Can Hong Kong usher in the next “Octopus Moment” with Web3

Many people say that the more than 20 years that Hong Kong, China has contributed to the technology industry, are more than 20 years that have been constantly missed. The reason why it is said to be “missed” is that Hong Kong is not without innovation capabilities.

The introduction of the Octopus card in Hong Kong in September 1997 quickly became the most popular electronic payment system in the region and a symbol of the city’s ability to nurture innovation and technology.

But in the era of mobile Internet, Hong Kong launched a voice IM application Talkbox one step ahead of the mainland, but it was eventually surpassed by WeChat; The team of the School of Engineering of Chinese University was established, but then Shang Tang chose to take root in Shanghai. Not only that, the Chinese University of Hong Kong, Hong Kong University of Science and Technology and other colleges and universities are also sending a large number of talents to enterprises and academia every year.

The slow development of Hong Kong’s technology industry was initially blamed by some on the failure of the “Silicon Port Project” around 2000.

In October 1998, Tung Chee-hwa, the then Chief Executive of the Hong Kong Special Administrative Region, put forward in his second policy address after taking office, that Hong Kong should be developed into an international innovation and technology center. However, this project has not been able to move forward. On the one hand, it is because the government has a very low right to speak on the approval land, and on the other hand, it also includes the restrictions on the export of semiconductor manufacturing equipment to Hong Kong by the United States at that time.

But these reasons are obviously not enough to explain the later problems. In the boom of the rise of the mobile Internet and AI, many companies are latecomers that only started to develop around 2010. The failures in these areas are mainly due to factors such as high labor costs in Hong Kong, lack of capital attention in the technology field, and imperfect industrial chains and markets.

Wang Tao, founder of Shenzhen drone company DJI, once said when the third Chief Executive Liang Zhenying came to investigate and asked whether DJI would relocate to Hong Kong: “The world’s best industrial chain division of labor is in Shenzhen. The best engineers are in Shenzhen, where the cost of starting a business is very low, Shenzhen has the best industrialization system, and DJI is inseparable.”

In addition, Hong Kong’s real estate industry, financial services industry, trade and logistics industry, and tourism industry together account for 60% of its GDP, resulting in insufficient capital attention to technology. For example, although the face recognition technology of SenseTime was born in Hong Kong, the capital and market it grew up with depended on the mainland. How can Hong Kong break out of the situation and catch up with the nearly 20 years it has lost?

However, nowadays, the Web3 industry such as NFT and Metaverse is developing rapidly in Hong Kong, and a new batch of digital technology-led start-ups are gradually emerging. The city may usher in its next “Octopus Moment”. Last year, SenseTime also returned to Hong Kong to list on the Hong Kong Stock Exchange, and its share price rose by more than 23% on the first day, surprising the market.

Perhaps, Hong Kong will gradually take off its “label with innovative ability but not innovative soil” and overtake in corners on the Web3 track.

Can Hong Kong usher in the next "Octopus Moment" with Web3

“Octopus Card” Symbolizing Technological Innovation

When the Octopus card was launched in September 1997, the homegrown electronic payment system became Hong Kong’s most high-tech application, making it an attractive place for business in a world-class infrastructure, rule of law, and business-friendly A symbol of what can be achieved in a city with policies and an expanding tech talent pool.

According to the Octopus card operator, the widespread acceptance of the contactless smart card has led to the successful expansion of the use of this contactless smart card from the city’s public transport network to parking facilities, tunnel tolling, schools, retail, and even residential and commercial use Building access control, etc. The technology has since been adopted by various projects on the mainland, the Netherlands, the UAE and New Zealand.

Even at a time when other e-wallets were available in the market, most Hong Kongers (70% of about 6.3 million eligible residents) chose the Octopus digital payment platform last year to store their government-provided HK$5,000 consumption vouchers. As at 31 December 2020, there were approximately 30.4 million Octopus cards in circulation in Hong Kong.

Can Hong Kong usher in the next "Octopus Moment" with Web3

Citizens swipe Octopus cards at Sham Shui Po MTR Station to receive the latest batch of Hong Kong government consumption coupons

However, nearly 25 years later, Hong Kong’s hopes for the next “Octopus Moment” have never been realized again.

