Blockchain:

Vietnam’s opportunity in a new age of connectivity

On the occasion of a new spring, Deputy Minister of Information and Communications Nguyen Huy Dung shares his predictions about trends in digital technology in 2022 and his thoughts on the major opportunity blockchain presents for Vietnam.

2022 will be a year full of opportunities for ICT

Q: As the one directly responsible for implementing the national digital transformation programme, what is your assessment of digital transformation and ICT in particular?

A: According to Eastern traditions, 2022 is the year of the tiger, with strength and speed. It is a year to exert strength, following the hardworking year of the water buffalo.

For digital transformation and ICT in particular, such a spirit is also reflected. 2021 was when the foundation was laid for many major changes and 2022 will be when such changes become stronger and familiar with public life. It will be a promising year with opportunities in this field.

Q: What are such changes?

A: Technology in the world is developing rapidly. Today technology is not only a driver to improve productivity and economic efficiency but also a driver and key factor behind social and economic changes, and changes in everyone’s daily routines, work and entertainment.

Firstly, digital transformation is taking place in a strong fashion in all fields with three pillars, namely digital government, digital economy and digital society. The people, organisations and enterprises continue to enjoy more and more digital services with enhanced convenience and quality. This process will help reduce costs, save time and resources and enhance effectiveness for all society.

According to Dung, the digital transformation process will continue to undergo strong developments across all fields in 2022. (Photo: CE Tech)

According to Dung, the digital transformation process will continue to undergo strong developments across all fields in 2022. (Photo: CE Tech)

Next is the increase in the proportion of the digital economy, especially as traditional economic models have been severely affected by COVID-19. Digital economy becomes an appropriate choice to generate new incomes, especially for young people and those receptive to new ideas, for example taking agricultural products to e-commerce platforms, livestreaming sales and earning income from digital works.

Another driver that will shape 2022 is the metaverse. It is also digital transformation. Metaverse turns the digital world into a new living space for humans, where work, entertainment and shopping experiences are as satisfactory as in the real world.

2022 is expected to witness the development of Metaverse (virtual universe). (Illustrative image)

2022 is expected to witness the development of Metaverse (virtual universe). (Illustrative image)

The Metaverse allows humans to build a new world with very few limitations encountered in the real world. In 2022 we can expect to see the proliferation of the first applications, such as in the fields of online meetings, e-learning, shopping, entertainment in the metaverse.

And lastly and most importantly, the driving forces from digital transformation, digital economy, metaverse are promoting the formation of a new generation Internet based on blockchain platform, also known as web3 (a combination of web and blockchain).

The formation of web3 is comparable in importance to the formation of the Internet, but perhaps even greater. Web3 will be the foundation for technological advancements to turn into innovation in the way people interact, work, and organise society.

Deputy Minister of Information and Communications Nguyen Huy Dung.

Deputy Minister of Information and Communications Nguyen Huy Dung.

Blockchain solves the trust problem between people and people

Q: Among the prominent trends of 2022, you emphasised blockchain. This is also a phrase that has been mentioned a lot in 2021, so can you tell me what this trend is?

A: Blockchain, commonly known as Distributed Ledger Technology, is a technology created to solve the problem of trust in cooperation between two or more people together.

In life, in order for two or more objects to cooperate with each other, for example, to perform a contract, or to purchase and sell transactions, to transfer money, it is necessary to have trust. This trust can take the form of direct trust, for example, two partners know each other well and both believe that the other will comply with the terms provided. When the scale of cooperation involves many people, direct trust is difficult to exist, and then cooperation is often based on indirect trust in an intermediary organisation such as a notary, a credit institution, courts or associations. These intermediary organisations are responsible for setting up regulations, guaranteeing partners to participate in cooperation, and protecting the legitimate interests of related parties. It can be said that all human social activities are based on direct or indirect belief.

Blockchain allows people to cooperate with each other based on a new kind of trust called “digital trust”, or belief in the correctness of cryptographic algorithms. (Illustrative image)

Blockchain allows people to cooperate with each other based on a new kind of trust called “digital trust”, or belief in the correctness of cryptographic algorithms. (Illustrative image)

However, building trust directly is difficult to achieve on a large scale, while trust in intermediaries is not always guaranteed as all organisations run by people pose a risk of error, corruption, and abuse of power, leading to the improper operation of the intended function.

So is there a way for people to build trust without having to know too much about the partner and without the need for intermediary organisations?

The answer is yes. Blockchain allows people to cooperate with each other based on a new kind of trust called “digital trust”, or a belief in the correctness of cryptographic algorithms.

Q: So it can be understood that blockchain is a revolution in building trust among people. However, when it comes to blockchain, people often talk about cryptocurrencies, or such trends as play-to-earn and NFTs. So what is the relationship between these concepts?

