Asia bets on blockchain to battle online theft during pandemic

TOKYO — As the pandemic forces more companies to transact business online, hackers and other digital thieves are getting bolder, spurring Asia to embrace blockchain technology as a way to secure data.

According to The Business Research Company, the global blockchain market is expected to hit $15.88 billion in 2023 despite retreating 7.27% to $2.27 billion in 2020 — potential annual growth of over 91%.

Tomohiro Maruyama, senior manager of PwC Consulting, says “more companies should adopt blockchain after the pandemic.” He thinks that the widespread digital transformation triggered by the coronavirus has driven use of blockchain to guard against scams.

“Internet piracy has posed a major challenge for companies as they look to digitize operations,” Maruyama told the Nikkei Asian Review, given the ease of counterfeiting digital documents compared with paper versions. “Blockchain emerged as a solution for fighting digital counterfeits, pushing businesses to adopt the technology.”

Kenta Akutsu, CEO of Japanese startup, LasTrust agreed. “We’ve received lots of inquiries since the coronavirus outbreak,” he said. LasTrust launched a blockchain service in September that offers digital certifications for universities. Called CloudCerts, the service provides academic transcripts and expected graduation diplomas for college seniors looking for jobs.

“Even before the outbreak, universities were looking to digitize, but the pandemic forced them to move quickly,” Akutsu said.

Japan declared a state of emergency in early April, which further prompted efforts. “While PDF and JPG documents are easy to fake, blockchain promises tamper-proof records,” the CEO said.

LasTrust also plans to offer services in Malaysia and Thailand, both of which highly value academic credentials and where universities struggle with counterfeit diplomas and school records.

The startup hopes to grab 50% of Japan’s digital certification market in four years.

The pandemic also compelled companies to review how shareholders meetings are run while finding safe and effective ways for investors to vote.

One company may already have a solution. bitFlyer Holdings has developed a blockchain-based app that prevents spoofing by linking with Japan’s My Number national identification system. Stakeholders will be able to use the app to vote without having to actually attend meetings.

bitFlyer tested the app for its own shareholders meeting in June and now plans a domestic roll out this autumn. “We hope to expand the app to other Asian countries,” a company spokesperson told Nikkei, while noting that there are many “local regulations” that first need to be addressed.

Restaurants and other businesses in Japan affected by COVID-19 also welcome blockchain, as many are offering digital coupons and premiums to drum up business that evaporated after an unofficial lockdown was announced.

Nihon Unisys is looking to fill this niche. The company has teamed up with crowdfunding operator Glocal Crowdfunding and is now providing digital coupons to more than 600 businesses, most of which are in the food service industry in Kumamoto Prefecture on Japan’s southern island of Kyushu.

Blockchain is well-suited for the task, as it can prevent unauthorized reuse of coupons. It also eliminates the physical exchange of paper coupons.

Now more than ever, the public is concerned about the safety of their personal data, making consumer-vendor trust imperative. “When a business shifts to digital, winning the trust of consumers is critical,” said Tomonori Makino of Nihon Unisys. “Companies need to understand and respond appropriately to transaction data to earn consumers’ trust.”

Speculation over the source of COVID-19 is a major reason why trust is so important. “Businesses would be responsible to disclose more information about where food comes from,” said Shunji Murakami, vice president at Seafood Legacy, a Tokyo-based consultancy specializing in sustainable seafood. Even before the coronavirus, the company had a blockchain-based system for tracing seafood. Still, Murakami says that “the need for traceability will increase more than before.”

Blockchain is making its way into other Asian countries as well amid coronavirus uncertainties.

Singapore-based Agrocorp International announced in April a partnership with America’s Cargill, Singapore blockchain startup Dltledgers and a number of logistics companies to monitor disrupted agricultural supply chains in the wake of country lockdowns. The company initially focused on blockchain transactions of wheat from North America to Southeast Asia. While trade using blockchain takes five days to settle, traditional trades using paper documents took up to a month, the company said.

Meanwhile, China’s insurance industry is using blockchain to speed the settlement of claims and avoid physical contact between representatives and customers.

In February, online health care platform Xiang Hu Bao, part of Alibaba Group Holding, introduced a policy that pays up to 100,000 yuan ($14,000) in the event of death from the coronavirus. “Traditionally, fraud and a lack of transparency have made it difficult for mutual aid platforms to effectively benefit those in need,” the company’s spokesperson told Nikkei. But he added it can confirm “transparency” and process one billion transactions daily, thanks to Alipay’s blockchain technology.