theSun Property May 2017

3 / 4

Email your feedback and
queries to: propertyqs@
X
Property in a digital era
NOT too long ago, bitcoin
entrepreneur Andreas
Antonopoulos visited our
shores and delivered a talk
on a subject he is most familiar,
renowned and informed about –
bitcoin. The industry expert who
has written and spoken far andwide
on the subject shared about the
application of bitcoin in the
property industry.
Having attended his talk on how
bitcoin can hugely impact players in
the finance and property industries
(like howUber impacted the
transport industry), we have
explored and laid out a number of
pointers that could be of interest to
sceptics who feel that this growing
technologymay not be feasible for
certain reasons. Below are some
issues in question.
UNREGULATED/ NO
CENTRALISED CONTROL
Although the bitcoin decentralised
system is good for participants
within the bitcoin network, that
itself is seen as a problemwith
certain authorities, including the
banking institution, mainly because
bitcoin is an open systemof
payment, which is borderless,
neutral and censorship resistant
(refer article in part 1). With the
likes and characteristics, and similar
to the internet andUber, the
government is expected to have a
hard time regulating it.
Moreover, bitcoin technology
does not fit into themould of anti-
money laundering – reason being
every participant is identified by
codes and digital signatures,
making it difficult. The bitcoin
community regulates itself based
on bitcoin protocol.
ELIMINATES
INTERMEDIARIES
With bitcoin’s attributes designed
to conduct direct transactions,
intermediary services from lawyers,
brokers and escrow agents (in
propertymatters) could be
rendered obsolete when employing
bitcoin. This is because land titles
and contracts are permanently
recorded and immutable, hence, the
process for buyers and sellers of
property transactions becomes
faster, straightforward and
transparent.
In all, with no local governing
body in “control” it would not be
surprising for the legal and
brokering industries to be
apprehensive in employing bitcoin
technology in our country.
LACKOF EDUCATION
Like any new technology, a lot of
exposure and education is required
before the “ newkid on the block” is
fully accepted and employed.
Bitcoin is still a relatively new
technology here inMalaysia and the
Southeast Asia, despite the fact it
was established in 2009.
Many are still apprehensive in
adopting the technology,
especiallywith the big
number of modern day
online scams being
reported. If people are not
educated, they can be
vulnerable to various
monetary con games and
such.
It is best to do research
and gain knowledge about
this new technology
before using it.
VOLATILE
EXCHANGE RATE
Due to the limited
application of bitcoin in
current business climates,
the exchange rate from
normal currency to
bitcoin is volatile. Hence,
themarket size for bitcoin
is relatively small as it is
still a new technology in
most countries, more so
within Southeast Asia.
The volatility of
bitcoin could also be the
result of the lack of
confidence among
publicmembers,
who are
apprehensive in
using it without
much knowledge
on it.
CONSTANT
INNOVATIVE
NATURE
Like the internet,
bitcoin goes through
changes and
developments
constantly. With its
nature as such,
regulating the bitcoin
is a difficult task for
political and financial
institutions.
“The fundamental
issue with regulation
versus innovation is
that innovation
created with.
“The reason you need regulation
in escrow and real estate is because
the escrow agent canmake off with
the money. The reason you don’t
need regulation for escrow in
bitcoin is because the escrow in
bitcoin is programmatically secure
and no one can steal the money.
So if you can solve the problem
with software, then regulation is
unnecessary.
“Before we start discussing
about how to regulate bitcoin, we
should ask if it is really necessary to
regulate it, why and what we are
regulating. These technologies
offer newways for people to deliver
services to each other without the
need for toomuch government
oversight, making governance
easier,” said Antonopoulos.
While traditionally, there are
still many countries and govern-
ments which feel there must be
some formof regulation in applying
bitcoin technology, Antonopoulos
shared possible consequences in
trying to regulate it.
“The problem is bitcoin can be
regulated, but just at the edges
where it touches traditional
banking systems. However, there is
a risk. If the government tries to
regulate bitcoin too rigidly
according to traditional banking
models, it will stifle innovation, and
ultimately drive jobs and growth
out of the country.
“It may also cause some
slowdown in commercial
application but it is not going to
make bitcoin obsolete, instead
more avert to government control.
Bitcoin itself cannot be regulated
because it is mathematics and you
cannot regulate mathematics. It is a
branch of appliedmathematics.
Once it is understood by people,
anyone can recreate it. One does
not have to call it bitcoin, instead a
cryptocurrency creation of their
own and release it on the internet.
It is difficult to control the
proliferation of technology,” he
said.
Based on Antonopoulos’ word, it
could simply mean that any
government’s efforts in regulating
bitcoin by employing a centralised
control systemnot only defeats the
purpose of bitcoin’s decentralised
nature, but it will bring down the
barrier for hackers to attack the
systemwhere all bitcoin is stored in
(a centralised area). With
regulation, it simply means that the
institutions will be the major target
hackers will concentrate their
efforts on, rather than computers
under the bitcoin system, which
bitcoin was in the first place,
designed for.
Follow our final article on
bitcoin next week to find out how
secure this modernmethod of
transaction really is.
DID YOUKNOW?
The current exchange rate for bitcoin to
ringgit Malaysia is 1 bitcoin = RM5,300
PART3
SOURCE:
Embedding distributed ledger technology.
A distributed ledger is a network that records ownership through a shared registry.
Centralised ledger Distributed ledger
In contrast to today’s network, distributed ledgers eliminate the need for central authorities to certify
ownership and clear transactions. They can be open, verifying anonymous actors in the network, or
they can be closed and require actors in the network to be already identified. The best known existing
use for the distributed ledgers is the cryptocurrency Bitcoin.
FT graphics. Source: Santander InnoVentures, Oliver Wyman & Anthemis Partners.
From left: MIGHT president and CEODatuk Dr Mohd Yusoff Sulaiman, Antonopoulos and BLOKTEXCFO
Ahmad Samsudin
moves at a speed that is 10 times
greater.
Right now, while the regulators
are regulating the bitcoin of 2010,
the bitcoin has alreadymoved
ahead. By the time they get to
regulate the current version, there
will be another 1,000more
cryptocurrencies,” Antonopoulos
said.
IS THERE A NEED TO
REGULATE BITCOIN?
While currencies across the globe
are regulated, many are
apprehensive about unregulated
modern day cryptocurrencies.
Antonopoulos enlightens: “The
question that must be asked is
‘What level of regulation is
necessary, if any? If the problemwe
are trying to solve is fraud or
consumer protection, then these
technologies could solve themwith
the very attributes they were
>Challenges and efforts in using bitcoin, including the effects of regulating it
BYBRIAN CHUNG
23
theSun ON FRIDAY | MAY 19, 2017