Interview with Topp Jirayut, Bitkub
I had the privilege to listen and shake hands with Topp while attending the Next Block Asia 2.0 in Bangkok, back in December 2019. Topp is a great speaker and very passionate about his work. He also likes sharing his knowledge about emerging technologies both in the financial world as well as on a personal level.
Topp Jirayut is the co-founder and CEO of Bitkub, Thailand’s Leading Digital Asset Exchange. We hope that you will enjoy this fantastic interview as much as we did!
What’s your backstory? How did you get to where you are today?
There has always been a purpose that underpins all that I do- to create an impact that greatly matters- for my people and the community as a whole.
As such, accomplishing an MPhil at Oxford University, UK is one thing; value creation, in relation to my field of expertise, is another. The italicized phrases “in relation to my field of expertise” were best incorporated. As society dictates, our subsequent decisions should at least be relative to our credentials and be able to meet expectations. Don’t they?
I gave corporate jobs a shot and worked as an investment banker in Shanghai as well as a financial consultant in San Francisco. Until Bitcoin spurred my desire to make a difference as I can’t simply ignore the reverberating reality: access to financial markets is globally unequal, and many countries are excluded from international banking services leading to a significant number of unbanked individuals.
In 2014, we pioneered a bitcoin exchange in Thailand- Coins.co.th. Bitcoin, blockchain, startup, and cryptocurrency were jargon to everyone and a threat to officials to which Bank of Thailand termed as Ponzi schemes. AML officers sent out letters regarding KYC and AML processes. The Revenue Department questioned Bitcoin’s eligibility and was completely unaware of the process in taxing Bitcoin companies and customers. Along with my team, we educated the Revenue Department and Thailand Securities and Exchange Commission about the potential of blockchain and spoke on more than 300 stages to spread the knowledge, omit the common misconceptions and enlighten the public. As education kept pace, the crypto exchange operating license came out, and we were in one of the very first batches.
With an aspiration to be a role model of integrity, quality, and positive change, we established Bitkub.com to shape the future of the digital economy and bridge the gap between digital currencies and traditional financial structure. Bitkub holds the title as the startup with the largest seed investment in Thai history.
To respond to your question, “How did you get to where you are today?” I believe I haven’t arrived at my destination just yet; I am still in the middle of my path for nurturing oneself takes a lifetime. Passion is a non-negotiable element to succeed, accompanied by the responsibility to keep the desire alive. This has driven me to where I stand with great pride and decency.
What makes Thailand the forefront of blockchain adoption?
Thailand has proven enthusiasm towards value reap from blockchain technology- which has been regarded as more actual than potential. As blockchain gets more sophisticated and its societal use, economic worth and technical design are in flux, Thailand has a liberal and progressive stance; explored the future developments from the myriad seed of possibilities of the present; opened its doors to crypto-related businesses and technological opportunities.
Thailand has one of the most prosperous cryptocurrency ecosystems in Southeast Asia, which is largely accounted for the government’s adoption of cryptocurrency legislation. The lack of regulation and on the flip-side, overregulation, may cause false-starts in the space. Thus, the Thai Securities and Exchange Commission, at the forefront of blockchain technology development, imposes firm regulations while providing safe boundaries without hampering blockchain’s growth.
In August 2018, the Central Bank collaborated with R3 to develop a proof-of-concept for Central Bank Digital Currencies (CBDC) known as Project Inthanon with an aim to enhance the Thai financial market’s efficiency through a thorough study conducted on distributed ledger technology (DLT). In January 2019, the Thai SEC endorsed four digital asset exchanges. During the same year, the National Electronics and Computer Technology Center of Thailand considered leveraging blockchain technology to further assist the organization of national, provincial, and community-level elections as well as corporate stakeholder voting.
The change was embraced; ambiguity and complexity were navigated, and; a diverse disrupted community was harnessed.
Can you tell us about Bitkub and how the Thai government is looking at cryptocurrencies and trading in general?
Our parent company, Bitkub Capital Group Holdings Co., Ltd. acts as a holding company which consists of four business units: the digital asset exchange platform (www.bitkub.com); Consulting and Development of Blockchain technology for enterprises both in the government and private sector; ICO portal (an entity in charge of underwriting digital asset, i.e. token creation) and lastly; Bitkub Academy manages education in blockchain technology and digital assets.
These units are operated by different companies, with Bitkub Online Co., Ltd. at helm of Bitkub.com.
With Thai officials advancing what would best serve the interest and security of its people, the congruence between the technology’s design attempted mode of development and stated goals is the most persuasive argument in favor of taking blockchain seriously. Blockchain is supervised by key regulators, including the Bank of Thailand, Office of the Securities and Exchange Commission, and the Office of the Insurance Committee.
