This article was first published in The Edge.
Project Orchid, the programmable money pilot by the Monetary Authority of Singapore (MAS), is a safe way for Singaporeans to take “baby steps” into blockchain currencies and Web 3.0, says a panel of fintech experts at the Singapore Fintech Festival (SFF) 2022 on Nov 4.
“Project Orchid — I think that’s a good government initiative, not in a wild way but in a controlled and safe way for the man on the street to try out,” says Ho Chee Wai, Singapore country head and head of neobanking at global business payments platform Nium. “Once they know the basic concept, I think they would be able to appreciate the more sophisticated variations of it and [subsequently] upskill themselves to understand more.”
However, while schemes like Project Orchid can drive economic incentives of using Web 3.0 technology, it is still in its “early days” for widespread adoption among the financial world, says Adrian Chng, founder and chairman of Singapore-headquartered investment management fintech Fintonia Group.
“It’s still in the early days, but what still excites me is what public blockchains’ new behaviour, and new economic systems [have to offer],” says Chng to The Edge Singapore. “Soon, we can use a different design, a different economic incentive system to change behaviour [in the Web 3.0 space].”
The MAS-backed project could also err on the side of caution. To Chng, Project Orchid is but a “more efficient database”, as MAS attempts to set rules on its project amid a fragmented Web 3.0 landscape. “What Project Orchid is trying to solve is [something] that the industry can’t agree on together,” he adds.
Launched in November 2021, MAS’s Project Orchid is an exploratory project examining the infrastructure needed to create a Central Bank Digital Currency (CBDC) system for Singapore, along with its use cases.
MAS released on Oct 31 a report detailing potential uses of a digital Singapore dollar, should the need arise in the future. The report marks the end of Phase 1 of Project Orchid, which explored the concept of purpose-bound Singdollar, one that lets senders specify conditions such as the validity period and eligible retailers.
Also known as purpose-bound money (PBM), DBS Bank, Grab, Oversea-Chinese Banking Corporation (OCBC) and United Overseas Bank (UOB) announced on Oct 31 four trial projects in 2022 for this form of digital currency.
Use cases for these four pilots range from redeeming government-issued vouchers to disbursing grants for SkillsFuture training providers.
Looking ahead, MAS says a digital Singdollar can appear in the form of a retail CBDC or privately issued money. While a CBDC is the digital equivalent of the notes and coins issued by the MAS, privately issued money refers to tokenised bank deposits or securely backed stablecoins.
While Chng agrees that Project Orchid is indeed a great initiative by the government, he believes that what really is going to change the world is Web 3.0 initiatives.
“[What we have] right now is a faster horse. What I’m thinking about now is breakthroughs — I want to be able to move a car,” adds Chng.