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When Singaporeans shop online, they tend to buy products sourced from outside the lion state.

Overall, it’s estimated that 55% of all ecommerce transactions in Singapore are cross-border – meaning the items were listed on etailers in the US or China, for example – and then shipped to their eventual destination.

The statistic is higher than corresponding figures for cross-border online trade in Japan, South Korea, and China.

This is undoubtedly strengthened by the fact that the overwhelming majority of ecommerce purchases in Singapore are prepaid with credit card and Singaporean consumers are exempt from GST and import duties as long as the total value of their order is below S$400.

Singapore is also a high-income country, meaning residents can afford to splurge, while also bereft of the same logistical challenges that stymie higher adoption of ecommerce in countries like Indonesia and the Philippines. Next-day delivery is the norm.

In 2016, the World Bank declared Singapore the fourth-best country for logistics infrastructure in the world noting it’s an important hub for regional and world trade, located conveniently in the heart of major shipping lanes.

There are other factors at play, too. Amazon and Singpost have a collaboration to facilitate the delivery of overseas purchases within three days – roughly the average time it takes to deliver a domestic order in Indonesia.

Despite the fantasized utopia of a truly open world economy – a scenario where goods and services can move unhindered to where demand is – the reality is that cross-border flows still involve a great deal of friction.

Cutting down cross-border fees for Singaporeans

The first problem is that there’s a high degree of financial inefficiency, with banks and payment processors trying to capitalize on arbitrage opportunities to bump up their own bottom line. Foreign exchange rates also work against consumer interest with banks routinely charging far more than official rates. And lastly, consumers are simply unaware of the available discounts and promotions that may be applicable to their purchase.

Jake Goh, CEO of RateX.

“Consumers are still paying unnecessary fees when they shop online, e.g. they pay 2%-5% in transaction fees on top of the price of the goods they purchase due to the frictions in existing payment networks,” explains Jake Goh, CEO and co-founder of RateX, a Singaporean payments startup that’s trying to iron out these inefficiencies and level the playing field.

RateX, which recently raised a US$2.3 million pre-series A funding round, has built a free browser extension – currently available on Chrome and Firefox – where users can get the lowest exchange rates for overseas purchases on Amazon and Taobao.

The extension also aggregates coupon codes, applying it directly to applicable sales. It leverages partnerships with Sephora, Zalora, ASOS, and more.

The extension is currently only available for consumers in Singapore, but the team expects to add Taiwan and Indonesia to its roster later this year. The long-term goal like most companies is to dominate the region.

“Southeast Asia is the world’s fastest-growing internet market. Gross merchandise value of ecommerce will rise to US$65.5 billion by 2021, up from US$14.3 billion in 2016,” outlines Jake referring to a study by Frost & Sullivan.

Jake claims RateX has helped shoppers save S$500,000 in both foreign exchange conversion fees and coupon codes since launch. He adds that they’re expanding at 30% month-on-month but doesn’t specify whether that’s in terms of users or transaction value.

A cursory examination of the website reveals the number to be actually S200,000 though.

Leveraging blockchain

The founder accepts that while the ultimate goal is to simplify cross-border commerce for all of Southeast Asia, a key hurdle the company faces is siloed infrastructure when it comes to payment and settlement mechanisms. There are significant overheads and fees involved when dealing with multiple currencies and paying merchants in different countries.

So what’s the solution to this problem? Jake believes blockchain can minimize the intermediaries involved in cross-border settlements. The team’s already working on the Rate3 token – a proprietary payment network built on top of the Stellar horizon platform that specifically looks to solve problems in fintech.

“This significantly reduces the risk and fees associated with different banks in various countries […] RateX eventually leverages on [it’s] own payment network to scale in a much more efficient way compared to existing methods,” explains Jake.

The eventual aim is for the Rate3 token to be used pervasively across the ecommerce ecosystem, bridging together shoppers, merchants, 3PLs, wholesalers, and manufacturers.

“We believe that blockchain technologies are key to creating this [enabling network],” affirms Jake.

The key challenge for the team will be convincing the disparate players in the ecosystem to come onboard by accepting this token as a payment mechanism. It’s unclear what the incentive structures will be for them to move away from existing structures towards Rate3.

