Tech giants lead crypto adoption in South Korea

Samsung’s recent ventures into cryptocurrency have sent ripples across the market, as speculators bet that South Korea’s biggest smartphone exporter could soon be delivering the next wave of crypto adoption.

But while the world watches Samsung, other developments are taking place in South Korea that could be equally significant. Despite the ban on token sales, and the “blockchain, not bitcoin” attitude championed by authorities, development continues to push ahead — led by tech giants that have both the capital to see projects through to completion, and the infrastructure to bring them to a wider audience.

Tech giants lead the way

Hitting headlines with a crypto wallet on the flagship S10, and plans to develop an Ethereum-based blockchain, Samsung is connected to various different aspects of the blockchain business — and has investments in both cryptocurrency projects like CryptoKitties and Ledger, and private enterprise blockchain platforms like its own Nexledger.

In terms of adoption, some of these efforts are already coming to fruition — Samsung’s partnership with Cosmee, announced at MWC Barcelona 2019, already has a working product.

The Cosmee Dapp, which allows users to earn Cosmo tokens in exchange for beauty product reviews, is already in widespread use with more than 300,000 downloads on the iOS App Store, though an average rating of only 2.1 stars suggests there could still be room for improvement.

Rival smartphone manufacturer LG is also working on its own blockchain initiative — Mona Chain, which is currently undergoing a trial run at the LG Science Park in eastern Seoul.

Crypto tokens can already be used here for or the purchase of goods and services, and the team has forged partnerships with several top South Korean banks to develop direct integrations that will eventually allow for final settlements of payments by cash and credit card.

But, in line with the government’s concern over gambling and unregulated investment, Monachain, which is also being used in the public sector by KOMSCO, the South Korean mint, is sold as an enterprise platform that promises to enable blockchain-based logistics rather than a decentralized cryptocurrency.

Elsewhere, Korean car manufacturer Hyundai has also invested in blockchain, announcing a partnership with infrastructure provider Blocko that will enable them to record vehicle history, such as the data of the previous owner, the age of the vehicle, and the mileage, in such a way that tampering is impossible — a scheme reminiscent of Jaguar Land Rover’s recent plans to introduce incentivised data sharing with IOTA, only without the monetary element.

Atmosphere of collaboration

Unable to raise funds from Initial Coin Offerings after they were banned in September 2017, some South Korean crypto and blockchain startups are teaming up with bigger players for funding and guidance.

SK Telecom, the Korean equivalent of Verizon or BT, has announced it will be developing both a blockchain-based asset management service and token consultancy service, and also taking several smaller blockchain projects under its wing.

Most recently, the telecoms operator has formed a partnership with startup Haechi Labs, which is using funding from a government scheme to develop a smart contract platform based on blockchain technology.

Blockchain – not cryptocurrency

Of the top five fiat currencies traded on the single day of April 26th 2019, the Korean won accounted for 14.4% percent of fiat to crypto trading volume. Source: Brave New Coin

Enthusiasm for crypto in South Korea remains high, with major exchanges such as UPbit, Coinone, Bithumb and Korbit providing onramps for the Korean won. However, while blockchain remains a promising new innovation in the eyes of the South Korean government, cryptocurrency is still viewed as a potential threat to investors. So as funding has been readily funneled into blockchain-centric companies and projects, those with an explicit association to cryptocurrency have been left out, and even stripped of tax breaks as they are shoehorned into the same legal category as gambling products.

This legislative divide, some suggest, could be preventing the next stage of adoption in South Korea. At the Seoul Deconomy conference in early April, Ethereum founder Vitalik Buterin spoke of the need for Korean lawmakers to enact legislation that would encourage innovation — claiming that for the country to get the full benefit of blockchain, laws now need to be drafted that recognise the role of cryptocurrency.