What is Blockchain?
Blockchain is a shared and immutable ledger or a distributed database that can facilitate the process of tracking transactions of tangible and intangible assets among the nodes of a computer network. It is famous and known for maintaining secure and decentralized records of transactions. With Blockchain, the digital information can only be recorded or distributed but not edited. This prevents or greatly increases the difficulty for hackers to alter, or steal the digital information.
Overview of Blockchain Market
Blockchain in Vietnam
Vietnam is one of the top five leading countries in the global Blockchain industry with more than 10 innovative startups in the field that have a capitalization of over USD 100 million. For example, Axie Infinity by Vietnamese Studio – Sky Mavis, has gained more than 100,000 gamers or users with a market capitalization of approximately USD 4 billion.
Furthermore, the Vietnam Government also forecasted that 40 million jobs will be created by the Blockchain Technology and approximately 15% of the economic infrastructure will be based on the Blockchain Technology System by 2030. 7 out of 200 companies that are also based on Blockchain technology globally are founded by Vietnamese people.
Vietnam has a bright future ahead with Blockchain Technology, according to the US-based Globe Newswire, one of the world’s largest newswire distribution networks. Moreover, according to the Vice President of Vietnam Blockchain Association – Huy Nguyen, he said that Vietnam has become an emerging market for the Blockchain due to its achievements in Digital Transformation and Digital Economy.
Cryptocurrency Market in Vietnam
Finder surveyed more than 42,000 people across 27 counties and found that Vietnam has the highest adoption rate for cryptocurrency, with about 41% of Vietnamese respondents having purchased cryptocurrency at least once and about 20% of them having bought Bitcoin before.
Vietnam is also ranked 10th on the Global Cryptocurrency Acceptance Index, which indicates the openness of Vietnamese people to Blockchain Technology.
Global Blockchain Market
In 2021, The Global Blockchain Technology market size was valued at USD 5.92 billion, forecasted to grow at a Compound Annual Growth Rate (CAGR) of 85.9% from 2022 to 2030, and reach USD 1,431 billion by 2030.
The significantly high CAGR is due to an increase in Venture Capital Fund for companies with Blockchain Technology. Furthermore, the demand for Blockchain Technology is also increasing especially in Financial Services as it can ensure secure and efficient transactions.
Examples of Corporates with Blockchain Technology:
- Core Technology Center by Viettel, uses Blockchain Technology in Personal Health Record Management. They aim to build a national database of health records of citizens in Vietnam with the technology. They utilize Blockchain to facilitate the interaction and coordination between patients, Medical Facilities, Hospitals, pharmacies and other medical-related Ministries and Agencies, to improve transparency and to build trust between each party.
- Vietcombank uses Blockchain Technology to develop a Customer Gratitude Program – VCB Rewards. VCB Rewards Program allows customers to look up their points accumulation history and redeem their gifts at any time, as the entire process will be automatically updated and stored on VCB Digibank.
- MB Bank
- MB bank utilizes Blockchain Technology to commercialize the Letter of Credit (LC) service. The entire documentary LC business process, from issuance to presentation, will be able to now fully implemented in the Blockchain-based LC service. This Technology also helps to digitalize the products and services for import-export activities and optimize the customer experience.
Challenges of Blockchain
1. Limited Interoperability
There are many different Blockchain networks in the market, and information in each Blockchain network is unable to be shared or accessed across, without intermediaries. According to the Co-Founder of a Blockchain company. SotaTek – Nguyễn Đình Phúc, as each Blockchain network uses different encryption methods, transferring one data or information from one to another securely is very difficult. However, some developers or companies around the world like Polkadot and Cosmos see the problem and are determined to develop a solution to connect multiple Blockchain networks.
2. Negligence and Poor Practices
Blockchain Technology is known for being safe and secure, but when the codes will be open to the public in the Blockchain network, this creates a potential risk for the hackers to study the codes to find exploitable vulnerabilities. For example, about USD 625 million worth of cryptocurrency was hacked from the Axie Infinity in March 2022.
