The New Silicon Valley — Asia’s Time to Shine
Our world has been shaped by numerous revolutions throughout history. The documentation of humanity and early human history dates back to antiquity, providing a glimpse into ancient civilizations. Subsequently, mankind has witnessed significant eras such as the Middle Ages and the Dark Ages, as well as transformative periods like the Renaissance. The course of history was altered once again with the advent of the Industrial Revolution, followed by the Dot Com Revolution, which brought about path-breaking changes.
Today, we stand on the cusp of yet another revolution, one that is poised to reshape our world one more time (hopefully, for the better). We find ourselves on the threshold of a Web 3.0 world, marked by its perceptible and conspicuous beginnings. It is the age of individual ownership of data, the era of decentralization.
But surprisingly, it is not Europe or North America that is leading this game of data privacy and immutability, unlike the other revolutions. We have a new dark horse in the house. It is Asia.
Where does the Achilles Heel of Web 2 lie?
It is contemplated that hiding under the garb of cosmic inflation and mass layoffs is the end of the golden era of Silicon Valley and that is speculated to mark the subsequent end of Web 2.0 — the current centralized version of the internet.
But hasn’t this discourse always been there? Wired, a monthly American zine, published a piece on October 18, 2008. Although this was followed by the great recession of 2008, it is important to note that the first ever blockchain and cryptocurrency, Bitcoin (BTC), was also invented around the same time. So, yes, this discourse has sort of been there, but experts today speculate that the last nail in the coffin of Web 2.0 is nigh.
Now it may be argued that data collection used to take place even before the advent of Big Data. If we talk about America, it is not that the likes of Lotus MarketPlace were not protested, for privacy issues, back when the internet did not exist. So, why this discomfort and anxiety now?
Well, realistically, since the incident of Cambridge Analytica, people have grown cautious of how their personal data are being used, handled, and mishandled. Today, 75% of people have little to no trust in the way their data is being shared and 63% of people find connected devices ‘creepy’.
It is both hysterical and concerning to think that a social media platform could have so much power to shape and mold your opinion. The amount of influence cannot be quantified. However, it is not just consumers like you and me who are in a state of paranoia. Governments have already started to regulate personal data. The EU, after the Cambridge Analytica scandal, introduced a law, General Data Protection Regulation (GDPR), in 2018. While the law has different clauses and it has gained some traction, it essentially puts power into the hands of the consumer. No company or corporation should have and can have the right to steal data and mishandle it.
Do we bid adieu to identity data breaching after Web 3.0?
Unfortunately or fortunately, while governments were trying to maneuver their way through these privacy breaches and data stealing, a new internet revolution was underway. Web 3.0 started to pick up the pace around 2018 regarding various types of blockchain-based applications. Coined in 2014 by the co-founder of Ethereum, Gavin Wood, the term Web 3.0 became a buzzword over time. It roughly translates to blockchains, cryptocurrency, decentralized gaming, finance, and NFTs (Non-Fungible Tokens).
Web 3.0 started to penetrate different industries. From supply chain management to pop culture to video gaming, it had it all. Multiple currencies with each user with their own separate wallet. It became a whole new ball game. Truth be told, Web 3.0, over the course of time, has turned out to be almost everything that Web 2.0 is — a space to create, collaborate and build — and everything that Web 2.0 is not — secure, immutable, and safe.
This is not to say that the new Web 3.0 space has not had its own fair share of challenges. There have been data breaches and loss of capital. However, it is still a budding and developing technology. But when and how Web 3.0 will tread towards mass adoption and self-perpetuity is not the question here. It is more about who will lead this development. Who is going to sit on the virtual throne and rule it?
Blockchain enthusiast and Web 3.0 aficionado Asians
Documentaries tell us a lot about a society’s realities and truth. When the Netflix documentary, Singapore Social, featured a female blockchain entrepreneur, it was a clear indication that for Asians, blockchain is no longer a hoax. Instead, it has become a part of their social fabric.
The Asia-Pacific region has a lot of value and importance attributed to Web 3.0 startups and applications. As per a survey, Future Enterprise Resiliency & Spending, conducted by International Data Corporation (IDC) in the Asia-Pacific region in October 2022, 89% of the firms think that Web 3.0 is important to regional enterprises.
Moreover, 83% of firms believe that DAO (Decentralized Autonomous Organizations), an alternative to Web 3.0 organizations with little to no hierarchical structures and power dynamics, is also important to their industry ecosystem strategy.
IDC also pointed out that there is a gap between the buzz and the implementation of blockchain technology and Web 3.0. While that is true, it is important to reiterate that Web 3.0 is still rapidly evolving. Switching to a new working system is never a walk in the park. It requires big enterprises and firms to take baby steps to reach there. However, the positive sentiments are indicative of an upward development trajectory in the Web 3.0 space in Asia.
