At Hong Kong Web3 events, industry players look past recent crypto scandals to promote blockchain for everything

Major Web3 events in Hong Kong have been focusing more on Web3 usability and use cases like identification, content ownership and video gaming
The city faces challenges like recent crypto scandals and a talent shortage, but some say its proximity to mainland China still gives it an edge

Blockchain

Matt Haldane

Published: 9:00am, 30 Oct 2023

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As Hong Kong kicks off its annual FinTech Week conference, which marks one year since the city announced a policy shift with the intent of becoming a global cryptocurrency hub, big industry players have increasingly been focusing their messaging on a broader Web3 beyond just financialisation.

Events such as September’s Edge Summit, the recently concluded ETH Hong Kong and a hackathon this past weekend hosted by Shanghai-based blockchain company Neo reflect a growing desire to focus on practical applications of Web3 technologies beyond speculative assets.

The recent JPEX cryptocurrency exchange scandal linked to more than HK$1.5 billion (US$192 million) in lost consumer funds has some industry figures trying to move the conversation beyond crypto by concentrating on practical applications for consumers.

In some ways Hong Kong has long been at the forefront of this area of Web3 development, with home-grown Animoca Brands being a leading blockchain video gaming company. Yat Siu, the company’s co-founder and chairman who spoke at the Edge Summit, has been an outspoken Web3 advocate.

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The cryptocurrency scandal gripping Hong Kong

“[Web3 is] like the internet 25 years ago. You had all these people building websites and didn’t really know what the website was supposed to do,” Siu said in an interview with the Post on October 13.

“[Companies] know it’s important,” he added. “I think the difference [now] is that the urgency, and the sense that it is important for their future, are now there.”

Behind the promise of Web3 is the idea that people – rather than companies or governments – will own their own digital identities, and therefore their data. A single cryptographic key, for instance, can be the gateway for users to access everything from cryptocurrency wallets to social media profiles to video game avatars, all on a decentralised ledger that is not controlled by any single entity.

Telling users they have to manage and safeguard cryptographic keys is a usability hurdle, though, and it is one that many Web3 organisations are now trying to solve.

Dfinity Foundation, which appeared at the Edge Summit and develops the Internet Computer Protocol (ICP) blockchain, aims to solve this with passkeys, a type of technology that makes a user’s physical device the key for accessing an account. The passkey concept is growing in popularity among Big Tech firms seeking to end issues related password-related vulnerabilities like phishing attacks.

“Web3 is not just about crypto, but about maintaining the good of blockchain technology,” said Darren Wong, co-founder of ICP Hub Hong Kong, part of the new ICP Asia Alliance that Dfinity recently started with a US$20 million grant. “And you see a lot of Web2 companies right now are coming into the Web3 space, because they have the right users.”

Vitalik Buterin, co-founder of the Ethereum blockchain, also promoted ways of making Web3 easier to use for average people in a talk given remotely at the ETH Hong Kong event. He discussed things like social-recovery wallets, which enable people to piece together keys through a network of social connections in the event they lose access to their accounts.

“There’s a lot of work involved in understanding users and building things that work for users,” Buterin said. “There’s developers and applications, wallets for infrastructure, and all of these different actors that really need to work together to make some of these transitions work.”

Dfinity founder and president Dominic Williams introduces the Internet Computer Protocol during the ICP Asia Alliance launch event in Hong Kong on September 28. Photo: SCMP/ Matt Haldane

But making Web3 easier to use is just one step in giving people a reason to use it.

Video gaming has long been seen as the avenue through which Web3 applications would reach broad public adoption by introducing transferable in-game assets like weapons that could be used across different titles. Asia has been especially receptive to blockchain-based games, mostly in the form of so-called play-to-earn games like Axie Infinity from Vietnam-based Sky Mavis.

Karl Blomsterwall, CEO of Sweden-based Nibiru Software, said his company made a strategic decision to focus on Asia for its play-to-earn title Planet IX.

“This part of the world is much more open to new ideas and open to blockchain in general,” Blomsterwall said on the sidelines of the Edge Summit. More than half of Planet IX players are in China, he added, and 80 to 90 per cent are in Asia.

Animoca Brands has also been heavily involved in blockchain-based gaming. Its metaverse subsidiary The Sandbox, which sells virtual plots of land in the form of non-fungible tokens (NFTs), continues to build out local partnerships like its recent McNuggets Land game developed in collaboration with McDonald’s Hong Kong.

Many of Animoca’s initiatives also involve enabling creators to retain value from their creations by putting them on a blockchain. Last year the company acquired TinyTap, which allows teachers to receive royalties in perpetuity for their lesson plans, and has invested in Virtual Arts, which allows street dancers to prove ownership over their moves using NFTs on its app DanceFight.

“This platform can create the income for … musicians, writers, artists of all sorts,” Siu said.

A sign for the Neo Hackathon finals at Hong Kong’s Cyberport business park on Saturday. Photo: SCMP/ Matt Haldane

However, beyond just negative perceptions of blockchain from consumers because of recent scandals, Hong Kong must also overcome a talent shortage. Some see the city’s role in the Greater Bay Area as a possible strength relative to a market like Singapore, which also does not have a large developer base.

“Singapore is definitely, from a regional perspective, a competitor,” said Ryan He, the other co-founder of ICP Hub Hong Kong. “Where our advantage [lies] is [in] how quickly we can tap into that supply chain resource of developers.”

Da Hongfei, the founder of Neo who currently lives in Singapore, said the blockchain firm is in the process of moving resources from Shanghai to Hong Kong, primarily because the blockchain uses a crypto token for payments, which is banned on the mainland.

“The environment in Hong Kong is really vibrant,” Da said in an interview with the Post during the Neo Hackathon on Saturday. “Although there are not so many developers … it’s really easy to find financial, legal [and] marketing people here.”

Additional reporting by Xinmei Shen