At the moment, however, the primary mode of monetization is via affiliate sales, where merchants give RateX a commission of the sales it brings to them. The RateX browser extension will suggest products as users browse sites and the site has an updated list of trending deals.

“This business model allows us to give consumers zero markup on exchange rate conversion fees and transaction rate fees,” outlines Jake.

Singaporean shopping preferences

The startup’s been facilitating shoppers in Singapore for a couple of years now. What has it noticed about trends in the country?

Jake reiterates the view that Singaporeans are one of the top cross-border shoppers in the world. Despite a thriving mall culture, the sheer variety of international brands and fast-fashion trends means that all products cannot be found in local stores. Even when they are, it’s sometimes cheaper to purchase from overseas via online shopping even after factoring in shipping fees.

The two largest segments for its user base are consumer electronics and appliances – which are primarily sourced from either the US or China – as well as clothing and fashion brands that haven’t established a presence in Singapore yet.

The dynamic goes some way in explaining why Amazon set up shop in Singapore as well as the decision of Lazada to offer merchant goods from Alibaba’s Taobao marketplace. Consumer purchase intent is marked and vivid, why not double down to make the process even more seamless?

Jake also notes that most RateX shoppers display a tendency to purchase things late at night.

Online activity spikes between 10PM – 1AM in Singapore.

Mobile shopping is on the upswing, Jake says, but it’s still not the dominant channel particularly when it comes to big-ticket purchases. Desktop browsing and shopping are deeply ingrained in the Singaporean consumer psyche, a factor that Jake believes is due to the better product comparison features on a larger screen.

Singaporeans are also incredibly plugged in. The average resident has over three connected devices and the overall internet penetration rate is about 85%, one of the highest in Asia, but Singapore isn’t a mobile-first country like Indonesia or the Philippines. Consumers accessed the web on desktops and PCs before the smartphone revolution engulfed the region. It doesn’t seem like these preferences are going away anytime soon.

Bitcoin is the mother of all Ponzi schemes.

It will crash and fade at some point. But on the way to its inevitable death, the journey may make many more insanely rich. This is a global high-velocity bubble, the first in which the entire world can easily participate in.

And so it could be HUGE.

But it will end in tears.

Why? The problem isn’t that Bitcoin is digital. I’m cool with digital.

I do get that paper currency is nothing more than paper printed by a government.

But suppose I started a paper currency, the Asim Dollar, and stated that I legally cannot print more than 1,000,000 Asim Dollars ever, just like the cap on Bitcoin.

The question is would anyone use, or give a value to, Asim Dollars?

If I was the first person to think of this, in amongst a group of cavemen, I might get some traction but once everyone sees others making new paper currencies, the Asim Dollar will collapse.

That applies to Bitcoin too. Bitcoin is open source so it’s damn easy to copy, and those copies can be improved on, which is what we’re seeing happening.

The new copies of Bitcoin address some of the weaknesses of Bitcoin, in particular speed of transaction and the blockchain file size.

So when they’re better where will that leave Bitcoin?

Cryptocurrencies in general also have other fundamental issues. Given they’re decentralised who do you go to if your Bitcoin suddenly disappears? No one.

And can anyone give any assurance that today’s hack of US$64m of stolen Bitcoin will not be the first of many hacks? Nope.

Further, the lack of price stability makes Bitcoin far from ideal as a currency.

The only currencies that have maintained value are ones that are backed by something like gold or ones that are backed by legislation and a government.

Bitcoin is neither.

Bitcoin is a scam. And while blockchain technology has uses, it’s massively overhyped in large part due to Bitcoin itself.

The future of money is digital. But it’s not Bitcoin…

Source: Quora, answered by Asim Qureshi, CEO LaunchPad, 5 $1-10m startups (including Jibble.io)

After superpower China announced earlier this week that it has banned Initial Coin Offerings (ICO), the value of bitcoin fell 11.4%immediately after. Circulating speculations claim the ban will impact the large amounts of capital raised from ICO, a total of more than $1.7 billion from January to early September 2017.

What is ICO and bitcoin? What impact does it have on businesses and why did China, one of the world’s most influential countries, ban something so lucrative?

What is bitcoin?

Invented by the then-unknown creator Satoshi Nakamoto in 2009, bitcoin is a ‘peer-to-peer’ electronic currency. It has no physical form so it does not require a central location to store.

