an unrealistic pipe dream but it’s becoming more of a reality.
El Salvadore is the first country to actually adopt cryptocurrency as legal tender. Although Malaysia’s Ministry of Finance is saying they have no immediate intentions to adopt cryptocurrency as legal tender in the parliamentary meeting in March, the ministry is not refuting that CBDC has the potential and that further research is needed.
Previously, BNM also announced that Malaysia is collaborating with several other countries like Singapore, South Africa and Australia in a prototype known as Project Dunbar. This is an experimental multi-CBDC platform which would allow for the involved countries to perform cross-border transactions at high speed.
Effendy believes that further study into CBDCs could possibly result in BNM creating their own cryptocurrency and that this is just a start of how CBDCs would be established in Malaysia.
3. Using blockchain in manufacturing industry and tracking of vaccines
The manufacturing industry is coming up with solutions utilising blockchain. Based on a research by PricewaterhouseCoopers (PwC), 84% of manufacturing executives globally reported they had involvement with blockchain. This was from a survey in 2018.
The survey showed that the industrial products and manufacturing sector is tied with the healthcare industry when it comes to being industry leaders in blockchain with number one being financial services.
Blockchain being used as a solution in the manufacturing industry typically targets the long-term problems that the industry has faced. This includes monitoring supply-chains, ensuring validity and origins of materials, quality assurance, asset tracking and the list goes on.
Locally in Malaysia, blockchain is also used for Halal tracing, something which Effendy was personally involved with.
According to a statement published on New Straits Times, using blockchain, also known as the distributed ledger technology (DLT), allows for the Department of Islamic Development (JAKIM) to trace proper origins of food sources to ensure they are Halal from step one and hopefully eliminates fraudulent Halal claims from unscrupulous people.
Meanwhile, Effendy also talked about blockchain being used for vaccine tracking in Malaysia and also around the world particularly after COVID-19.
In January this year, Science, Technology and Innovation Minister Datuk Seri Dr Adham Baba, said that vaccine certificates in the MySejahtera app have blockchain technology that makes it impossible to copy and duplicate.
A contributor on Forbes also formerly mentioned that the decentralised and encrypted nature of blockchain makes the information stored on the ledger really hard to be tampered with and thus is a great solution to ensuring someone’s vaccination status is legitimate.
4. The NFT hype is real
Since 2021, NFTs have been a trend and its popularity continues to balloon even up to now.
Effendy said that March 2021 recorded a historical moment in the NFT community as a token was sold for US$69.3 million at British auction house, Christie’s.
The artist known as Beeple minted the NFT which he titled ‘Everydays: The First 5000 days’ and since then, NFTs have been the talk of the world, Effendy said.
When explaining it, Effendy said that NFTs are not limited to art pieces and even now, there are increasing numbers of play to earn games where you will be able to get NFTs such as Axie Infinity.
According to the Axie Infinity website which has a guide on how to play the game, players are able to battle, collect and raise Axies – fantasy creatures with special abilities and classes.
Players can trade these Axies with ETH with some the developers recording an Axie being sold for 300 ETH in November of 2020. At that time, it was valued at US$120,000.
Applying NFTs into games is just one way of innovating the games industry where in-game items could possibly be exchanged for other assets in the future.
5. The rise of the Metaverse
The term Metaverse became a focus after Facebook CEO Mark Zuckerberg started to talk about it. Although the whole concept of Metaverse is still not really fleshed out, what we know now is that it is a virtual reality (VR) or augmented reality (AR) world that as the name suggests, is not really in the physical world. It is still a complex idea which is hard to put into words.
An article by The Verge explained that the Metaverse currently does not have a real definition but it is possibly a network of 3D worlds focused on social connection.
Like in the book and movie ‘Ready Player One’, typically the Metaverse offers a new lease on life.
Effendy that you could have a second life in the Metaverse.
Albeit that there is still much to learn about the Metaverse, Effendy says that tech companies like Facebook and Microsoft getting involved in it means that the Metaverse will be big when it comes to fruition.
He also believes that blockchain, NFTs and cryptocurrencies will all be part of the up and coming Metaverse.
All these are part and parcel of an ever evolving innovative landscape within the technological world.
Join our Telegram group for the latest updates!
Read more: Fintech solutions set to enable growth of Malaysia’s Islamic capital market
Discussion about this post