SOONER or later, disruptive technologies find a home. The industry supporting blockchain and other distributed ledger technologies has become an international business, and an international race is on to establish blockchain hubs. Though traditional tech centres such as San Francisco and Berlin host blockchain firms, non-traditional technology hubs such as Singapore, Switzerland, Gibraltar and Malta are fast emerging as leading centres of innovation. Small jurisdictions are proving mighty when it comes to harnessing the power of this disruptive technology.
Smaller jurisdictions - whether city-states like Singapore, overseas territories like Gibraltar or small countries like Switzerland or Malta - are forever on the lookout for new ways to attract business and investment. By demonstrating their "crypto-friendliness", these governments have successfully attracted new residents, business and investment, expanding their tax base, making headlines, and burnishing their reputations as a result.
To stay relevant internationally, it is imperative for these smaller jurisdictions to remain competitive and seize new opportunities. As they cannot necessarily rely on large economies to make up for shortfalls in a given sector, smaller nations must be more proactive in growing and maintaining their competitive advantage in nascent industries. This includes promoting new technologies, capitalising on new business opportunities and adopting dynamic, innovation-friendly regulation.
For these smaller jurisdictions, embracing blockchain offers more than just the welcome promise of new business. Distributed ledgers have the potential to disrupt larger states' entrenched economic dominance. By making borderless, decentralised and highly-transparent business and financial transactions a reality, blockchain provides companies which were previously excluded from international markets the opportunity to connect with customers, partners and capital worldwide. The transformative nature of this technology empowers businesses within smaller jurisdictions to expand their operations and scale, and, in doing so, promote local economic growth.
Faced with blockchain's economic potential and regulatory challenges, smaller jurisdictions have proved more nimble than larger ones. This flexibility has made them fertile soil for blockchain ecosystems to flourish. In Singapore, a combination of clear guidelines on blockchain and crypto currencies, proactive support for innovation and collaborative partnerships with industry leaders have made the city-state a favourable environment for emerging blockchain technology.
The Monetary Authority of Singapore (MAS) and Singapore Exchange (SGX) recently announced a collaboration with Anquan, Deloitte and Nasdaq to explore safe and efficient trading across blockchain platforms.
This type of government support creates a stable, accommodating and secure environment for blockchain companies and startups, accelerates local innovation efforts and draws international projects to emerging blockchain hubs.
The success of small jurisdictions embracing blockchain technology is likely to beget more success. A pronounced first-mover advantage in promoting local blockchain economies and attracting international investments make these locales ever more attractive to innovators. Each successful blockchain project developed provides further cachet for the jurisdiction as an innovation ecosystem. As the blockchain sector continues to mature, we can expect to see an increase in the number of organisations utilising this transformative technology, and far more capital allocated to the industry.
More investment, of course, means heightened international competition. To continue to reap the benefits of their current dominance within the blockchain space, smaller countries will need to maintain the flexibility and dynamism which they have exhibited to date, and be prepared to adapt to new challenges and opportunities as they arrive.
- The writer is founder and CEO of Wachsman, a blockchain professional services firm with offices in New York, Dublin and Singapore.