Knowing Infrastructure Provider and 3 Basic Trends in Digital Assets
When talking about Digital Assets, most people perceive them as trading Cryptocurrency or investment in DeFi Blockchain. Besides those Digital Asset investors, there’re those who play an important role in Digital Asset Ecosystem called Infrastructure Provider which is a person or persons providing all infrastructure activities associated with the Digital Asset world. Khun Dechapol Lamwilai, Head of Strategic Partnership SCB 10X will share the story of Digital Assets and the role of Infrastructure providers that will give rise to the Digital Asset market in the near future.
Digital Asset Development
The world of Digital Assets started from Cryptocurrency over the last decade and then has developed into Digital tokens under the supervision of Digital assets by the Securities and Exchange Commission*. Digital Token is divided into Investment Token which is close to assets and unit trust. It means to change original asset to digital form, and token which can be exchanged to 2 subcategories of Utility Token as follows.
· Ready-to-Use Utility Token: Token that we know how it can be used and can use right away.
· Not Ready-to-Use Utility Token: Token that is not ready to use now for exchanging product or service. Investors need to wait for permission in the future, or until the money received from selling Token has already been arranged for product or service. The launch of this Token is a type of fundraising.
What is the role of the Infrastructure Provider?
“The straight meaning of Infrastructure is the basic system in the Digital Asset world. The infrastructure in the original financial world is arranged by humans such as, the bank that receives savings deposits or offers loans, etc. When we’re entering the digital era, computer technologies replace human jobs. Moreover, the Process can be installed and operated by itself without a medium in Blockchain or DeFi in the future”, said Khun Dechapol.
A business transaction in Digital Asset consists of main touchpoints connecting the original financial world to the digital world; for instance, 1. The point where existing securities or assets are changed to Digital Token 2. The point where investors bring Fiat, money currently used, to trade for Cryptocurrency 3. The connection point between CeFi (Centralized Finance) with the medium when making digital asset transactions, and DeFi (Decentralized Finance) without medium as transactions run by automatic programming.
All 3 touchpoints including Exchange Infrastructure, the basic system for exchanging Cryptocurrency, is a door of opportunity for Infrastructure Providers that will create multiple platforms as a base of support Digital Asset growth to elevate the role of Infrastructure Provider to become a space preemption for players throughout the financial world. So, what’s the trend that Infrastructure providers going to create for more Digital Asset prosperity?
1) Create security in storing Digital Assets
The basic system that can’t be missed is Custody Infrastructure, in charge of deposit service provider for Digital Asset. Khun Dechapol said that “When Cryptocurrency or Digital Token enter Blockchain, people can’t store those Crypto coins securely because that Infrastructure needs Know-how and Technology. People must understand how to secure those assets, manage Blockchain technology, and study Cryptography, Private/Public Key as those fields require high expertise. Consequently, Infrastructure Provider is truly significant. As when people own digital assets either Cryptocurrency or Token, they’ll look for someone who can help them secure those assets, especially a trendy issue like digital assets”. He also adds that “The need of Custody for storing digital assets is not only in Thailand, other digital investors across the world want to secure their assets as well. As a result, Custody Infrastructure is an opportunity in the regional level”.
2) Increase an opportunity for Digital Assets
Referring to the forecast of global digital asset value at US$ 3.4 billion in 2020, it’ll raise US$ 6 billion in 2025 with an average growth rate of 12% per year, leading digital assets to become “Asset Class” and attract the large number of investors because of their potential to generate remarkable long-term returns and the economic impact in the future.
Fund investing for digital assets like ETF is an option for those who want to invest in digital assets but don’t have enough insight to make a direct investment. Principally, the investment that is monitored and managed by Fund Manager can reduce risk. Khun Dechapol shares his views “Cryptocurrency ETF emerges by the trend. Digital Asset is quite a complicated issue and potential investors may not understand it well. That’s why there’s a chance to issue funds invested in Bitcoin; for instance, the U.S. recently announced Futures ETF of Cryptocurrency which indicates that the financial institutions foresee a bright future for digital assets. The assets are not temporary but long-lasting”. The launch of that trendy Fund paves the way for a massive amount of people to reach digital asset investment. Besides, a new financial tool “Derivatives” similar to those in the stock market are also being launched widely to manage risks and develop to mature market.
3) Making digital currency to be widely used
An anticipation that the role of the digital assets will have an economic impact in the near future is partly because many businesses have accepted more spending of digital money like Bitcoin such as Microsoft, AT&T in the U.S., KFC in Canada, Burger King in Venezuela, and over 2,000 Coca-Cola vending machines in Australia and New Zealand. The infrastructure is a tool to arrange an exchange between Fiat and digital money (on and off-ramps). The convenience of receiving and paying Crypto when buying products and services, either application wallet currently used or Crypto Debit Card that has just started using abroad, etc. All those activities have proven that digital money can be truly used so it’s not far-fetched anymore.
The trend of investment, exchange, flow, and digital asset that grow unceasingly, and Infrastructure Provider invested in the supporting system to handle digital assets; all those things are not betting but a ‘must do’ to grab an opportunity before others in order to cope with digital assets that will be prevailing very soon. For the role of SCB, Khun Dechapol suggests that there should be players who are knowledgeable and tech-savvy to develop Infrastructure to eliminate worries about the new trends. That’s the true origin of SCB*. We help manage customer assets shifting from tangible assets to digital, and make digital assets interchangeable widely either investment, money exchange, or spendings in the future in the forms of Utility Token, Stable Coin, CBDC, etc. Therefore, there should be Exchange Infrastructure to bring stored digital assets to exchange with Ecosystem because it's reliable and simply used.
“The principle is how to securely store digital assets and use them wisely. That infrastructure is built to support the Ecosystem in the future of the digital world. And we see no country boundary in technology area as we have to follow the regulations of that country anyway. Thus, those Infrastructures are not only used in Thailand but also at a regional level to align with SCB* vision and moving forward to a Regional Player”, concluded by Khun Dechapol.