However, according to the CEO of Malaysian Block Company, Blockline and Chairman of ACCESS Malaysian Blockchain Association – Harpreet Singh Maan, Blockchain is still one of the safest technologies for conducting business. These incidents usually happen because of negligence, poor code practices and bad security procedures.
3. Lack of Regulations
Although the adoption of Blockchain Technology is increasing in Vietnam, there is still a lack of a regulatory framework to support and empower more mainstream applications in Blockchain, according to the ASEAN Deputy Chairwoman of Global Impact Fintech Forum – Nicole Nguyễn. However, Maan also mentioned if the regulation is not strategically structured, it might hinder the development instead.
According to the Founder of Vietnam Real Estate Marketing – Mr. Phan Phuc Thanh, without proper regulations, many Blockchain Enterprises are unable to develop full Blockchain applications, as usually, only a few parts are legal in Vietnam. These Blockchain Businesses would choose to go abroad to set up their companies instead.
4. Lack of Human Resources
One of the challenges to the rapid development of the Blockchain Field in Vietnam is the lack of talents who have sufficient knowledge and skills to utilize this technology, according to Trịnh Ngọc Đức, the director of Meta DJINN. He mentioned that this problem might be due to a lack of training programmes for Blockchain in Vietnam.
Mr. Giang from AkaChain has the same view. He mentioned that one of the biggest difficulties in the Blockchain Industry is to train their staff to be proficient in utilizing the technology.
According to the CEO of JobHopin – Kevin Tùng Nguyễn, the existing talents are only able to satisfy about 15 – 20% of the recruitment demand in this fast-growing field.
Hence, this causes the cost of developing a Blockchain-related application to be usually 5 to 10 times more than a normal application, which is around USD 15,000 to USD 60,000 on average.
However, according to the representatives from FPT (Financing and Promoting Technology), the novelty of Blockchain today is similar to the novelty of the internet in the early 90s, when most Vietnamese people were new to the internet. Within 25 years, Vietnam has grown to be one of the top 20 countries with the highest number of internet users. Hence, the lack of human resources to join the Blockchain industry seems to be only a problem in the short-term.
Opportunities for Blockchain
1. Huge Potential in Vietnam
According to the Director of Government Cipher Committee – Ngo Duc Thang, the Decision No. 2813/QD-BKHCN issued by the Ministry of Science and Technology in 2018, and the Decision No. 2117/QD – TTg was signed on 16 December 2020 by the Prime Minister of Vietnam, the Blockchain will be one of the prioritized digital technologies in Vietnam, ranked 2nd after Artificial Intelligence (AI), that mainly use for research, development and application for the 4th Industrial Revolution.
According to the CEO of Infinity Blockchain Lab – Junya Yamamto, although the legal framework of Blockchain, especially in the Finance and Banking sector is not well-developed yet, there is a great potential for Blockchain Technology in the Vietnam Market.
According to Director at Binance SEA – Ms. Lynn Hoang, Vietnam is becoming one of the frontrunners in the global Blockchain Industry and Vietnam is also now one of the top 10 countries globally on Binance for various aspiring Blockchain projects.
When the Vietnam Government has listed Blockchain as one of the prioritized digital technologies, the development of regulations to support Blockchain startups and companies should be only a matter of time. Hence, this shows that there is a high potential for the Blockchain Technology market in Vietnam.
According to Ta Viet Dung from the Ministry of Science & Technology, there are more than 40,000 graduated and trained ICT engineers from more than 290 universities in Vietnam every year. As the universities start to realize the potential of Blockchain and start to develop training courses, these talents provide an opportunity for Vietnam to fully exploit the field of Blockchain Technology in the future.
Due to the labour shortage in the Blockchain Field currently, the engineers in the Blockchain industry have one of the highest salaries in the IT industry, according to a survey done by VietnamWords with more than 1,000 people in Vietnam.
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