The South Korean economy, which is the fourth largest in Asia and 11th largest in the world, has been a long time leader in technological adoption and experimentation. South Korea has now set itself on the path of blockchain innovation and is fast becoming a frontrunner in this cutting-edge industry.
Home to some of Asia-Pacific’s leading blockchain service providers, crypto exchanges, and blockchain-based businesses, the Korean market has shown itself to be fertile soil for this nascent technology and the development of a local blockchain community.
In addition, the force of the crypto community is reflected in the fact that the South Korean market has, at times, accounted for as much as 10% of Bitcoin trading globally. This has resulted in Korean traders paying above the global market average for Bitcoin and other cryptocurrencies – a price gap dubbed the “Kimchi premium”.
In the face of a bear market and a string of negative comments from government officials surrounding blockchain technology, the blockchain community has continued to mature. Multiple conferences with thousands of participants and attendees were held several times a month in the country in 2017 and 2018, with many projects announcing major company milestones from the city of Seoul.
“The collaboration between members of the Korean business, developer, and entrepreneurial communities cannot be underestimated in its effects on blockchain experimentation and adoption”
Fiat-to-cryptocurrency trading is actively conducted within the country, while new digital assets exchanges are forming to meet national and international demand. These activities demonstrate an undeniable enthusiasm for industry growth within Korea.
Much has been made of previous negative sentiments expressed by South Korean government officials towards the budding blockchain economy. Historical portrayals of the government’s stance have painted a picture of an institutionalised, hostile position.
However, in reality, a number of government agencies are beginning to examine the potential benefits of adopting blockchain technology, including the National Election Committee; Ministry of Agriculture, Food and Rural Affairs; and the Ministry of Land, Infrastructure and Transport.
While it would be easy to assume that media portrayals of a negative government stance towards the cryptocurrency may deter the South Korean blockchain community from continued development, as of August, the Korean province of Jeju has reportedly been attempting to establish itself as a ‘cryptozone’. The island is aiming to utilise its status as a self-regulating province to create an amenable environment for blockchain-based businesses and to incubate the industry.
In the face of an uncertain token economy, a number of factors have fuelled Korean interest in, and adoption of, blockchain. The collaboration between members of the Korean business, developer, and entrepreneurial communities cannot be underestimated in its effects on blockchain experimentation and adoption.
With almost 20% of the population centred around Seoul, and most of the business headquarters densely packed into a few districts, the capital city provides a convenient locus for collaboration, experimentation, and joint action on behalf of the business and blockchain communities.
The desirable melange of large corporations and international businesses based in Korea, as well as the outward-looking stance of local enterprises, is proving an amenable environment for increased international cooperation and collaboration between blockchain and business.
South Korean media giants, Maekyung Media Group (MMG) and CJ Hello, for example, have recently formed partnerships with the California-based blockchain video content platform, Theta Labs. Huobi, a leading cryptocurrency exchange, with offices in China, the United States, Hong Kong, Japan, and Korea, has partnered with Korean securities firm, Kiwoom Securities Co., to create a $90 million investment fund to support transnational collaboration and cooperation between blockchain companies in China and South Korea. These initiatives and international partnerships set Korea apart as a gateway for global blockchain actors hoping to access Asian markets.
As the appeal for blockchain expertise grows globally, so too has the demand for educational initiatives to provide developers and technology advocates with the appropriate skills to fuel technological development and experimentation. In order to meet the demands of a changing economy and to capitalise upon its emerging blockchain economy, the South Korean government has taken a proactive approach towards blockchain education and training programmes.
The nation garnered international attention when it announced the foundation of the Walton Blockchain Institute, one of the world’s first educational institutions devoted to the study of blockchain technology and its potential applications, as a part of a $90 million blockchain education agenda.
“Multiple conferences with thousands of participants and attendees were held several times a month in the country in 2017 and 2018, with many projects announcing major company milestones from the city of Seoul”
A recognised force in the global blockchain industry, as the South Korean government develops a greater understanding of the value of blockchain technology, the local ecosystem can only flourish, with Seoul already positioning itself as a “Blockchain Smart City”.
Given the promising nature of developments surrounding blockchain incubation in Korea, one can’t help but wonder whether the next initiative will be to position itself as the world’s first “Blockchain Smart Country”.
At present, one thing is certain, it is at a turning point. It must now decide whether to separate the crypto economy from blockchain technology, or simultaneously support the growth of both. The government’s agenda to exclusively grow the blockchain ecosystem while deemphasising the importance of cryptocurrency as a form of financial incentive has been hit with repeated criticism since earlier this year.
Which path it takes with respect to regulations surrounding the new economy will ultimately decide the fate of the industry for 2019. There is no clear answer: slow and controlled? Or fast and unstable? Despite no obvious choice, it is a decision that must be, and will, be made in the coming months.
By JB Lee, Head of Global Operations, aelf