In other words, bitcoin runs independently from banks and financial institutions and without any involvement from those institutions, bitcoin transactions are ‘free of charge’ but this also means if they get stolen or lost, there is no possible way to recover losses.

ICO Explained

Craig Wright, an Australian entrepreneur, who claimed in 2016 that he is Satoshi Nakamoto, creator of bitcoin. Source: The Economist.

Cryptocurrency is any currency associated with the internet that uses cryptography – the process of converting legible information into an almost uncrackable code, to track purchases and transfers.

Cryptography was created to cater to the need for secure communications in the Second World War. It has evolved in the digital era thanks to mathematical theory and computer science, to become a way to secure communications, information and money online.

Bitcoin was the first cryptocurrency, other examples include Ethereum and Ether.

How does it work?

To buy or sell bitcoin, users need to have a bitcoin wallet installed on their desktop or mobile devices. The identity of users are kept anonymous but transactions are tracked with digital identification comprised of a bitcoin address and a private key.

Think of your bitcoin address as a transparent safety deposit box. Everyone knows what is inside but only the private key can access it. These “safety deposit boxes” are public logs called blockchain.

How do you get bitcoin in the first place? Users typically take part in mining.

Mining is the act of verifying bitcoin transactions by contributing computing power to match private key to bitcoin address. Whenever a new block of transactions is created, it is added to the chain of blocks, hence the name. Still with us?

For comparison’s sake, blockchain technology  is similar to Google Docs.

Before the arrival of Google Docs, users could only edit documents via Microsoft Word one person at a time because two users couldn’t edit a document simultaneously. With Google Docs, both parties have access to the same document at the same time if they are provided access.

Blockchain technology is like a shared document, but it is a shared ledger.

What is bitcoin used for?

Blockchain solves two challenging problems associated with digital transactions: securing information and avoiding duplication making the technology widely applicable to multiple use cases.

It also eliminates all the pain points with transferring money through traditional methods: crossing borders, rescheduling for bank holidays, high bank fees, failed/dropped transfers, etc.

“The blockchain is an incorruptible digital ledger of economic transactions that can be programmed to record not just financial transactions but virtually everything of value.” – Don & Alex Tabscott, Blockchain Revolution

Because bitcoin allows users to stay anonymous, it has raised concerns in its application to facilitate drug deals, money laundering and illegal purchases. But as with all crime, there is a price to pay if caught.

“But if you catch people using something like Silk Road [bitcoin market], you’ve uncovered their whole criminal history,” Sarah Meiklejohn, computer scientist at University College London, says. “It’s like discovering their books.”

In more positive applications, tech giants like IBM are utilizing blockchain technology for information storage in healthcare, government, and supply chain for its accuracy and transparency.

Estimated spending on blockchain technology by banks in 2019 can be as high as $400 million.

ICO Explained

The price of bitcoin has fluctuated aggressively since it became popular in 2013 when prices rose by almost 10,000% before the biggest online bitcoin exchange sent it crashing.

Telegraph recently reported that there are currently 15 million bitcoins in circulation, each of which is worth $4,231 (as of September 2017). A single bitcoin’s sharp increase in value has many sceptics believing that we are in a bubble.

ICO Explained

Back full circle, what’s the big deal with ICO?

Similar to an Initial Public Offering (IPO), an Initial Coin Offering (ICO) is when a company offers a chance to invest in a new cryptocurrency. Instead of trading shares, companies exchange their newly created cryptocurrencies, known as tokens in ICO…essentially, code.

An example would be OmiseGO ICO in August, when the payments company raised $25 million selling its OMG tokens. Since then, many news outlets are reporting millions of dollars raised in selling cryptocurrencies in a matter of a few hours.

China banned ICO because its legality is described as ‘undefined’ and it was only in July this year that US regulators began looking into it.

According to Sun Guofeng, director general of the Chinese Central Bank, banning ICO was a necessary move to stop illegal fund raising.

China-based ICOs raised about $400 million through 65 offerings with more than 100,000 investors. If it all came crashing down, China would be in hot water.

What is the future of ICO around the world and in Southeast Asia?

To clarify, holding cryptocurrencies in China by private parties is still legal. The People’s Bank of China only makes it illegal for financial institutions to hold or transact in them. It does not mean that there is no opportunity for Chinese developers and service providers in cryptocurrency.

