The Rise of Cryptocurrency in Vietnam

Blogs - Vietnam: June 18, 2018

As information technology has taken over and replaced traditional brick-and-mortar establishments with mobile phone apps, it was only a matter of time before this evolution started to creep into commodities and more recently, the way we handle money. About a decade ago, a new form of online technology, called blockchain technology, which increases security and offers a more streamlined approach to transactions, started to gain traction and it didn’t take long before an entirely new alternative to money was born—cryptocurrency.

In 2009, cryptocurrency arrived in Vietnam and the likes of BitCoin, Ethereum, Litecoin and Ripple started to appear as a viable alternative to cold hard cash. People who were searching for ways to transfer and receive money from overseas bank accounts without the hassle and exorbitant fees were initially the most prevalent users.

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At present, there are currently about a million cryptocurrency users in Vietnam with thousands of US Dollars in transactions everyday, according to an article from VietnamNews in September 2017.

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However, there are a few stumbling blocks with regards to cryptocurrency in Vietnam, most notably, its regulations.

The State Bank of Vietnam officially banned the use of cryptocurrency as a form of payment at the beginning of this year. However, there might be some hope as Prime Minister Nguyen Xuan Phuc has ordered relevant agencies, namely the Ministry of Finance and Ministry of Information & Communications, to look into the possibility of drafting legal framework for cryptocurrency and digital assets, which is expected to be submitted August 20. This could give cryptocurrency the push it needs to be accepted as a mainstream form of payment.

Another stumbling block for cryptocurrency in Vietnam, according to figures by research firm Nielsen, in report titled “Mobile Money” which was published in October 2016, is the unwillingness of mobile device owners in Vietnam to resort to mobile banking activities. 53 percent of people surveyed highlighted the barriers they face, such as hard to understand terminology, user interface and a lack of confidence in information security. The rest noted either that they prefer physical banking or that they don’t use the service at all.

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Another apprehension for locals is that these cryptocurrency channels do not have any Vietnamese language support. Most of the interfaces are in English, which makes it harder for some Vietnamese with limited English to use the currency.

However, this has not stopped Vietnam from consistently ranking among the top three countries in the world in number of logins to global BitCoin exchanges such as Poloniex and Bittrex.

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While cryptocurrency is largely used as an investment tool in Vietnam, its use as a means of payment will only increase once the obstacles are cleared. In due time, it won’t be surprising to see Vietnam established as one of the world’s most active cryptocurrency transaction hubs.

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