'Smart contracts, trustless transactions' on the menu

HONG KONG - If the internet is an information highway without memory, then blockchain technology will be the information highway associated with memory, says Phang Yew Kiat, chief executive officer of Chong Sing Holdings FinTech Group.

Chong Sing, which is listed on the Stock Exchange of Hong Kong’s Growth Enterprise Market board, is growing its blockchain research and development focusing on providing better financial services to small and medium-sized companies, merchants and individuals on the Chinese mainland and across Asia.

As an online lending and payment platform, Chong Sing began its “blockchain exploration journey” some three years ago. As of June this year, the group’s blockchain segment had recorded revenues of 430.5 million yuan (US$63 million) for the first half of 2018, based on blockchain transaction verification, according to its interim results.

Transaction verification is common in today’s bitcoin ecosystem. It means that when a person sends a bitcoin, the information on the transaction that’s posted on the blockchain and once verified is transparent to everyone and cannot be rewritten or changed.

“The whole blockchain technology has many different variations. But, one of the concepts that everybody likes is the memory of the information highway,” Phang told China Daily. “The term we use is immutable.”

“Looking back at the digital history, all of our transactions have relied on ‘trust parties’, such as banks, credit agencies, lawyers and other intermediaries, to keep records of our financial information and transactions,” he said.

However, by introducing the concept of “smart contract”, which brings together on the internet two strangers who’ve never met before, it will be possible for investors to enjoy “trustless” transactions, said Phang.

The Hong Kong-based financial services provider has bet on blockchain technology service providers Bitfury Group and Chainup through convertible bonds in its portfolio, which account for 0.24 percent and 0.15 percent of the total assets, respectively, according to Chong Sing.

At present, markets tend to associate blockchain technology with the ups-and-downs in cryptocurrencies, with up to 80 percent of those who are familiar with the technology being speculators in digital currencies. But, Phang believes that only people who really know how to use the technology to do something good will turn out to be the eventual winners.

“Cryptocurrencies are equivalent to the information highway in blockchain. You can drive a big truck called bitcoin; you can drive a small truck called ethereum, or you can even drive another small tiny bicycle called ripple. Which one is good, we don’t know,” Phang said. “But, the fact is that the information highway with memory is good.”

Creating the right application of blockchain at the right time and with the right infrastructure is what society calls for, he added.