While countries are slowly trying to control ICOs, the Southeast Asian market sees bitcoin as an opportunity to improve the financial maturity of its citizens, over 70% of whom are unbanked.

Singapore has been dubbed to be the next ICO hotbed given its a favorable location for startups, favorable regulatory standards, and supportive tax measures.

And developing markets like Vietnam are embracing digital currency as showcased by smart vending machine startup Dropfoods that announced its ICO this week and Myanmar’s SKYBIT that aims to open the country to a global market through bitcoin.

Bitcoin is not evil. Digital currency is not the bad guy. What has fueled the “ICO bubble” uproar is the excessive optimism that is outweighing rationality that usually comes with smart investing.

Tokens purchased by “investors” in an ICO can be used to transfer value within the new coin’s ecosystem, or to other cryptocurrencies’ ecosystems. The problem is that there is a high likelihood these ICO projects will fail. Why?

Take it from the creator of a famous cryptocurrency.

“Many firms are issuing a coin not because it makes sense to do so, but because they have a product they can sell quickly.” – Ethereum founder Vitalik Buterin

Financial technology is always evolving in Asia-Pacific Region.

Banks, local telcos, payment solutions providers alike are pushing to increase cashless payment acceptance and integration (e.g. credit cards, mobile wallets, and/or variations of online and offline).

However, a common roadblock faced by most payment systems is that they are often siloed and cannot interact across organizations (e.g. companies or brands) or jurisdictions (e.g. cross-border).

To break to silo? Payment providers across the region are looking to various types of solutions, including blockchain, a decentralized technology, as means to disperse functions and expand global market reach.

1[decentralized technology]: Cryptocurrency is a digital medium of exchange not controlled by any one group or agency and secured by cryptography. Block chains are politically decentralized (no one controls them) and architecturally decentralized (no infrastructural central point of failure) but they are logically centralized.

eIQ sits down with Vansa Chatikavanij, Managing Director of OmiseGO Pte. Ltd., an Omise subsidiary blockchain company, to learn more about the upcoming product, a recent $25 million ICO, and how companies can benefit from this new technology.

What is OmiseGO?

“To put it simply, OmiseGO is a decentralized payment and exchange network designed to disrupt the current payment landscape,” says Vansa.

“The idea is to enable users connected to the OmiseGO network to trade any value (e.g. currencies, store loyalty points, rewards, in-game points etc.) efficiently, securely and at low cost across the internet.”

To allow users to interact with the OmiseGO blockchain, the company will be making its first user interface application, the white-label wallet software development kit (SDK), available towards the end of 2017.

The SDK allows third party programmers to develop a wallet application for its own brand or integrated existing wallets onto the OmiseGO blockchain.

What functions could be possible for a wallet running on the OmiseGO platform?

The simplest application of the decentralized payments network would be transfer of funds between peers without the need of a bank account and/or incurring high third-party fees.

But peer-to-peer payments are only the beginning. The main use cases of OmiseGO appear to be:

1. Remittances
2. Loyalty points
3. Mobile banking
4. Asset tracking
5. Digital gift cards
6. Tokenized fiat

OmiseGO, ecommerceIQ, eIQ Insider

OmiseGO was designed with flexibility in mind.

Take for example two retailers each with a loyalty program. If both are operating on OmiseGO, their users could potentially cash in their rewards points interchangeable at either establishment; creating their own trading market.

Cross-platform transactions means grocery points could one day be exchanged for air miles.

One of the largest markets that OmiseGO will facilitate is cross-border remittance. The World Bank predicts remittances to low and middle income countries are expected to increase 0.8 percent to $442 billion.

“Through OmiseGO, senders and receivers will be able to safely transfer money locally and cross-border to their families, regardless of whichever wallet or payment platform they are on,” says Vansa.

“There is so much opportunity for companies to customize their target users and customers experience and reward online financial transactions,” says Jun Hasegawa, Omise Holdings Pte. Ltd. Group CEO.

“With addition of OmiseGO, we are taking concrete leaps towards realizing the Omise group’s mission of Online Payment for Everyone.”

“Through OmiseGO, senders and receivers can safely go cross-wallet and transfer money locally and cross-border to their families, regardless of whichever account or platform they are on,” says Vansa.

Use of ethereum blockchain makes exchanging digital currency easy and secure as each user has access to their own private keys, making it impossible to manipulate the data.