Thai SEC released a cryptocurrency exchange license, cryptocurrency broker license, and cryptocurrency dealer license. They have also created an ICO portal license and legalized crypto trading pairs. Thailand’s forward-looking actions and positive attitudes towards blockchain and cryptocurrency present a competitive edge.
Recently, the Thai SEC proposed flexibility of regulations and plans to reconsider cryptocurrency laws in order to remain relevant and fulfill the fast-evolving market needs.
What is the most challenging aspect of integrating blockchain technology into banking system? At what stage is this process currently at?
As most of the firms are still experimenting with blockchain and PoCs, banks’ identification of use-cases won’t suffice. Other allied factors such as transaction speed, verification process, codes for smart contracts, and data limits should be considered.
The integration procedure and change adoption would be regarded as the most challenging phase.
Blockchain applications offer solutions that require a significant overhaul of existing systems. Blockchain utilizes sophisticated math and innovative software rules that are enormously difficult for attackers to manipulate, which makes it the most secure and powerful network. In order to make the switch, banks must strategize the transition- which requires a consortium-based approach to assure all relevant stakeholders for the underlying use-case agree to come together on the platform. Blockchain as a solution uses virtual currency to perform the transaction, which will demand an absolute clarity around how the change will impact the dynamics of a transaction.
Accordingly, the application of this technology to the banking sector should be capable of resisting all sorts of manipulation. The authorized parties involved in managing such network has to be given a different level of permission access whether the implemented blockchain is permissioned or permissionless as it will create a huge impact on the entire system’s security.
The paradigm shift entailed by blockchain’s premise of decentralization envisages an eventual migration from the end-to-end principle to the trust-to-trust principle. Though there are definitive challenges in implementing a blockchain-based solution, I believe that an effective implementation roadmap can mitigate and address the challenges. Once a suitable business case has been identified, it’s vital to align all the relevant stakeholders, then design as well as structure the blockchain stack. Once the architecture is ready, a prototype needs to be developed first and then successfully tested on a pilot basis on multiple transactions. Post successful pilots, firms should plan to make the solution live.
Which benefits does blockchain bring to the system compared to the conventional banking system? Are there any downsides?
In less than a decade, the original Bitcoin white paper was turned into a vibrant, functional technology ecosystem in a bottom-up fashion, by a rapidly growing group of technologists, investors and entrepreneurs sporting grand techno-solutionist visions of how to change the world.
Blockchain is a digital, immutable, distributed ledger that chronologically records transactions in near real-time. The prerequisite for each subsequent transaction to be added to the ledger is the respective consensus of the network participants (called nodes), thereby creating a continuous mechanism of control with regard to manipulation, errors, and data quality. Blockchain won’t simply disrupt the banks- it is going to power the banks.
Current Pain Points:
Manual documentation – Blockchain makes the entire documentation paperless. Agreements, contracts, terms and conditions documents, etc. are digitized; validation and checks are automated. Its immutability feature eliminates the need for multiple copies of the same documents.
Time-consuming process – Blockchain provides real-time settlement of transactions where clients may transfer invoices to the blockchain network using an external technology. An automatic debit to the customer account is triggered on the due date. Automated due diligence and analysis of information for loan underwriting reduces TAT. Funding and payment settlements with activities are executed via smart contracts.
Lack of mechanism to track the status of invoice throughout the process and potential to fraud – Blockchain offers real-time tracking of transactions wherein all relevant parties can view and verify the processes. There is only one source of truth, and transactions can’t be processed further unless all the relevant parties agree and authenticate it. Blockchain can facilitate immediate KYC through digital identity for clients. It has features of encryption and verification inherent to its design, with consensus on the network being a required condition for a transaction to be captured in a block.
Lack of interoperability in reward points – Blockchain protocol creates an algorithm-generated loyalty token, which is a base for all types of rewards issued by players that sit in the network. This token can be used to initiate and execute any transaction- issuance, redemption, or change. The loyalty token’s existence and unique identifiers are updated in each participant’s ledger and made available across the network.
The blockchain platform can accommodate different and multiple organizations and their loyalty programs, facilitating their interaction, especially in terms of convertibility and exchange of their points.
As mentioned above, though the potential of blockchain is widely claimed to be at par with early commercial internet, it is important for banks to understand the key features of the technology and how it can solve the current business issues on the one hand, as internet enabled exchange of data while on the other, blockchain involves exchange of value. Banks need to identify opportunities, determine the feasibility and impact, and test proof of concepts.
What is your vision for the future of banking?
In response to the evolving forces of customer expectations, regulatory requirements, technology, demographics, new competitors, and economic shift, much of the landscape will change significantly. Banks must choose what posture to adopt against this change- whether to be a shaper of the future, a fast follower or to manage defensively, putting off change. Banks’ ability to manifest opportunities out of the disruptive environment based on technology and external partnerships to create customer value will determine its success in the future.
