Expert interviews

Expert interviews

Blockchain and real estate expert: Tokenization can widen bottlenecks in property transactions.

by Blocks99

7 months ago

Vietnamese-German economist Binh Nguyen Thanh talks about attitudes and blockchain and real estate, tokenization and the correlation between economic policies and cryptocurrency prices.

Binh is a financial economist particularly interested in blockchain, FinTech, cryptocurrency and real estate. He is currently the Program Manager of Finance (Acting) at the Royal Melbourne Institute of Technology (Vietnam Campus). In this role, Binh provides the school with academic support and leadership and ensures the high quality of the student experience in the finance courses.

Binh holds a PhD from the International Real Estate Business School (University of Regensburg) – Europe’s biggest real estate department. Prior to joining RMIT Vietnam, Binh worked in Germany for more than five years at the University of Regensburg and at the German Central Bank. He shared his thoughts with us in December 2019.

Blocks99

Your background is in real estate, finance and economics. What initially got you interested in blockchain technology?

Binh

Bitcoin triggered my interest – it’s a digital asset that is secure and can be easily transferred from one owner to another without the involvement of an intermediary. When I am thinking about the future of finance in a digital society, assets will be digitized or may exist entirely in the digital space only, and blockchain – or DLT – is a great infrastructure that people, companies and countries can use to bring assets and services into the digital society.

Blocks99

Working in both Germany and Vietnam, your activities span precisely the geographies we as Blocks99 focus on – Southeast Asia and Europe. Please talk about the blockchain industries in these regions, their differences and how they can work together. Above all, we’d like to hear your thoughts on synergies between the regions.

Binh

When we take Germany and Vietnam as examples, then I feel that Germany is moving at a faster pace in terms of creating a regulatory framework for Blockchain applications, particularly in finance. On the other hand, Vietnamese seem to be faster in terms of adoption even though the regulation is unclear. I think having more collaboration, exchanges of technology and market know-how among stakeholders in the two regions would help to speed up the regulation and adoption of blockchain.

Blocks99

One of your main interests is asset tokenization, which of course ties in with your real-estate background, because some of the biggest tokenization projects so far have been in real estate. What benefits do you think tokenization holds for the real estate and investment markets in Southeast Asia? And in Europe?

Binh

As mentioned before, I think that eventually assets will be digitized for a digital society and real estate tokenization is just a prime example of that. Tokenization brings several advantages compared to the traditional paper-based real estate registry in many countries. First, real estate tokenization could increase the security of information on ownership titles. Second, once information on the ownership of a property is secured and can be easily verified after tokenization, the tightest bottleneck in the whole process of ownership transfer can be widened. Finally, tokenized real estate could be divided into smaller parts, which can be traded – just like a company can be divided into shares for trading – bringing a lot more liquidity into this asset class. 

Blocks99

Being a country with low cashless payment penetration, how could Vietnam benefit from blockchain technology to leapfrog to the next level in the finance industry?

Binh

Given the current non-allowance of blockchain products for payment usage, I cannot see how blockchain can help to increase the cashless payment in Vietnam. However, if the legislation were to allow payment with blockchain financial products, cashless payment fractions could increase. Of course, that can only happen if the ecosystem for payment with those alternative blockchain financial products is developed.

Blocks99

What can German players learn from the booming Vietnamese and Asian blockchain market?

Binh

Besides of cryptocurrencies, I don’t see a big boom in the Vietnamese market. Yes, blockchain adoption seems to increase gradually, particularly in the areas that do not require a lot of regulation like logistics and traceability, but the funded projects in Vietnam need to deliver more and the regulation needs to happen faster. However, the Chinese government is advocating blockchain, as it sees the blockchain infrastructure as a vital part of its digital economy. I think the German government should take the lead here to bring clarity and security to the blockchain space in Germany, as German users are less eager to try out new things that are risky, unlike their Vietnamese counterparts.

Blocks99

The German government recently rejected cryptocurrency as a payment method. At the same time, 200 banks in Germany have joined forces to lobby for a digital euro built on blockchain. What’s your view on these developments?

Binh

The case of Germany and the Eurozone is special, as they all use the euro as the medium of transaction. So the European Central Bank and related governmental bodies need to find their stance here. It might not be wise to start an individual digital euro blockchain in a particular country without thinking about what it would mean for all stakeholders in the Eurozone if this new type of medium of transaction is created.

