While Bitcoin and other cryptocurrencies struggle to break into the mainstream, blockchain – the underlying technology – continues to attract investor interest. And while global banks are still figuring out how to reap its benefits, small companies are launching real-life solutions. One of them is even giving solutions away for free.
"[Blockchain] is a mass-market product. It's going to touch every consumer and business," says Ken Lo, co-founder and CEO of ANX International. "It will revolutionize every part of our life, the way that the internet has revolutionized everything."
Hong Kong-based ANX International, which Lo established in 2013 together with co-founders Hugh Madden, the CTO and Dave Chapman, the COO, started as a Bitcoin exchange. "We wanted to facilitate easy purchase and selling of Bitcoin," he says.
In the early days of excitement about Bitcoin's potential, with a vision of high-frequency trading and the value of the cryptocurrency skyrocketing, the co-founders leveraged their earlier experience in telecom industry and banking to create a high-powered platform surpassing anything on the market at the time.
"We thought it was going straight to the Moon," says Lo. "We were the only Bitcoin exchange that was able to support ten fiat currencies and trading against all digital assets in one order book." (Today the ANXPRO platform supports trading in eight digital assets, including Bitcoin, Litecoin and Ripple, but not Ether.)
Alas, the high hopes didn't materialize as the hype around Bitcoin faded. "We were looking at millions of trades per second," says Lo. "Now it's actually ten trades per minute. We developed a Mack truck to deliver flowers."
All the effort wasn't for nothing though. The robust technology gained recognition in the fledgling Bitcoin industry, and as others jumped on the bandwagon, Lo started getting inquiries about leveraging the platform for use by other companies. Soon the company refocused on providing blockchain-based solutions merged with payment networks.
Initially ANX International provided customized enterprise implementations of their platform. Its first paying client was another Bitcoin exchange, which launched in January 2014. Its other clients include insurance companies, banks, global merchants and retail businesses.
Delivery of a customized implementation may take up to six months and require IT staff, consultants, project managers. The fast-moving and nimble world of cutting-edge Fintech, however, called for a simplified, quicker approach.
Following one of its vision statements, "bringing the blockchain technology to the masses" in Lo's words, ANX started helping other companies merge blockchain technologies with traditional payment networks. This has led to the launch, in May 2016, of ANX Blockchain Services (ABS), a cloud-based platform offering free and instant access to blockchain applications.
Users of ABS can create a digital asset for their business (loyalty points, tokens, vouchers, coupons, even their own currencies), set up wallets - accounts - for their clients, and build an ecosystem in which new units can be created, transferred and traded for fiat currencies or for other digital assets. They can also issue debit cards which facilitate cashing out of the digital assets via standard payment networks like Visa.
Such a blockchain-based solution, which crosses borders easily, is particularly useful for large e-commerce companies. One of ANX's clients has presence in 20 countries.
Most of ABS’s early clients use the platform to manage their own loyalty point programs. Among them Lo mentions an e-commerce site selling shoes. Another company uses the platform to manage digital vouchers which serve as currency across the company's several online stores. Lo declines to name any of his clients as most of them treat blockchain-based solutions as highly strategic and are reluctant to talk about plans or new implementations.
By late August 2016, the number of clients on the platform has surpassed a hundred, and ANX had to restrict new onboardings, putting the applicants into a queue. The highest number of ABS's clients is from China, many are in Japan and Europe.
Lo compares the position his company occupies in the blockchain ecosystem to that of Amazon Web Services in cloud computing. "We provide hardware, a server, you run your application on top," he says.
The platform is free to use for the time being, while ANX tweaks its performance and tries to achieve something that resembles mass adoption. In the future, Lo sees the business develop a tiered model where larger clients, or those looking for customized solutions would pay higher fees.
In developing and promoting blockchain solutions, ANX strives to remain technology-agnostic. ABS runs on the Bitcoin blockchain, but depending on the requirements, the enterprise solutions the company offers may use any of the newer protocols like Open Assets, MultiChain or Ethereum.
Not a magic solution
A common concern about Bitcoin transactions is the processing time, which can be up to ten minutes, or longer if a higher transaction confidence is required. (The more ten-minute cycles have elapsed since the transaction, the higher the certainty that it won't be reversed.) For low-value loyalty points however, ABS provides a "zero-confirmation" option, which means transactions are instant. The risk of reversal and the minimal cost of remediation are absorbed by the asset issuer.
Another concern is the high volatility in the value of digital currencies like Bitcoin. Private assets like loyalty points, even those that piggy-back on the Bitcoin blockchain, are not affected by the value of the cryptocurrency. The value of the private asset is determined by the issuer.
While optimistic about the future of blockchain as technology, Lo admits that digital assets aren't a solution to all problems and in all markets. In banking in particular, he sees the biggest opportunities in areas underserved by traditional financial services, or where these services are expensive. So far, cross-border payments have seen the most activity among Bitcoin-related startups.
Retail or P2P payments are also ripe for an upgrade, and in his vision blockchain can help. "People just think it needs to be complicated," he says. He would like to see payments become more like the Uber experience, happening behind the scenes, without cash changing hands or a card being pulled out.
But is it secure? "Blockchain is democratizing the transfer of value, like the internet has democratized the transfer of information," says Lo. And although it isn't a panacea, it can solve many of the financial industry problems, "because it is the most secure transaction ledger known today, bar none," he adds.
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