Now, you may argue that a similar stance would be found in the responses of American and European firms as well. Well, that is true to an extent only. A recent survey conducted by Casper Labs and Zogby Analytics amongst 603 business enterprises within the UK, America, and China showed that 90% of the businesses are positive towards deploying blockchain technology in some capacity. Moreover, 87% planned to invest in blockchains in the year 2023. However, these numbers were more pronounced in China, yet again an Asian country. Moreover, when it comes to consumers then as per Pew Research, 75% of Americans have heard of cryptocurrency but they are apprehensive about its safety and reliability.
Thus, the argument that similar sentiment regarding the adoption of Web 3.0 is found in Europe, and the Americas does not stand completely true. Asians are seemingly and proactively more enthusiastic about, more invested in, and more interested in Web 3.0 technology. To give an example, as of today 55% of the gaming population is found in Asia and it is to dominate 80% of Web 3.0 gaming. This tells a lot about the potential of the burgeoning technology in the Asian market and its sundry use cases, leading to natural mass adoption.
Blockchain regulations in Asia vs America
Bill Gates (2021) once wrote that policies are designed to drive research out of the lab into the market and regulations create markets and make it easy for research to be deployed at scale.
There is no doubt that Asian governments tend to be more welcoming and open to crypto regulations. Thus, it is not just the firms or investors, or consumers who are into Web 3.0. The governments of Asian countries are equally supportive of it. This is also the key difference between American, European, and Asian governments.
Currently, there are 320 million crypto users and of these, 130 million are Asians. Moreover, of the 20 countries with strong adoption of blockchain technology, 7 of them belong to the Asian region.
In one way or another, almost all Asian countries are utilizing some aspect of Web 3.0 to either evade sanctions or develop a central bank digital currency, as is the case with Bhutan partnering with the famous Ripple blockchain (XRP). The truth is that they vary in their severity across different Asian countries. Countries like Singapore, the UAE, and India are especially ahead in the game.
Blockchain regulations in America
As far as cryptocurrency and blockchain regulations are concerned in the case of America, there has not been extensive rulemaking. However, there are several bills, such as the RFIA (Responsible Financial Innovation Act), around the clarity of the emerging sector. The case with the USA is that there are 50 different states. Each state has its own legislation and set of laws. Some states like Hawaii and New York have very strict blockchain regulatory laws. Whereas states like Nevada and Texas are crypto-friendly.
It was in October 2022 that the Biden government in an executive order shared that it wants to support the development of cryptocurrency and restrict its illegal uses. The US federal government, however, is still in the process of showing “interest” in regulating cryptocurrency and domestic laws.
While the recent steps by the Biden government are surely positive and determinant, the USA still has a long way to go compared to Asian countries, some of which have already passed nationwide crypto laws.
Asia’s monopolization of Web 3.0 — the ulterior motive
There are currently 600 blockchain companies present in South East Asia. It is true that major blockchain research work still takes place in the US, but the practical implication of that research and the capital are still in Asia. If America has ideas, Asia has execution and implementation. Moreover, in Asia, the scale work has majorly been done in the categories of DeFi and P2E. In fact, the top blockchain conferences today also take place in Asian countries such as Japan, Turkey, India, UAE, Thailand, and Singapore.
Now there is no doubt that for years, many Asian countries have been labeled different things; the third world, the global South, developing nations, etc. by big political and economic powers. The dollar has ruled the world for nearly a century since the Bretton Woods Agreement. And it is indeed exemplary to see Asian countries today grow and rise from the ashes after the Asian crises.
But are digital currencies really the tool that Asia is eyeing to leverage to break the monopoly of the bigger powers and currencies? Why exactly are blockchain and Web 3.0 more prevalent in this part of the world? There is no doubt that our world is being ruled by digital dynasties sustained by innovation empires. Recently, de-dollarization initiatives are taking place by the BRICS bloc. Indonesia, which has been involved in de-dollarization, has classified 501 and declared different kinds of digital assets as commodities and properties in June 2023. This means that these currencies may now be treated as gold.
Similarly, the Yuan has been competing with the US dollar for over a decade now. China has been leveraging neighboring Asian countries to chase world hegemony which has been enjoyed by the US for decades. It has been leading everything in the pursuit of Yuan supremacy — be it cash or cryptocurrency. And it is doing so with the help of the Central Bank Digital Currency (CBDC). China is using Yuan, a fiat currency, as a digital currency. It is a framework similar to cryptocurrencies. Digital currencies are expected to play a huge role in global trade and consequently, give a tough time to the dollar-dominated global financial system.