A glimpse ahead shows an emphasis on innovative technologies to vastly facilitate banking- inclusive banking through new types of bank models, non-traditional alliances to make banking affordable, Fintech capabilities to make banking customer-centric. Banking will be collaborative and will raise the bar in setting new standards. Consolidation in the industry is inevitable.
Smart banking embracing artificial intelligence and cognitive technologies – With the dawn of cognitive computing, consumers acquire quick and uniquely tailored services. Cognitive systems unlock the power of unstructured data (industry reports, financial news) using deep text and/or image/video understanding. The interactive computing systems will utilize artificial intelligence to collect information and automatically build models of understanding and inference, as well as communicate in natural ways. Cognitive solutions can automate knowledge creation, scale a company’s knowledge capability, and uncover new revenue streams by digging into consumer needs.
Blockchain and Distributed Ledger Technology – All the information in Blockchain is digitized, eliminating the need for manual documentation. As the name suggests- a chain of blocks, each being a repository of information pertaining to a transaction and links to the previous block within the same transaction. These connected blocks form a chronological chain providing a trail of the underlying transaction.
Indistinguishable copies of the information are shared in Blockchain. Participants independently validate information without a centralized authority. Even if one node fails, the remaining nodes continue to operate, ensuring no disruption.
Since the blocks created are cryptographically sealed in the chain, it is impossible to delete, edit, or copy already created blocks, thereby creating true digital assets and ensuring a high level of robustness and trust. The decentralized storage in the blockchain is failure-resistant. Even in the event of failure of a large number of network participants, blockchain remains available, eliminating the single point of failure. Data stored is immutable.
Robotic Process Automation – RPA is a technology that mimics human actions performing simple rule-based processes. RPA will help clients improve case handling productivity to address the existing case backlog and meet regulatory requirements in Global Investment Banks; it will enhance customer experience by reducing inbound calls and indexing turnarounds with digital interactions in Insurance Firms; aid the reduction of manual processes’ errors; and will significantly improve operational efficiency and reduce overall operational costs.
How far has China come with tech adoption and legislation? Is Thailand far behind?
Blockchain’s significant breakthrough in China unleashed a cascade of activities: propaganda organs immediately launched a new wave of educational content; cities marshaled funds for subsidy programs; censors declared that calling blockchain a scam on social media was henceforth forbidden; Chinese investors rushed to purchase any stock vaguely associate with blockchain and; the value of Bitcoin soared as a result.
While blockchain acts as an open-source technology which was initially released as the underlying technology for the world’s first decentralized global digital currency: Bitcoin, China’s blockchain architecture is based on permissioned framework that implies significant centralization, with distributed ledgers managed by regulated, trusted entities- with an emphasis on maintaining the balance between people’s privacy and the authorities’ need for information.
Thailand maintains a strong foundation for blockchain- with the incumbents’ regulatory support and significant digital penetration rate of Thai nationals acting as pillars. Coupled with a young and tech-savvy population, Thailand serves as a hotbed for blockchain and cryptocurrency.
Thai officials recognize that tech-driven startups offer novel tools, platforms, capabilities, and approaches to improve customer experience and bolster operations. Blockchain is increasingly seen as an opportunity to differentiate- a critical source of innovation helping to infuse a more agile, entrepreneurial mindset into what has traditionally been a conservative community that’s slow to change.
As cited above, regulatory frameworks govern blockchain and cryptocurrency, and the officials even plan to make amends to assure competitiveness.
Blockchain technology served as a spark and, in some cases, an engine of true transformation within a growing number of institutions.
Is Ripple/XRP leading the way for the banking sector? When are customers going to have access?
Ripple is one of the key players for banks to realize significant benefits. Ripple is to establish an institutional, cross-border payment with XRP, an open source for access and participation in the public sector of XRP cash flow- a stand-alone digital currency used to facilitate transactions on the Ripple network.
Bitkub, Ripple’s official exchange partner in Thailand, is joining the Ripplenet programme. We are on a mission of humanizing blockchain experience- where people will inherently utilize cryptocurrency as a transaction protocol on the backend in order to receive as well as transfer money at a fraction of the cost across the globe. Within early next year, global money remittance at a much cheaper rate would be feasible.
Can you tell us about the Thai Fintech Association?
Thai Fintech Association is an organization formed to drive financial technology in Thailand. In line with the group’s mission to build and look at the ways where blockchain and emerging technologies can engineer progress and increase financial inclusion, this is a great opportunity for me as well as Bitkub to create platforms for wider collaboration and partnerships and encourage more involvement with both private and public sectors in creating opportunities and establishing smart standards and policies for regulatory compliance, streamlining these processes, and helping all parties achieve their aims.
We can propose and lead various projects that will further push the blockchain ecosystem forward, promote a deeper understanding of digital technology, design activities, organize events, and act as an accelerator for blockchain projects. We will make sure everyone benefits from the potential of the blockchain technology and ensure that the government takes more notice at the blockchain and cryptocurrency industry.