1[ethereum blockchain]: focuses on running the programming code of any decentralized application.

A $25 million boost for OmiseGO

The company recently made headlines after a successful ICO (initial coin offering) that raised $25 million by selling its OmiseGO network token – OMG tokens.

Similar to kickstarter crowdfunding, a piece of code is granted to contributors that gives them rights to earn fees by helping run the OmiseGO network.

The product sounds promising but having strong backing is useless without educating its users.

“The exciting challenge with OmiseGO is the newness of the technology. Majority of people have heard of blockchain but are either unsure how it can be used to their benefit,” says Vansa.

“Similar to when the internet first started, not many people could have imagined where it would be today.”

The long term goal for OmiseGO is to “Unbank the Banked”; become a new global tool to enable financial inclusion for both the banked and the unbanked.

Its success would be a milestone for financial technology in Southeast Asia but we will have to wait and see as OmiseGO network is slated to officially launch towards the end of 2018.

Financial Technology, or “fintech”, has been at the forefront of Southeast Asia’s growing digital adoption. In 2015 and the first half of 2016, a total of $345 million was invested in fintech startups in the region alone because market maturation and ecommerce adoption have been stagnated by payments.

In recent years, there has been an array of mobile wallets and government initiatives in the region, like PromptPay in Thailand, or Wave Money in Myanmar. Not many initiatives have involved a less explored and more popular technology in the West – blockchain and bitcoin.

eIQ speaks with Philip Lim, the founder of SKYBIT, a bitcoin startup that encourages cross border payments to a frontier market – Myanmar.

He explains the concept behind blockchain, how SKYBIT could possibly change the lives of the Burmese and why he decided to launch his startup in one of Southeast Asia’s less developed countries.

What is blockchain technology and bitcoin?

“A blockchain is a ledger of transactions which are grouped into blocks and tied together one after the other by encryption,” explains Philip.

The bitcoin blockchain is the largest and most active one, it is the token of monetary value that flows in the network.

“A blockchain is immutable, which means you can’t change its history, as the system would reject it,” says Philip. “Immutability also means that the record is seen as permanent. A good non-payments application would be for transfer of assets like land.”

“The number of bitcoin transactions per day around the world has continued to increase and has recently almost reached 370,000. Such increase in transactions could be attributed to media attention, especially of bitcoin’s steep rise in price recently but the technology has actually been around since 2009,” says Philip.

How does SKYBIT utilize blockchain technology?

Philip developed SKYBIT to create significant social impact in Myanmar by solving difficulties in transferring money to Myanmar as it was one of the factors impeding the country’s and the peoples’  development.

The SKYBIT payment processor helps Burmese businesses and aid organizations receive payments from abroad. A number of charity organizations have already signed up to accept donations from anywhere in the world.

Merchant Accounts dashboard on the SKYBIT platform

Example Ad Item on the SKYBIT advertising platform

A customer who wishes to make a payment clicks on the “Pay with bitcoin” button on the sales page, enters details such as email address and bitcoin address (used in case of refund), and is taken to an invoice page, where they can simply scan the uniquely generated QR code using any bitcoin app such as Copay, Coinbase and Bitcoin Wallet.

Invoice page and QR code generated by SKYBIT.

Payment is detected instantly and the entire process is done in a matter of minutes.

Invoice page and QR code generated by SKYBIT.

Behind the scenes, the bitcoin is received by SKYBIT, and SKYBIT deposits Myanmar Kyat into the organization’s SKYBIT account. The organization doesn’t need to handle or even understand bitcoin at all.

In case of a refund, SKYBIT can send bitcoin back to the bitcoin address provided by the customer and there is a limited amount of time to report a problem related to an invoice or request a refund, during which the merchant cannot withdraw the amount earned from the sale from their SKYBIT account.

“Signing up to use SKYBIT is far easier than applying for a merchant account to accept credit cards, as banks only want to deal with large businesses. This may encourage small merchants and even individuals to use SKYBIT and access a global market,” comments Philip.

“Credit cards also still have many problems, especially fraud and chargebacks, which can cause losses to merchants. With bitcoin, which was designed especially for the internet, transactions are detected immediately and irreversibly settled within minutes, and cryptographic checks prevent fraud,” says Philip.

