October 29, 2019

The Internet has revolutionized the way we live. It has become impossible to fathom our private lives, society, politics, and economy without the Internet. And now the conditions are increasingly forming the next Internet revolution to occur.

Every day the global media uses new terms such as artificial intelligence (AI), blockchain, Internet of Things (IoT), cloud computing, and data. All these new concepts are largely based on a single foundation – the blockchain technology. Traditionally the information people share on the Internet has been stored in a server somewhere. This has allowed hackers to infiltrate the server and steal, remove, or change the stored information. But now, the information is being stored with blockchain technology, which has enabled an extremely secure protection of information. It is now leading to new ways to use data, the creation of new applications, the growth of new economic sectors, and eventually an unprecedented revolution in the way people live their life.

In the beginning, the wondrous possibilities of the Internet weren’t fully understood by people. But, once it happened, the Internet gained incredible momentum within a short time period. Similarly, blockchain is coming closer and closer to gaining full momentum. The industrial revolution was triggered by steam engines, and blockchain technology is the steam engine of our era.  

Blockchain in Mongolia

The Internet has enabled people to send and receive information within seconds and in different forms, including text, image, and video. The blockchain technology has now made it possible to send and receive value-carrying assets, including money, shares, and bonds, in a secure way without needing to have a broker. It can be done within a second, just like sending a text message to someone. Hence, there is already a new term in use – ‘Internet of Value’.   

With the creation of financial assets based on blockchain technology, Mongolia is seeing a rise of companies established to attract foreign investors to make an investment in real estate and fixed assets. An example would be Truss Chain LLC. As a result, the competition to attract investors by offering a new financial product based on blockchain or other new technologies is growing fiercer in Mongolia. Currently, over 20 different companies offer financial technology services (Fintech). Some of these companies, including LendMN, Ard App, K Mobi, and Numur, offer short-term microloans. Some, such as Crowd Asset, provide crowdfunding, while others including facilitate loans between people via P2P. Most Money and Candy Pay offer ‘wallet’ services that allow people to make payments in an easier way. In addition, there is a digital bank named M Bank. Some companies have even started making investments in other countries.

Mongolia has been struggling to create a stable business environment for the mining industry, which accounts for 75 percent of foreign investment. Therefore, we have an immense need to diversify our economy and enter the international market via a non-mining industry. Set under this timing, the Mongolian Fintech Association organized the ‘Frontier Fintech Summit 2019’ for the first time in Mongolia on 9-11 May, with support from the Ministry of Foreign Affairs and the Financial Regulatory Commission. The summit, which took place under the theme “The Future of Fintech” attracted over 50 international entrepreneurs. The attendees included Fintech leaders from Japan, Korea, and Hong Kong, representatives of blockchain technology companies, and a congressman from Brazil. Having attended the summit in my capacity as the president of the Mongolian Fintech Association, I believe it is time for us to have a public discussion on what advantages the block technology can bring to Mongolia and what problems we can resolve using this technology.

Blockchain is the new Internet. But there are a few big differences. Blockchain is more open, non-centralized, non-changeable, ensures data security, connects two users directly, and removes the need for a third party. Therefore, there are many advantages.

Most Mongolians are under the impression that the blockchain technology is all about bitcoin and an easy way to make money fast. Although the blockchain technology is inseparable from bitcoin, it should be noted that bitcoin is merely one of more than 700 blockchain products. Bitcoin has become well-known because it was the first one that was successfully implemented and recognized. Moreover, bitcoin has brought a new solution in making financial transactions. But the true innovation lies in its foundation, which is the blockchain technology that can have many different uses in many different industries.  

Simply put, the blockchain technology can be referred to as a non-centralized database that records and saves every single change in the data. Having your data centralized in one place increases the risk of cyber threats and unintended changes to the data. The blockchain technology allows several databases to be chain-connected and record the most recent information. Any member of the network can access the network from anywhere and can openly see the changes occurred to the data. Blockchain is truly the technology that brings creative destruction and change within the large parts of social and economic spheres.  

For a developing country like ours, the blockchain technology can help improve transparency, reduce corruption, offer solutions to mitigate inefficiencies in government bureaucracies, and rapidly catch up with the highly developed countries.

Blockchain will have crucial impacts on liberalizing basic business processes and improving the availability and stability of financial services. Estonia, Georgia, Sweden, United Arab Emirates, and Finland are the countries that have been successful in making good use of blockchain technology. These countries are converting their many different systems to the blockchain, which includes electronic elections, land and real estate ownership rights, transfer of those rights, and health information database. Also, many large corporations, such as Walmart, Amazon, IBM, Infosys, Microsoft, and Apple have started using blockchain in their mainstream businesses.

We are getting an opportunity to do creative destruction by replacing the old with new technologies and significantly improve our efficiency.