Blockchain technology is a distributed, decentralized ledger that tracks the origins of digital assets. The data on a blockchain cannot be manipulated due to its fundamental architecture, making it a viable disruptor in areas like payments, cybersecurity, and healthcare. With the booming fintech industry and the economy’s increasing digitization, blockchain technology has garnered and continues to gain huge appeal among local and international investors. The potential of blockchain technology in Vietnam is discussed in this article.
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Blockchain Landscape in Vietnam
Vietnam is a very attractive market for fintech businesses in general, with a huge underserved population and backed by strong economic growth (6.17% in Q3 2021 despite the Covid-19 pandemic). To keep up with the rest of the world, the government is leaving no stone unturned in promoting innovation and entrepreneurship.
The tech/fintech community in Vietnam has embraced blockchain technology with enthusiasm. The majority of blockchain operations in Vietnam are connected to finance/banking and are taking the form of exchange platforms (Bitcoin.vn, VBTC, Remitano, etc). The Vietnamese blockchain landscape is likely to further benefit from the country’s growing fintech prospects, with the total transaction value of digital payments being US$8.6 billion and the number of registered mobile wallets reaching 6.5 million in 2020.
Forecasts by TechSci Research indicate a potential double-digit compound annual growth rate (CAGR) for the blockchain industry, partly thanks to venture capitalists and cybersecurity concerns. This cutting-edge technology is seeing more support from the Vietnamese government as its adoption spread across different applications (such as digital ID and smart contracts) and to the public sector. From e-commerce and digital banking to smart city development, blockchain tech is being put to work in tandem with 5G and other infrastructure to maximize sustainable growth.
Challenges and Opportunity in the Vietnamese Blockchain Market
The Vietnamese market’s unique characteristics present both a significant barrier and a wealth of potential for cryptocurrencies. The Vietnamese market is dominated by cash, is informal, and lacks digital financial infrastructure. High costs, banking distrust coming from a lack of knowledge, and a lack of infrastructure are all reasons why Vietnamese people are hesitant to use personal banking.
With more than half of the population owning a smartphone and an increasing number of internet users (70,3% million out of a total population of 98.5 million in 2021), Vietnam provides a fertile market for mobile banking and payments, as long as the public understands and trusts the mechanism.
Prospects of Vietnam Becoming a Blockchain Hotspot
In terms of financial inclusiveness, just 31% of Vietnamese people hold bank accounts. However, smartphone use is on the rise, with 61 million people owning one in 2020, suggesting that app-based, blockchain financial services might bring the unbanked population into the fold.
More people might develop their wealth and establish financial histories instead of fighting to obtain loans or invest their money. This provides tremendous possibilities for Vietnamese businesses to bootstrap their ideas and expand their user base, particularly by tapping into the country’s large unbanked population. Vietnamese companies are now looking to create applications outside of bitcoin, thanks to excellent programming abilities and a vibrant community. This will help the nation strategically place itself on the global blockchain map in the long term, with the potential of becoming the global Blockchain hotspot of Asia.
Why Invest in the Blockchain Industry in Vietnam?
Blockchain is gaining popularity among Vietnamese fintech businesses as well as the previously reluctant government. Government ministries and blockchain firms are already working together to close the regulatory gap. The government has made a decision dated June 15, 2021, authorizing the plan for e-government development toward the digitalization of government for the period 2021-2025. Furthermore, the Ministry of Finance of Vietnam stated in March 2021 that it has created a study group on virtual assets and digital currency with the goal of developing a suitable regulation and management system for them.
The prospects look very promising not just in government sectors but also in private sectors. In late July, Shark Nguyen Hoa Binh’s NextTech Group made a 2.5 million dollar investment in AntEx Fintech Blockchain Ecosystem.
Consequently, Vietnam continues to be a hotbed for blockchain research and development. Long-term tax cuts and other investment incentives are available to high-tech firms. The country’s interest in blockchain technology is on a quick rise, and firms in the sector are helping to educate future engineers. In fact, an interview with recruitment technology platform JobHopin mentioned blockchain as the hottest keyword in 2021. There has never been a better time to invest in the business.
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