Blocks99

Please talk about the cryptocurrency and digital asset regulatory landscape in Vietnam now. As you are deeply involved in FinTech space in Vietnam and have been working with the State Bank of Vietnam, we would like to hear your view of the SVB stance on digital currencies – to what extent is the SBV ready to regulate them?

Binh

I think the Vietnamese government is doing a great job in terms of keeping up with development in the space, and I believe that they are ready to regulate it. However, in terms of changing or implementing new regulations, it is just always hard and takes time to push things forward in Vietnam. 

Blocks99

The Advisor to the Thai Minister of Commerce shared his thoughts about the regulation of digital assets in a recent interview with Blocks99. Among other things, he pointed to the stifling effects of overregulation on the industry. He also talked about the fact that Singapore has very little regulation of digital assets and has seen a lot of growth in that space. What are your views and what approach do you think Vietnam should take?

Binh

I strongly advocate a blockchain sandbox in Vietnam to enable innovation while protecting customers and investors, as a lot of investor money has been lost in Vietnam in the last years.

Blocks99

China recently passed a blockchain law and is launching its own national digital currency. Do you think Vietnam will follow the same path?

Binh

I think the Vietnamese government draws on international experience in terms of success and failure to find its own path. So if this turns out to be a success in China, I am sure it would give Vietnamese policymakers more evidence to push things forward more quickly.

Blocks99

Swiss-based PwC Partner Guenther Dobrauz recently shared his views in an interview with Blocks99. One of his thoughts was that an ecosystem needs a cluster of innovation actors, a network of directly or indirectly connected players and catalysts like intermediaries, media companies, consultants and advisors. What are your thoughts? What does Germany need to do to become a blockchain powerhouse?

Binh

I also believe that the entire Blockchain ecosystem needs to work closely together to promote adoption and, in doing so, make the pie bigger. It would be very hard for ecosystem stakeholders to be successful in the long run if they don’t collaborate.

Blocks99

Germany has recently passed a law that will allow banks to handle cryptocurrency for their customers as of January 1, 2020. What are your views? What effects do you expect?

Binh

The new law is a major step towards making cryptocurrencies more mainstream. I am sure that some German banks will see the potential of diversifying their financial products with crypto. I hope that bank employees are well prepared to deliver consultancy to customers about the different types of cryptocurrencies and provide proper risk evaluation analysis to protect investors from crypto investing pitfalls.

Blocks99

In your research, you have analyzed how the issuance of alternative cryptocurrencies – altcoins – alongside Bitcoin weakens Bitcoin’s daily returns. It is in the general interest of all crypto players to move away from the extreme volatility in recent years and get to a place where people can rely on the value of the digital assets they are trading. Where do you see this trend going?

Binh

I think crypto players should know why they are holding cryptos. If the crypto players want to trade for profit, they should actually love the high volatility, since it opens up more opportunities for high profits. If they are interested in the long-term success of a project or company, maybe they should also consider buying the traditional equity of blockchain companies instead of buying cryptocurrencies. The high volatility of cryptocurrencies is mainly due to the unclear fundamental value of the assets, and equities are easier to price than cryptocurrencies in my opinion.

Blocks99

One of your papers looks at the asymmetrical effects of monetary policies on cryptocurrencies. Such a correlation seems like a disappointment, considering that the whole idea behind the first and still most widely used cryptocurrency, Bitcoin, was to establish a digital means of payment disengaged from central bank control. Please talk about your findings and what we can learn from them.

Binh

Normally, when a central bank uses a tightening monetary policy that increases the interest rates, asset prices will go down, since the future cash flows of assets will be discounted more heavily. In the case of Bitcoin, however, prices tend to go up when the Chinese Central Bank tightens the monetary policy. This suggests that there is capital flight from the stock market to the cryptocurrency market during tightening monetary policy regimes.

Blocks99

You are Vietnamese-German and have studied and worked in Germany until very recently. What brought you to Vietnam and what keeps you there?

Binh

I enjoy living and working in Vietnam because of the great spirit of the people here. You can truly feel the optimism and hands-on attitude and it is great to experience them on a daily basis.

Blocks99

Is there anything you wish to add?

Binh

Many thanks for giving me the opportunity to share my thoughts. I just would like to add that people in Blockchain space who are interested in collaboration and research, for example on a PhD thesis, can contact me on LinkedIn any time.

Blocks99

Thank you!

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