Ranging from internet companies to manufacturing-focused conglomerates, Korean companies have been rolling out series of blockchain-based business plans.
The country’s two leading online service providers, Naver and Kakao, have launched their own blockchain ledgers and digital currencies. Samsung Electronics has introduced a blockchain-powered wallet, where users can store cryptocurrencies to purchase apps at its flagship Galaxy S10 phones.
But, in the eyes of Korea’s leading blockchain fund Hashed chief Simon Kim, there is still a long way to go before such services become more successful. While describing them as “significant moves,” Kim said the conglomerates’ blockchain projects should become open-source to boost global popularity.
“Most Korean conglomerates are familiar with the mindset that ‘if we come up with something, people will use it anyway,’” Hashed CEO Simon Kim said in an interview with The Korea Herald. “But that is not the way the blockchain system works.”
“In the digital economy, the value of products is determined by the quality of the system and the number of people using them. No matter how good the products are, they are meaningless if they are limited to only a few people.”
Blockchain accelerator Hashed CEO Simon Kim Park Hyun-koo/The Korea Herald
According to Kim, openness is the key to determining the success of blockchain businesses, in which relaxed entry and divided authorities are major characteristics. For instance, Samsung’s “Blockchain Wallet,” launched three months ago, has four kinds of decentralized apps, compared to 30 from other platforms like Ethereum-based wallet Metamask.
Since its establishment in 2017, Hashed has been investing in about 40 blockchain projects launched by companies around the world. Half of them are led by companies in the US.
Compared to the US, Korean companies are much more reluctant to work with “outsiders,” Kim said. While US companies such as Facebook and Uber are being operated on an open platforms where companies do business with users, that approach appears to be rare among Korean conglomerates.
“During the initial process of developing a system, taking in-house approach is inevitable,” said Kim. “But it has to be changed if they want to venture into global market.”
Kim said he thought Koreans’ blockchain attention lies in more on digital assets than decentralized systems. In other words, people here would more likely associate blockchain with accumulating wealth rather than revolutionary technologies for universal use.
In fact, Koreans were among the first to see the business potential of digital assets. In the early 2000s, before blockchain, digital currencies were in widespread use for gaming and social networking services. There were even trading markets, where users can sell and buy online items with regular currency.
While those services helped Koreans appreciate the value of digital assets earlier, they failed to become mainstream businesses with global appeal, because most of them ran through a centralized system.
“Compared to current cryptocurrencies, those previous digital assets were operational within restricted boundaries,” said Kim, citing the example of Dotori, a digital currency available at social networking service Cyworld provided by SK Group, which ended the service in 2015.
“If the company had created an ecosystem where individual developers could provide various services, it would have created entirely different results. … Products only targeting domestic users can’t survive no matter how good they are.”
For companies to develop relevant blockchain businesses, “mass adoption” is key to ensuring their survival, he said, adding that they need to create a universal platform that people from around the world can easily access.
However, Kim asserted it was unlikely that blockchain funds would invest in developing entirely new forms of blockchain for average companies, as the public blockchain market is dominated by established global players such as Ethereum.
Instead, the investment focus should be on expanding platforms’ accessibility to potential users around the world. That is why those with a global presence with massive user bases, such as Facebook, can be game-changers in blockchain, Kim said.
“The biggest hurdle in blockchain technology right now is creating more decentralized app browsers to connect with the vast blockchain networks. There are so many complicated processes involving private keys and pin numbers with dozens of digits.”
“What is stunning about Facebook is its ability to penetrate global users. Given its 2 billion daily users and those in Whatsapp and Instagram, its business implications for the blockchain industry would be something we have never seen before.”