Can Korea be a global leader in the blockchain space?

Charles Pyo – venture capitalist, blockchain evangelist and member of the Presidential Committee on the Fourth Industrial Revolution – seems to think so, judging from comments he made at the recent Chain Plus conference in Seoul.

The blockchain and crypto industries have faced challenges due to strict regulations, but there is still some room for growth, he said. “There is little chance for Korea to become a leader in fields like artificial intelligence and autonomous cars, but it has some chance to become a crypto powerhouse.”

Pyo particularly cited the volume of digital currency traded in Korea’s national currency, the won. At the end of 2017, the height of the crypto bubble, Korea accounted for no less than 36 percent of global crypto trading. Now it accounts for 6 percent, but this is still good enough to rank fifth in the world.

Pyo wasn’t the only one touting Korea’s blockchain potential at Chain Plus. One speaker praised the country’s regulatory openness to blockchain technology, the ICO ban notwithstanding. Another speaker, Seoul’s mayor Park Won Soon, drew attention to his own city’s attempts to cultivate the blockchain industry through innovative administrative services, including the development of blockchain-based citizen card.

Blockchain observers have long taken an interest in Korea – not surprising given the country’s prominence in global crypto trading, its traditional role as a global testbed for emerging technologies and Seoul’s professed support for blockchain technology.

The Japanese crypto news site BITTIMES recently named Korea one of the world’s four leading crypto nations (link in Korean) alongside Japan, Malta and UAE. The site praised Korea’s success in putting blockchain into action, pointing to the availability of crypto ATMs and the growing number of shops that accept crypto payments. It also cited the Korean government’s blockchain projects, including its development of a beef traceability system and blockchain-based voting solutions.

Also lauding Korea’s crypto possibilities was Coin Rivet’s Emma Thompson, who examined how Korea was becoming a “big player” in cryptocurrency. She writes, “South Korea has become one of the most welcoming countries for the cultivation of blockchain.”

She notes how one Korean province partnered last year with the Israeli startup Orbs to develop its own cryptocurrency. She also points to the government’s decision to bolster investment in blockchain projects and young Koreans’ own enthusiasm for cryptocurrency.

“The future is looking strong for South Korean cryptocurrency, and is set to only get better.”

OK, let’s not just crown Korea just yet

While many have praised Korea’s blockchain potential, others are less optimistic.

Indeed, the influential Korean business newspaper Korea Economic Daily just ran a series of articles marking a year since the government mandated that crypto currency traders register their real names and banned foreigners from opening crypto accounts.

One piece subtly entitled, “Korea, a Grave for Virtual Currency,” points out that Korean exchanges Bithumb and UPbit were once the world’s two largest traders of Bitcoin, but have since fallen into the 40s (we’d point out, however, that Bithumb is still a leader in digital currency trading overall). Another piece tells of an “exodus” of Korean exchanges and blockchain firms to avoid regulations such as Seoul’s de facto ban on ICOs.

This sentiment was echoed in the Korea Times, which warned that Korean tech giants were “fleeing” to Japan for more opportunities:

One industry official, asking for anonymity, noted that Kakao may be looking overseas as the government has shown a somewhat negative attitude toward blockchain on concerns about virtual currency speculation.

‘ICT companies’ efforts to expand into new businesses are limited by several factors here including regulations,’ he said.

Looking on the bright side. Mostly.

As many observers note, Korea’s authorities have adopted a dualist approach to blockchain – on one hand, distrust of cryptocurrencies, but on the other hand, support for the underlying technology, complete with subsidies, tax breaks and government-driven blockchain projects. Whether that two-sided approach is sustainable, however, can be debated.

Still, Korea’s experience in the mobile revolution might offer a glimpse of blockchain’s future. Though Korea’s enthusiastic adoption of mobile technology is the stuff of New York Times profiles, many forget that it took three years for Koreans to see their first iPhone, the device that ignited the start of the country’s smartphone era. But once the barriers to smartphone adoption – in this case, opposition from local manufacturers and telecommunication companies – had been overcome, all parties involved took to the technology with gusto.

Similarly, should Korean lawmakers and regulators jump into the proverbial deep end and craft a regulatory regime that lets blockchain reach its innovative potential, Koreans could embrace the technology just as enthusiastically as they did the internet and the smartphone. This may take some time, however – time for the technology to work out its kinks, and time for policy makers to understand the technology and espouse it.