These days Canada is known for much more than their cold weather, tundra, and love of hockey. Canada’s technology sector is quickly expanding, especially in terms of blockchain technology.
In 2018 Deloitte conducted a survey which targeted companies around the globe with a focus on blockchain technology. According to its results, 51% of those surveyed in Canada said they are currently investing in blockchain.
Just for comparison, Canada’s neighboring country, the U.S., joined the movement towards blockchain adoption in the last place with only 24% of respondents currently investing in blockchain technology. Notably, out of all respondents from Canada, only 5% said they would not be investing in blockchain.
Overall, the top two countries with the highest interest in blockchain technology are Malta, also known as “The Blockchain Island,” and China that has the most blockchain companies in the world. The third place is highly debatable, but most experts are willing to put Canada there as it is quickly gaining ground in the blockchain.
Why Is Blockchain So Big in Canada?
Due to the country’s low energy cost, high internet speeds, and favorable regulations, blockchain and cryptocurrency industries have always prospered here.
Since mining consumes a vast amount of electricity, making it a timely and costly process, low energy rates in Canada ensure favorable blockchain environment.
More to it, mining rigs often require a substantial amount of energy to function and are often prone to overheating. The cold climate in Canada is ideal for mining due to its low energy costs and cold temperatures.
Quebec is considered the Canadian mining center as it possesses several unique features that are not seen anywhere else. Those include the local energy surplus (equivalent to 100 Terawatt hours for ten years) along with low-cost electricity and high internet speed.
Many attribute the blockchain boom in Canada to a single individual — Vitalik Buterin, the creator of Ethereum and one of the most prominent blockchain figures worldwide. According to the chief software architect of Ethereum Foundation, Nick Johnson, “Ethereum platform will be building a bridge between the readability of cryptographic addresses by humans and machines.”
The Enterprise Ethereum Alliance (EEA) is one of the key members of the Toronto-based Blockchain Research Institute (BRI). EEA has been at the forefront of blockchain mass adoption worldwide. According to Ron Resnick, the executive director of the alliance, it “will connect the Ethereum blockchain and enterprise industry which is currently evolving.”
Additionally to all the factors already mentioned above, the Canadian government and other institutions are pioneering the blockchain research and mass adoption, so let’s take a look at some of the major developments.
Ethereum and the Rise of Smart Contracts
First released live on July 30, 2015, Ethereum lays the groundwork for blockchain technology to be introduced in various sectors. Ethereum saw its first uses in Canadian markets but quickly expanded to global use within its first few months of development. At the moment, Ethereum is the second most valuable cryptocurrency, right behind bitcoin.
Smart contract development services became highly demanded in the blockchain sphere. With smart contracts, blockchain technology has been able to expand further into various sectors, with more use cases to evolve shortly.
At the moment, Ethereum is one of the most widely used networks for developing blockchains, known for its ease of use and clarity. Similar to Hyperledger, the Ethereum network puts innovation at the forefront.
Blockchain Research Institute and Global Innovation
The Blockchain Research Institute (BRI) was founded by Don and Alex Tapscott in Toronto in 2017 to address the current problems facing blockchain. What changes and solutions will blockchain bring? What kind of effects can this technology have in various sectors, from business to government?
Since its introduction, the BRI has evolved into a global think tank promoting various blockchain-based projects throughout the globe. At the moment, the BRI has over a hundred research projects underway, from education to transportation. The institute keeps its focus set on the following key industries:
- energy and power
- financial services
- resources and mining
The BRI has been praised as the pioneers in the blockchain space. They offer reduced fees for blockchain startups to access research, which in turn has led to significant strides being made in the blockchain sector. One of the reasons blockchain seems to prosper in Canada is due to the country’s focus on innovation over everything else.
Bank of Canada’s Blockchain Project
Canadian authorities put the blockchain innovation at the core of the country’s values. In 2017 the Bank of Canada, the country’s central bank, teamed up with Payments Canada, central payments processor, and R3, a distributed database technology company, to conduct research called Project Jasper.