Achieving this aspiration has recently been complicated by a series of disruptive events: anti-government protests in Hong Kong, the US-China trade war, the coronavirus pandemic, restrictions imposed by the city’s “dynamic zero Covid-19” policy, And in the recent wave of immigration, Hong Kong has experienced a series of economic slowdowns and brain drains.

COVID-19 Accelerates Web3 Industry Expansion

Still, after the rapid growth of companies such as artificial intelligence firm SenseTime and freight logistics service provider GoGoX Holdings (formerly GoGoVan) in recent years, some research in Hong Kong’s tech sector suggests that a new wave of digital-led businesses may gain ground. Break through and become the new mark of the city.

And recently, Yat Siu, co-founder and CEO of Animoca Brands, a major video game and venture capital firm headquartered in Hong Kong’s Cyberport, also said that the Hong Kong tech industry has shown some exciting innovations.

Animoca was listed on the Australian Securities Exchange from January 2015 to March 2020 and has now made over 200 investments in various NFT-related blockchain companies, including popular NFT marketplace OpenSea, NBA Top Shot digital collection Product maker Dapper Labs and Metaverse game Alien Worlds, among others.

Can Hong Kong usher in the next "Octopus Moment" with Web3

Hong Kong’s latest tech unicorn Animoca Brands bets on video game NFTs

“During the last few years during the Covid-19 pandemic, industries related to the Metaverse and Web3, including NFTs, have taken off. Many new startups have emerged in this space, and they are working in areas such as Play to Earn, virtual real estate, and eSports. flourishing,” Yat Siu added.

The Metaverse is an immersive virtual world where people’s digital identities can interact with each other as they would in real life. Web3 is a new version of the World Wide Web based on decentralization and blockchain, the digital ledger technology behind cryptocurrencies such as Bitcoin.

NFTs are unique strings of blockchain registration data representing ownership of digital files. Therefore, NFTs are considered valuable because people can buy and trade these digital assets just like physical objects.

“NFTs represent the future of digital property and the Metaverse,” Siu also said, “The space is still young, and there are plenty of opportunities for anyone with an enterprising spirit, and it’s the best thing people should consider when developing their careers and exploring new ideas. one of the areas.”

In addition, Casey Lau, co-founder of StartupsHK, a Hong Kong startup community with about 5,000 members, also expressed his bullishness on the field: “Overall, I think Web3 is exciting and will eventually touch every industry.”

Immediately afterwards, Lau, who is also co-host of Asia’s largest technology event “RISE”, also said, “Although we have not really solved all the problems in Web2, the market has changed a lot compared to Web1, but we still need Keep going.”

NFT and Metaverse businesses thrive in Hong Kong

Web1, the earliest version of the Internet, was developed at the initiative of the U.S. government’s Defense Advanced Research Projects Agency. Meanwhile, Web2 describes the current state of the Internet with more user-generated content and ease of use.

Web3 takes the internet to a whole new level, using a decentralized network to return control of data to all users.Currently, Hong Kong has developed a vibrant community of Metaverse and NFT enthusiasts, with artists using cryptocurrencies to sell their works as NFTs, and various cartoon avatar projects competing for money and attention.

Can Hong Kong usher in the next "Octopus Moment" with Web3

Degenerate Ape Academy is a popular NFT project on the Solana blockchain, they rented an advertising space in Central during the recent Christmas and New Year holidays to promote their NFT

Additionally, Hong Kong-based Metaworld Development launched in March to attract people to invest in NFTs. These NFTs are expensive virtual lands created on Metaverse platforms Decentraland and The Sandbox, and the Metaworld team’s strategy is to trade portfolios of virtual lands, lease them to major brands, and distribute capital gains to NFT holders.

In the same month, the South China Morning Post announced that it would spin off its blockchain-based NFT business and set up a new company called “Artifact Labs” independently to convert the art, photos and content of Hong Kong’s 118-year-old English-language newspaper into tradable of NFTs. As an independent entity, Artifact Labs can also help turn the property of other organizations, including schools and museums, into digital collections.

Among them, the original collectible item, the “1997 Premium Collection,” which achieved sales of $126,000 in March, was developed using a blockchain metadata standard called ARTIFACT. The standard was specifically designed for historical and archival NFTs, built on the Flow blockchain, and a second series of the same NFT sold out in just over two hours in April.