“Traditional forms of payment are outdated and not entirely secure as they were designed before the internet was even invented,” says Philip.

Cryptocurrency adoption within Myanmar

Bitcoin can be purchased from SKYBIT via its exchange to effectively open up a whole new world of online shopping for the more affluent Burmese.

Myanmar banks have only recently released cards that are accepted internationally, but most locals would not qualify for one or the process takes too long.

“Traditionally, Myanmar is a very cash based society. People have stacks of money kept at home, and most understand it’s not practical,” says Philip.

To address this issue, mobile wallets like Wave Money have been introduced in Myanmar to allow locals to send local currency via smartphone, even in rural areas.

“Since Wave Money can only be used to send Myanmar Kyat, it cannot be used for international payments so Wave Money and bitcoin can actually complement each other,” says Philip.

“It makes a lot more sense to replace USD as the de-facto currency of the internet with bitcoin, as there is too much friction when dealing with traditional fiat currencies on the internet.”

“Businesses also aren’t allowed to display prices in any currency other than Myanmar Kyat. Within the past two years, many businesses in Myanmar, including Swensens and The Pizza Company, began openly quoting prices in USD. Authorities ordered them to stop because of the weakening value of the Myanmar Kyat relative to USD at the time,” says Philip. “They are afraid it will devalue the local currency.”

A social enterprise

“There have been, and still are, so many big problems that need to be solved in Southeast Asia, especially in Myanmar. Poverty is the normal mainstream thing there,” says Philip. “Most people around the world have been oblivious to Myanmar’s problems.”

“I was learning about bitcoin and could really connect with all the things that prominent bitcoin evangelist Andreas Antonopoulos was saying. For example, 5 or 6 billion people have not been cared for by traditional financial systems. He also mentioned that one of the common uses of bitcoin was for donations.”

The sky’s the limit for SKYBIT

Philip, together with a new co-founder, plan to push offline marketing in order to meet organizations face-to-face in Myanmar.

“This is not the kind of thing I can create a Facebook ad for because the technology, even just web pages and email, is so foreign to much of the Burmese,” he says.

Despite currently being one of Southeast Asia’s most underdeveloped markets, Euromonitor predicts the country will become one of the 20 ‘markets of the future’ to offer the most opportunities for consumer goods companies globally.

But opening up Myanmar to the world takes investment and finding such is currently SKYBIT’s highest priority.

“The platform is ready, and ideally will flourish once I have enough funds to open an office in Myanmar filled with a strong marketing and sales team,” says Philip. “The country is full of potential and I’d like to take the next steps in introducing Myanmar’s goods and services to global shoppers, whilst simultaneously helping the people of Myanmar at all levels of society.”

Here’s what you should know.

1. Thailand Stock Exchange to launch blockchain based marketplace

SET’s senior vice president Santi Kiranand said, the marketplace was not a trading board as there was no regulator to verify their business quality like the SET and the Market for Alternative Investment (MAI).

Startups that want to mobilise funds from this board are required to register with the authorities, run business with transparency and have a single financial account.

Due to high risks on investment, only institutional, high net-worth investors and venture capital funds are allowed to invest on this board.

The norms for the marketplace would be finalised next month.

Read the rest of the story here.

 

2. JD.com spins out its financial services business

JD Finance, the financial services business belonging to Alibaba competitor JD.com, is going independent.

JD.com is divesting its entire 68.6% stake for 14.3 billion RMB, or around $2.1 billion. The deal will see the ecommerce firm take 40% of JD Finance’s pre-taxi profits once its business once it has positive pre-tax income.

The move to independence hedges any risk that JD.com investors may feel around JD Finance, which was valued at $7.1 billion at the time of last year’s financing.

Read the rest of the story here.

 

3. eMarketer: Lazada dominates Southeast Asia – for now

For now, much of the ecommerce activity and web traffic in Southeast Asia is dominated by one large ecommerce retailer—Lazada Group.

SimilarWeb’s figures for Thailand showed that Lazada claimed almost 41 million monthly page views during December. That was more than 16 times the number garnered by JIB.co.th, the second-place finisher.

With Amazon poised to enter Southeast Asia sometime this year, and the incoming buzz of Korean e-marketplace 11street, Southeast Asia’s B2C landscape could very well look different by the end of 2017.

Read the rest of the story here.