The research focused on how blockchain solutions can improve the clearing and settlement of high-value interbank payments. The research initiative consists of three phases. Phase 1 was conducted on the Ethereum platform, and Phase 2 was conducted on the custom-designed R3 Corda platform. The Bank of Canada published an extensive white paper with its findings after the initial two phases were completed.
Among the key findings, the Canadian Central Bank noted potential cost savings through lowering the costs of reconciliation since “DLT-based system allows banks to validate their transactions at the very beginning. It could reduce back-office reconciliation work and potentially achieve major cost savings for the financial sector.”
Additionally, the Bank of Canada’s report highlighted the great benefit of using the DLT technology on a larger scale, also potentially including cross-border payments.
Phase 3 of Project Jasper primarily focuses on “a new collaboration to experiment with an integrated security and payment settlement platform based on distributed ledger technology (DLT).” Among the key findings of the report, the researchers highlighted technical and operational efficiencies, as well as cash and collateral ones.
According to the report, using blockchain on a larger scale in banking will result in “better and more efficient securities and cash interactions among participants.” In turn, this “may reduce participant costs to validate and reconcile delivery vs. payment transactions,” as well as “consolidate and optimize collateral requirements between large-value interbank payments and securities settlement systems.”
“We are pleased with the Phase III outcomes and the results achieved by bringing members of Canada’s financial market ecosystem together, including TMX, financial institutions and the Bank of Canada,” said Andrew McCormack, Chief Information Officer of Payments Canada. “Our results demonstrate the need to continue to broaden the scope of Project Jasper and actively explore what opportunities and challenges DLT could offer in the integration of financial markets and for the Canadian economy.”
Regulations Developed with Innovation in Mind
Like Malta, Canada realized the need for regulation that works with innovators rather than against them. To further develop mass adoption of blockchain technology in the country and their province, the British Columbia Securities Commission (BCSC) implemented lax regulations for the blockchain and crypto industry.
In 2017 BCBS included blockchain-centered businesses under its regulatory sandbox “to facilitate the ability of those businesses to use innovative products, services, and applications all across Canada.”
At the moment, startups in Canada’s blockchain sector are given a variety of tax incentives so that innovation can be further dedicated to the region. These allow developers in the blockchain industry to focus heavily on innovation rather than regulation. Similar practices have been instituted in Malta as well, which have quickly placed the small island country at the forefront of the blockchain industry.
Cryptocurrency and blockchain-centered businesses are fully legalized in Canada. Additionally, there’s a number of initiatives that enhance and support blockchain research in Canada.
Aion’s Development Platform
Since Ethereum’s launch, there have been a number of blockchain products of Canadian origin, many of which are now used worldwide.
One of them is Aion. Aion was developed in 2015 by Matthew Spoke, a board member of Ethereum. The goal of the Aion development team is to provide a further alternative to both the Ethereum and bitcoin blockchains.
Although very similar to Ethereum, Aion drastically differs from bitcoin, as it introduces a form of a smart contract.
Similar to Hyperledger, Aion focuses on pushing the development of blockchain technology. The Aion team offers various tools through its systems which are intended to build the blockchain networks of tomorrow. As Spoke is a former member of the Ethereum board of directors, needless say that Aion is in good hands.
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Ensuring an Innovative Future in Canada
Due to the efforts of Vitalik Buterin, Ethereum, Aion, and the Canadian government, Canada is quickly becoming a global hub for blockchain technology. The country has ideal weather conditions, regulations, and electricity rates, all of which promote an innovative industry.
The Blockchain Research Institute has also spurred innovation in Canada. The institute is always working on 100+ projects at a time, and each of these projects has ties to various industries, whether it be banking, automotive, or financial.
Canada’s focus on innovation is what is causing its quick rise in the blockchain sector worldwide. At the moment, Canada is the place to be for blockchain, and it will continue to be such in the foreseeable future.