The Blockchain Explosion Already Underway In South Korea
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In early April, Ethereum co-founder Vitalik Buterin had the rare opportunity to address the South Korean Parliament in Seoul. Standing before representatives of arguably the most blockchain-enthusiastic population on earth, Buterin spoke to what he viewed as the government’s irreconcilable pro-blockchain, anti-crypto stance. Deregulate the whole industry, he advised, because without crypto there is no blockchain.
If you saw the series of headlines from September 2017 to March 2018, which reported new Korean bans on ICOs, you might imagine this was a tough sell. On the other hand, if you’re more familiar with the longer saga of blockchain’s arrival to Asia’s fourth biggest economy, you probably expect otherwise. If you’re acquainted with South Korea’s history as a government and populace of tech pioneers, and know the huge blockchain investments already in motion, you may well be betting that these obstacles to widespread adoption will soon be just water under the bridge.
As early adopters, and eventually global trendsetters, South Korea has enormous potential in the blockchain space. Here are a few reasons.
A Culture of Innovation
Five years before the launch of Facebook, South Korea already had Cyworld—its own wildly-popular social network service that could eventually claim almost every young South Korean as a user. The data point is just one of countless testaments to the country’s enthusiasm and aptitude for cutting-edge technology, both as a tool and an investment.
One major reason to expect South Korea to blaze trails in blockchain is this culture of both adoption and innovation. In achieving miraculous economic growth since the mid-20th century, South Korea’s exceptionally well-educated population initially relied on reverse engineering of foreign tech imports to learn and understand their design. But rather than simply copy these products, South Koreans strove to innovate on them. Out of this commitment grew a globally-recognized culture of R&D, patent submissions, and high-tech companies—in 2015, the nation topped Bloomberg’s list of the most innovative countries.
South Korea, then, has a history of both harnessing new technologies and investing in them. And the tradition is carried on with blockchain. Thirty per cent of salaried workers own and exchange cryptos, for example, making this the country with the most crypto investors as a percentage of the total population.
A Forward-thinking Government
If the populace’s enthusiasm for blockchain and cryptos signal promise, the government’s initiatives and investments bode doubly well. And as with the former, the latter is rooted in a tradition of forward-thinking openness to new technologies.
In 1982, the South Korean government launched an ambitious national R&D program that set in place a commitment to investment in innovation. The nation tops lists of R&D expenditure as a percentage of GDP, and in 2018 allotted $880 million to be spent on blockchain development in 2019.
Part of this plan involves education in blockchain areas for young Koreans. Both the Ministry of Strategy and Finance and the Ministry of Science and Technology have announced plans to provide more rigorous education on blockchain and its applications.
Meanwhile, Seoul announced a $108 million blockchain industry plan to be implemented between 2019-2023. Aiming to nurture ideas and early stage businesses in the field, the initiative will include the construction of a blockchain complex providing space to 200 blockchain companies.
So, despite qualms about cryptos, the government is proactively supporting blockchain. And initiatives, both past and present, suggest it’s committing the nation to a future as a leader in the space.
South Korea’s embrace of blockchain, as well as both public and private investment, have thus fueled adoption in the nation. Across industries, in firms large and small, and also in the public sector, experimentation and implementation are already gaining momentum.
Last year saw a number of big blockchain announcements from some of South Korea’s largest conglomerates. SK Telecom, South Korea’s biggest wireless telecommunications network, revealed it will be implementing blockchain to manage subscriptions, payments, and real-name authentication. South Korean chat app giant Kakao introduced a blockchain platform, while Line Corporation – a subsidiary of the Korean internet giant Naver – launched its own cryptocurrency.
The government is also introducing blockchain tech. In late November of 2017, Samsung SDS announced it had won a contract to assist the Seoul Metropolitan Government in planning and incorporating blockchain technology in the city. The government has expressed interest in using blockchain to improve welfare programs, safety, and traffic management.
Finally, among smaller businesses blockchain is proliferating. And, also of note, the coin exchange Bithumb now offers a payment service using blockchain.
From trade to logistics, to medicine and finance, 2018 and the first quarter of this year have seen this adoption trend take hold in a wide range of industries.
Walking today, Running Tomorrow
In light of so much promise for blockchain in South Korea, the government’s seemingly “irreconcilable” stances on blockchain and crypto could seem perplexing. Indeed, months after legislation led a number of South Korean companies to launch ICOs through subsidiaries abroad, the federal government appeared to backtrack with last July’s announcement of a plan to legitimize crypto exchanges.
But blockchain adoption is moving along steadfastly, thanks to and in spite of government efforts, and owing to a tech-curious population. Most experts, in fact, see the anti-crypto laws as merely a self-imposed speedbump – purging the ecosystem of fraudulent elements and temporarily checking blockchain’s acceleration.
While an old Korean proverb advises that “If you don’t walk today, you must run tomorrow,” an updated version might warn that not walking today could mean you can’t outrun the rest tomorrow. Korea’s early adopters are walking briskly today, with the promise of running tomorrow. And quite possibly leading the field.