A: Blockchain has existed and been developed for more than 10 years, so the concept from the traditional meaning of distributed ledger technology to solve the problem of trust between people has expanded to a general term for platforms that operate distributed applications on the basis of “digital trust”.

Blockchain has expanded into a generic term for platforms that operate distributed applications on the basis of “digital trust”. (Illustrative photo)

Blockchain has expanded into a generic term for platforms that operate distributed applications on the basis of “digital trust”. (Illustrative photo)

Let’s imagine blockchain now as a platform for a smartphone, then cryptocurrencies, NFTs, GameFi are among the many applications that run on that device. However, the reason why cryptocurrencies, NFTs, and GameFi are best known to the public is because in recent times, the cash flow into these fields has been very large, of which many investments have lacked substance and have been of a speculative nature, creating many virtual transactions with great value, thereby attracting the public's curiosity.

The fact that major cryptocurrencies such as Bitcoin and Ethereum have had large price fluctuations in recent times, or the situation of some "sharks" manipulating prices through speeches on social networks is an example of the high-risk nature of the cryptocurrency market. Besides blockchain, cryptocurrency is a new and attractive field, so it is also being abused by some subjects to scam users, so the problem of fraud, cyberattack, stealing crypto accounts is also complicated and tends to increase in Vietnam in recent years.

Countries across the world have also discussed the issue of cryptocurrency adoption, crypto market control, the legality of owning digital assets via NFTs, income tax for players of play-to-earns games and so on.These are also legal issues that, in my opinion, Vietnam needs to pay attention to in the near future, and there should be a development orientation to create an appropriate legal framework to protect good projects and prevent fraudulent projects.

Although some applications of blockchain are still controversial, as I said, cryptocurrencies, NFTs, GameFi are just some of the many applications that run on the blockchain platform. On a global scale, there are many other distributed applications being developed and perfected such as DeFi (Decentralized finance), DAO (decentralized autonomous organization), SocialFi (distributed social network), IPFS (hypertext transfer protocol).

The development of distributed applications that have brought many new solutions to old problems. Simply put, “two heads are better than one”, distributed systems replicate many features of complex systems in nature such as ecosystems, the division of labour pattern of ants, bees, flocks of birds and so on.These distributed models have proven to be highly optimized, operating more efficiently and flexibly than centralized systems. This is also the right model to connect with billions of IoT devices that will appear in our lives along with the popularity of 5G, 6G networks. All these advancements are contributing to changing the face of the Internet as we know it into a new version called Web3.

Blockchain is creating the new generation of the Internet: Internet owned by users

Q: I am surprised at the idea that blockchain can help build trust between people based on cryptographic algorithms. But I was even more surprised to learn that from blockchain, the world has evolved into a movement to redefine the internet. It seems to be a revolution of great significance, doesn’t it?

A: Yes, it does. Many technology personnel have recently shifted from large technology companies to self-starting the blockchain field, similar to the boom period of internet and DotCom companies. Leading technology companies such as Microsoft, Meta (formerly Facebook), Google, and Tencent have developed their own blockchain departments and made considerable investment in the field. This illustrates that blockchain is no longer an experimental technology but rather a major technological trend.

Blockchain has become a major technological trend. (Illustrative photo)

Blockchain has become a major technological trend. (Illustrative photo)

As I had mentioned in the previous question, a problem that blockchain solves is building digital trust between people to create cooperation that does not always need the involvement of intermediaries.

The reduction or elimination of intermediaries not only aims to cut expense, save money, and shorten transaction times, it also helps prevent intermediaries from monopolising the market, thus profits are shared among all participants in the cooperative network.

Let’s take an example of today’s social networks. Although anyone can become a user of the social network and produce content that creates value for the social network, the real owner is the company which built the social network. Users barely have the right to decide how the social network will develop, nor do they receive profit sharing from the network. They might get a very small part of the profits from the social network.

A table showing how blockchain can help smart agriculture.

A table showing how blockchain can help smart agriculture.

If we understand the innovative features of blockchain technology, we can understand why the world is pouring huge money into blockchain applications to create new business models in order to replace old ones. For example, smart contracts, which can automatically execute a contract when predetermined terms and conditions are met, have gradually replaced traditional transactions; decentralised finance (DeFi) has replaced banks; and decentralised autonomous organisations (DAO) can replace traditional forms of corporation.

It can be said that the world is repeating the dotcom bubble (the booming period of internet companies at the time when the internet was born and then became popular) again, but this time with the web3 revolution.
Deputy Minister of Information and Communications Nguyen Huy Dung

Blockchain is a shortcut for Vietnamese people to enter the digital economy

Q: The idea of large-scale cooperation based on digital trust can be said to be very new and exciting. However, what opportunities do these trends bring to Vietnamese people or are they just trends in the world?