The success of this project demonstrates the continued growth momentum of NFTs. According to data from blockchain data platform Chainalysis, the NFT market has boomed in the past year, and its value has exceeded $40 billion.

Can Hong Kong usher in the next "Octopus Moment" with Web3

According to data from blockchain data platform Chainalysis, the global NFT market will exceed $40 billion in sales in 2021

And earlier this month, internet company Yahoo and Metaverse platform Meta also boosted confidence in Hong Kong’s nascent Metaverse industry. Meta said the city will serve as a testing ground, where it will launch initiatives to explore the potential uses of virtual worlds in everyday life. Subsequently, Yahoo also announced that it will launch a series of Metaverse activities, explore immersive advertising technology and release a limited number of NFTs.

Investment risks increase, and the industry urgently needs supervision

On the other hand, Paul Haswell, a partner at Seyfarth Shaw, an international law firm in Hong Kong, said, “While Web3 and the Metaverse are expected to have an impact on potential local innovations and the wider Internet development, there are other businesses that are more in need of capital and Government support.” Previously, Paul has been advising technology companies.

“The tech industry in Hong Kong operates on two levels,” adds Paul. “There are some gorgeous new technologies like NFTs and the Metaverse, which are generating a lot of new investment, and innovators that are working hard to change how we do business. way to protect our health and enhance our lives.”

“However, before investing in a cat NFT, please also consider investing in a new start-up health tech company or a company seeking to combat climate change.” Also, “Instead of using NFTs to sell pictures of monkeys, think about how to use them To revolutionize Hong Kong’s various systems of record and even property transactions.”

Currently, the growing interest in NFTs and virtual worlds has made the field a fertile ground for fraud and scams, victims have little recourse, and regulators have been unable to keep up with rapid market developments.

In February, however, risks involving NFTs and the Metaverse have been identified as one of the main security threats to watch this year, according to the Hong Kong Computer Emergency Response Team Coordination Centre, a government-run cybersecurity watchdog. The warning says criminals can steal sensitive user information or access their accounts to steal wealth, whether where assets are traded or stored.

At the same time, the investment frenzy has fueled criminal activity in the sector. According to Chainalysis, the total value of cryptocurrency scammed by phishing from illegal online addresses reached $14 billion last year. On June 6, the Hong Kong Securities Regulatory Commission also stated that some NFTs constituted investment products that must be regulated, and warned investors of the risks involved in investing in such tokens.

The problem of brain drain is highlighted, and the epidemic will ease and the economy will usher in recovery

In addition, there is a growing shortage of skilled labor in Hong Kong’s labor market, and there is a constant loss of talent, especially in the technology sector. A Hong Kong General Chamber of Commerce survey said some businesses have been grappling with brain drain amid the latest wave of immigration, with nearly two-fifths of their operations already adversely affected.

Last year alone, about 40,000 Hong Kongers applied to the police for a police clearance certificate, an important requirement for immigration to Canada, the United States and Australia, and the last time such a high number of applications was in 1989. Separately, 3,444 Hong Kongers were granted permanent residency in the country in 2021, more than double the number before the pandemic in 2019 and 15 times the number in 2010, according to figures from Immigration, Refugees and Citizenship Canada.

“Brain drain is Hong Kong’s biggest long-term challenge,” says Animoca’s Siu. “Currently, the city is still limited by travel activity, while the rest of the world is opening up to allow people to do business, and ultimately diversity and creativity. The loss will affect all aspects of Hong Kong’s business, culture, education and society.”

Carrie Lam, the outgoing chief executive of Hong Kong, also expressed concern, saying in March that strict anti-epidemic restrictions had led to the exit of business talent, while the exodus of expatriates would force more and more companies to operate overseas Find new talent.

However, Seyfarth’s Paul said: “As the epidemic is gradually brought under control, it is also necessary for us to think about how to minimize the losses. At that time, investment in the Greater Bay Area and the northern city plan may help encourage talents to return to Hong Kong.”

At present, discussions on the advantages of emerging industries such as NFTs and Metaverse over traditional industries are still rare, which may also be a major obstacle for Hong Kong to usher in another “Octopus Moment”.

Posted by:CoinYuppie,Reprinted with attribution to:https://coinyuppie.com/can-hong-kong-usher-in-the-next-octopus-moment-with-web3/
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