Thursday, June 1, 2017

Project Ubin: Singapore's secret SGD-backed crytocurrency

We really cannot say that "ah gong" doesn't look out for us.

When I first read the article from Coindesk, I was shocked. Not shocked that Singapore would actually do it, but shocked by how quickly they got their shit together.

Project Ubin, in a quick nutshell, is basically using blockchain technology between banks and also MAS.

How can you tell this is serious shit? Well, first there's MAS. Next we've got all 3 local banks - DBS, OCBC and UOB. We have other banks that are here too. And finally we have the technical experts.

R3 helped the Bank of Canada with something related. JPM has their Quorum blockchain. Deloitte has experimented successfully with Stellar Lumens.

Why is MAS experimenting with blockchain? What benefits could it bring?

Well, I think I've mentioned them before, but here's a direct screenshot from their paper itself:

1. Disintermediate - does not require a central facility, no single point of failure
2. Secure and Private - requires no further explanation
3. Smart Contracts - ability to make complex agreements
4. Immutable - records cannot be amended, which is good for auditing
5. Real Time Settlement - immediate transactions, need I say more?
6. Trustless - 2 parties can directly transact without a trusted 3rd party

These then in turn benefit the system in a secondary way:
1) reduction of internal systems / human errors
2) better monitoring for regulators
3) no counter party risk
4) no settlement risk
5) less capital, more liquidit
6) fraud prevention

Blah blah blah, technical jargon and what not.

You want it straight and simple? Faster, safer, cheaper, better, more accurate transactions and records.

This was a conclusion of their first phase, and they are going in deeper since everything has turned out smoothly. I guess the technology is sound. It is more about the integration with the current bank's system and just having a live prototype.

If you made it this far down the post and sort of understand this and why it's such a huge improvement for banks themselves, imagine the massive effects on society if your average ah beng and ah seng had access to such technology and can make transactions with the benefits of all the above?

Maybe I can give you an example:

You want to sell an item. You meet up with the buyer and he inspects the goods and agrees to buy it. You show him a QR code generated from your phone. He scans it. 5 seconds later, you refresh your phone and you see your money has come in. You pass him the item. You both part ways.

You did not need to handle and hold any money that could be robbed or taken from you.
You did not need to hand over any personal information to receive the transaction.
You did not need to remember, and possibly recite wrongly, any bank account information.
You did not need to issue a receipt, since it is recorded on the blockchain.
You did not need to worry about counterfeit money.

And if you were using a cryptocurrency that is privacy focused, here are some extra benefits:
Gov doesn't know if you made a transaction.
Gov doesn't know how much was the transaction.
Gov doesn't know who you made the transaction with.

This really isn't some sci-fi shit that is just fiction. This is real and people are using it already. Albeit only a small population of the world has ever used currencies (0.2%, or 2 in 1000 people. active users are probably even smaller, probably 0.1%).

The technology of this is moving FAST. However, so are the markets. The market cap of CCs can ballooned from 72b to 88b in over a week. Is this sustainable? I don't think so.

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