A: In today's modern world, it is not difficult to see that the capacity for cooperation is the clearest sign of social progress. It can be seen that the major powers share a common feature that their people are very good at cooperation. Their scientists, businesses, and politicians have worked closely together to quickly bring science and technology to life. Businesses together can create standards of products and quality towards compatibility. They have also cooperated with other countries to form common trade blocs and corporations operating on a multinational scale.

Meanwhile, Vietnam is still basically rooted in an agricultural culture. Therefore, traditional cooperation mechanisms based on standards, contracts, legal commitments and role of intermediary organisations have not been effective in many cases in Vietnam, leading to the view that Vietnamese people often find it difficult to cooperate together.

This is a drawback but a fertile ground for the adoption of blockchain in Vietnam.

Through blockchain, we can create high-trust cooperation models without needing payment for inspection and supervision. For example, the application of blockchain in tracing the origin of agricultural products can help increase consumers’ confidence in Vietnamese agricultural products, thereby increasing the value of agricultural products and boosting the application of organic farming methods
Nguyen Huy Dung, Deputy Minister of Information and Communications

Q: Although Vietnam has a lot of potential for blockchain adoption, the concept of blockchain is still quite new for the vast majority of people. Does Vietnam have enough advantages to successfully apply blockchain?

A: The novelty of blockchain today is similar to the Internet in the early 1990s.At that time, most Vietnamese people did not yet understand what the Internet was. However, after only 25 years, Vietnam reached the top 20 countries with the highest number of internet users in the world. The Internet has crept into all aspects of people's lives from urban to rural areas and has become an indispensable convenience in life.

The miraculous development of the Internet in Vietnam has confirmed that Vietnamese people are very good at getting acquainted and grasping new things. Even in terms of a very new field like blockchain, Vietnam is also the country with the highest cryptocurrency and blockchain acceptance index in the world, nearly 5 times higher than users in the US, according to studies. Not to mention Vietnam witnessed the appearance of several unicorn startups in the field of blockchain such as Axie Infinity, Coin98, Tomochain and KyberNetwork.

Tomochain is one of Vietnam's unicorn startups in the field of blockchain. (Photo: trade24h.vn)

Tomochain is one of Vietnam's unicorn startups in the field of blockchain. (Photo: trade24h.vn)

Despite many advantages, there is a fact that there is still no specific legal corridor for blockchain in Vietnam. This is one of the main reasons why Vietnamese blockchain startups often locate their headquarters abroad to easily operate and raise capital. This leads to missing out on opportunities to attract large financial resources investing in the blockchain sector. There are world-famous Vietnamese blockchain startups, valued at billions of US dollars, but all of their revenue is recorded in other countries.

Therefore, one of the key tasks of the Ministry of Information and Communications in 2022 is that the ministry will develop a blockchain project and consult with the Government to take early action to gradually improve the legal framework for blockchain and related applications.

Q: There are concerns that some applications of blockchain such as cryptocurrencies could destabilise the financial system, or represent high-risk investments. In addition, a number of game-style blockchain projects have shown signs of cheating investors, which has made many people lose faith in Vietnamese blockchain projects. So what do you think about this?

A: I think blockchain is a very new field and we are yet to fully understand it, so we often have concerns. Before the Internet was introduced into Vietnam, there were many concerns about the negative effects such as revealing secrets, being used by bad guys to spread malicious information, and causing difficulties to management. However, reality has proved that after a few years it has helped boost the economy, expand knowledge for the whole people, and bring about great efficiency. Although there are still negative effects of the Internet, they are very small compared to the positive factors that this technology brings to the people and the country.

Regarding the blockchain field, I think we need to have a bold spirit like bringing the internet into Vietnam.

Deputy Minister Nguyen Huy Dung at an event on information technology and communication.

Deputy Minister Nguyen Huy Dung at an event on information technology and communication.

In particular, with very rapid development of technology today, either we join the group of leading countries to jointly create a beneficial environment for our country, or we are forever behind and give the advantage to other countries.

Technologies with the potential to completely change the face of society like blockchain only appear once every 20-30 years. And in the current era, 20-30 years is a very long time, equivalent to three to four technology cycles. We definitely cannot miss this opportunity.

The Ministry of Information and Communications is committed to accompanying enterprises and promoting blockchain development in Vietnam so that we will have a strong blockchain industry, a worthy position on the world digital technology map and a stronger voice in creating a new generation of internet technologies so that every Vietnamese can truly enjoy the values that the digital economy brings about.

Thank you very much!

Production manager: NGOC THANH
Content: NINH CO
Design: VAN TOAN
Photos: NINH CO, VN+, VOV, CE Tech