ICONLOOP CEO Jonghyup Kim spoke with the Korean-language daily Hankook Ilbo earlier this month to discuss the state of the blockchain industry.

Cryptocurrency = taboo?

Kim told the paper that the worst side effect of the Bitcoin bubble was that it made cryptocurrencies themselves something of a taboo. Considering last year’s situation, when you had market chaos and even suicides, you could understand the Korean government’s response, said Kim, but it was still unfortunate that the bubble had cast a cloud over the development of blockchain technology, including cryptocurrencies. Cryptocurrencies were a core sector in the use of blockchain technology, one you couldn’t ignore in the end. He said we urgently needed to create a system for cryptocurrencies, but since the Bitcoin bubble burst, the government loathed to even mention cryptocurrencies.

In fact, when ICONLOOP asked for financial regulations to be eased so that it could develop blockchain services, the relevant government bodies had responded that their services have nothing to do with cryptocurrency.

Because of this, many blockchain companies are focusing on developing things other than cryptocurrency, such as services that take advantage of blockchain’s security. Though the general public remains largely ignorant of these services, some products have caught the attention of their respective industries. An example would be Kyobo Life’s construction of a blockchain-based system to simplify the insurance claims system.

Another example would be one of ICONLOOP’s leading projects, the “my-ID” service. This service grants users the ability to access financial services that require an ID while allowing the user to retain authority over the use of their identifications. It was also included in the Korea’s Financial Services Commission’s “Innovative Financial Services and Regulations Sandbox.”

Peals on a pig?

Though the blockchain industry has focused on developing services other than cryptocurrencies, the government’s view needs to change, too, if the market mood is to correct itself.

Kim said though it was true that the blockchain-related industry was growing through many government projects, the expandability of blockchain wasn’t being properly realized in many cases. He likened the situation to building a broadband internet network and then using it only for email. Government bodies and public institutions were adopting blockchain-based systems, but most were simply substitutes for anti-virus apps and other security programs.

He warned that while the public sector’s adoption of blockchain solutions could have a visible effect such as improving the work of government institutions, if these initiatives fail to take advantage of the characteristics of blockchain such as returning to users authority over their own information and enabling trustworthy exchange of information, it could spread the belief that blockchain produces no real difference and is expensive to boot.

In particular, Kim expressed concern over public institutions engaging in “show off” projects rather than working to create and expand public standards.

Letting Japan seize leadership?

Kim and other blockchain leaders are paying attention to Japan. This is because Japan, which still leads Korea in terms of transactions, has been busy working to adopt cryptocurrency ahead of next year’s Olympic Games in Tokyo. Kim noted that Japan, too, experienced serious social problems related to cryptocurrencies, but it has responded quite differently. Unlike the Korean government, which treats cryptocurrencies as taboo, the Japanese government is focusing on crafting a system in which one can use cryptocurrencies safely. He warned that while Seoul wants to craft prudent cryptocurrency policies by referencing the situation in Japan, Tokyo may have already seized leadership over the cryptocurrency industry by that time.

While blockchain still has many technological and systemic hurdles to overcome, blockchain technology including cryptocurrency will continue to expand. Kim said that while the government or users feel that the immediate benefits don’t outweigh their concerns, he hoped they would patiently wait and support the technology so that the industry could grow gradually.

Kim will be speaking on the topic of “Blockchain in Government” more deeply at next week’s BlockFesta 2019.