Project mBridge is a great example. Co-led by the Hong Kong Monetary Authority, Bank of Thailand, Central Bank of the United Arab Emirates, the People’s Bank of China Digital Currency Institute, and the Bank for International Settlements (BIS) Innovation Hub, project mBridge is a platform that experiments with cross-border exchange and transactions using the distributed ledger technology (DLT). It connects economies through CBDCs which are essentially virtual currencies. Asian countries are on their way to building a versatile and top-notch ecosystem with the help of blockchain technology. Although the CBDCs and mBridge are still in the experimentation phase, they are definitely a step towards something bigger and groundbreaking.
So, how exactly is Asia the next Silicon Valley?
Now that it has been established that Asia in general and Southeast Asia, in particular, are becoming the growing hubs of all things Web 3.0, Silicon Valley’s identity crises can only be seen to be growing deeper and bigger. Four explanations are important to show that Asia is the next Silicon Valley:
1. Asia’s young population
Secondly, Asia and SouthEast Asia have a huge young population. As per the Asian Development Bank, 34% of the population of Southeast Asian countries consists of young people. Moreover, as per the UN, over 60% of the world’s total young population lives in Asia. It is argued that the younglings understand new technologies and are already better equipped with the knowledge. When opportunities along new technological fronts arise, they specifically attract youth. Thus, they keep their respective countries ahead in the technology game. Thus, America’s depleting young population can be considered a weakness.
2. Change in the ways of getting funding
Thirdly, In 2021, the Southeast Asian Web 3.0 market alone had a market value of 193 million USD. This value is to reach some 6 billion USD by 2030 with a compound annual growth rate (CAGR) of 50%. Traditional startups raise funds via Venture Capital (VC). Concentrated capital funding is growing outdated. The Silicon Valley Bank (SVB) disaster, the biggest retail banking failure since 2008, has further added to it. However, blockchain has come up with different ways of raising capital which make fundraising easy and independent of traditional funding. A lot of money in Web 3.0 startups and firms is raised through ICO (Initial Coin Offerings), IDO (Initial Dex Offering), etc. This makes it easy for new and budding Web 3.0 startups to raise funds and grow without any geographical barriers.
3. The Fried fraud
Blockchain is inherently a game of safety and ledger technology. The FTX scandal is the total opposite of that. The fraud wrought by the FTX founder has not only hurt market sentiment but also changed consumer behavior and users’ investment strategies to a great extent in North America. With the US Securities and Exchange Commission (SEC) now filing lawsuits against major crypto exchanges, Binance and Coinbase, the tensions between the US government and the cryptocurrency sector have grown deeper. The popular exchanges have been in the limelight for not registering themselves with the SEC. The SEC also cost Ripple 200 million USD as recently as May 2023. The beef between US officials and crypto bodies is not to subside anytime sooner. This makes the future of cryptocurrency in the region dark, gloomy, and bleak. But with the US suing major crypto exchanges, major investments have migrated to Asia. Gemini and Binance are amongst some big names that have now entered the glorious Asian territories to expand. Moreover, in April 2023, Bitget, a crypto derivatives trading platform announced a $100 million venture fund to support crypto projects in Asia. Agree or disagree, it is evident that the US’s reaction towards Web 3.0 and blockchain is more-or-less that of a Luddite.
4. Job opportunities and global workforce
Lastly, Web 3.0 is said to have a deep impact on overall work connectivity and change the dynamics of the global workforce. In fact, post-pandemic, Web 3.0 hiring has doubled. All these years, Silicon Valley has had the opportunity to sit on the throne of tech innovation, fostering a diverse culture. As per Boston University, some 1,000 Indians have founded different Silicon Valley startups worth 40 billion USD. This phenomenon partially has to do with Europe and America being the symbols of success and economic prosperity. The same applies to the Chinese as well. However, with the internet world changing and innovation and capital shifting to the homelands of these people, there may not be as many Indians or Chinese, or Asians, as a whole, in Silicon Valley. This may pose yet another challenge to the tech innovation hub of the world.
Final Verdict
In conclusion, Asia holds huge stakes in Web 3.0, encompassing cryptocurrency and blockchain technologies, as the global economy and the internet undergo a swift and rapid transformation. Today, the economy goes beyond traditional elements like hedge funds and fiat currencies. The widespread adoption of modern technologies, such as Web 3.0, has introduced optimization, enhanced safety, and improved security. As a result, these innovations have exerted a significant influence on the economy. Asia has successfully tapped into the billion-dollar Web 3.0 industry, representing the new face of the internet. Thus, Asia is emerging as a potential contender to become the next major hub.
