There’s been ban on ICOs. Therefore, the Financial Services Commission of Korea early this year released a paper detailing financial measures to curb speculations in Cryptocurrency trading. Furthermore, Blockchain startups in Korea are dealing with highs and lows due to regulations.

To be or not?

Crypto exchange firms have had their share in pitfalls concerning the Blockchain-Crypto spheres. Coinrail recently suffered a massive hack in its exchange trading platform leading to a loss of about $37 million.

Despite all these setbacks, there seem to be several Blockchain startups springing up in Korea. Even the Mayor of Seoul reportedly announced the City’s ambition of launching it’s own Crypto and providing a conducive environment for Blockchain startups to thrive.

Will these Blockchain startups bolster Korea’s fourth industrial revolution plan?

Let’s take a look at 13 Blockchain startups in Korea that are poised for the future. They span across multiple services such as real estate, fintech, industries and many more.

ICON

ICON wants to take over the world of blockchain. Currently, they are the largest blockchain network in Korea, providing blockchain sharing ledger for industries such as securities, banks, insurance, universities, and hospitals. ICON is making giant leaps in their network due to their open-source technology.

UPBIT

The Danamu and Kakao backed crypto trading exchange platform seeks to make huge leaps after it was launched in October 2017.  It, however, boasts over 1 million users and KRW 10 trillion in daily trading volume.  In addition, Danamu which operates Upbit has already outlined huge plans to invest up to US$93 Million in Blockchain Startups. Therefore, this will make Upbit a force to reckon among the Crypto-exchange competition.

BLOCKO

Blocko’s Coinstack provides a platform for Blockchain Solutions in Korea. Furthermore, enterprises and individuals can easily build their blockchain infrastructure on Blocko. They’ve already eyed global markets by establishing their presence in Hong Kong and London. Blocko has recently secured $8.9 million in Serie B funding from Samsung Ventures, Sparklabs ventures, and Posco Capital.

DEBLOCK

Deblock is a Blockchain accelerator that pursues a decentralized, secure, and transparent pre-ICOs. In addition, they have plans of investing blockchain projects, support blockchain business models and entrepreneurs and provision of office space.

PROOF SUITE

Proof Suite is one of the fastest growing Blockchain Fintech companies in Korea having raised over $3.1 Million through Blockchain crowdsale. Furthermore, they provide retail and institutional platforms for Blockchain-assets such as Bitcoin and Ether.

KORBIT

Korbit is world’s first Crypto-exchange company that started offering Bitcoin-Korean Won exchange. Holders can easily exchange, buy and sell Cryptocurrencies on their secured web platform. It has raised over $3.6 Million won from top investors and envisions to utilize Blockchain technology for rapid growth and expansion.

theLOOP

TheLoop is in the Blockchain business of smartly connected society. Therefore, they provide total private blockchain solutions for such projects. This has led them to create a new digital currency, ‘loopcoin’ to facilitate the interconnectivity. Furthermore, other business projects include loopchain financial investments consortium and Loopchain Insurance solutions.

FORESTING

Foresting is a brand new mobile social media service based on Blockchain technology. They reward content creators and curators through a new concept of social media token operation. In addition, they intend to disrupt the Blockchain SNS business models with their Foresting Social Media Services, Foresting Lab, and Foresting Digital bank system.

LUCIDITY

Online advertising is fraught with a lot of mistrust. Therefore, this is the reason why Sam Kim and his team at Lucidity has created the blockchain protocol to bring more transparency into digital advertising. Lucidity verifies marketing analytics on the Ethereum blockchain so that online ads can be transacted with trust. Lucidity is a real game changer.

COINONE

Coinone is developing series of Blockchain related businesses on the Coinone exchange platform. In addition, they have built ‘Cross,’ a remittance solution platform built on Blockchain, to enable safe and faster money transfer among friends and families across the globe.

KODEBOX

Kodebox is a blockchain technology company that creates and manage smart asset management systems. Furthermore, Kodebox’s main product, ‘CodeChain‘ is a programmable open-source blockchain technology that seeks to develop multi-asset management system and bring transparency into the gaming industry.

MDL Talent Hub

MDL is looking to disrupt the talent acquisition and hiring industry with their global trustchain technology. Their name MDL stands for Mining Distributed Ledger.  It is a blockchain-based platform for hiring talents; by connecting performers to gigs and brands to the audience. In addition, their first ITO (Initial Token Offer) raked in $2.4 Million and puts it in a better position for scalability and adoption by the talent sourcing industry.

MAVLUX

Mavlux’s business is simple. They develop solutions based on Peer-to-Peer (P2P) and Blockchain technologies. Therefore, they have also developed ‘iChart,’ a medical database built on blockchain technology to allow secured sharing of information among hospitals.

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Blockchain Technology Potential in Korea

Korea should not be looking just at Korea. They already power 700 million homes in electronics.  Korea should be looking to partners to power 700 million homes in finance.  This blockchain technology is poised to open up a new market for the financial services industry to provide mortgages, loans, and other services to over 7 billion people.  Therefore Korea should not be worried about the 50 million people living in Korea.

The Korean government won’t be able to stop cryptocurrency technology.  So instead of trying to stop it and ban it and so forth.  They need to start looking to find a way to regulate it and keep all the bad actors out.  If they do this they will be able to see the true distributed and decentralized power of Blockchain.  This could potentially enable the entire global economy to run simply on connected smartphones, without the cloud, servers, central entity, or government.  The key will be getting the bad actors out to realize this potential.

Who are the Bad Actors?

The cryptocurrency community in Korea wants these bad actors out as well.  They are the ones giving ICOs a bad name.  They are slowing us down and slowing down the government as well.  The Korean government needs to protect their people not just from bad things but from missing a great opportunity to go global.  They need to be working with crypto companies instead of banning them.  Most of the crypto companies are good, sure there are some bad apples out there but the key is to open the door.  Let them in.  Then figure out who is good and who is bad.

The people in the crypto space need the help of government regulators and banks to stop the bad actors.  Banning ICOs in Korea is only going to push a lot of great opportunities away from Korea.  I feel the new world of finance is going to be driven by telecommunication and electronics.  Korea already has an unfair advantage to step into that and they should use that advantage to be the innovators in this industry.

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While many companies are crazy about ICOs there is something that that many should realize.  ICOs as of now is not healthy.  The tool itself is very innovative and it also can address a lot of access to finance challenge which exists globally.  Therefore it has a lot of positives sides.  Startups and companies are raising money quicker than ever while at the same time allowing investors to be more involved with the project.

High Risk for Investors

However, it also creates a lot of risks.  Especially for the small investors who don’t have the sophisticated system for due diligence.  Suddenly they get offered this opportunity to this very early startup which might not even have a proper product even.  The chance that the startup will go bankrupt is very high.  So if a lot of investors who are not experienced and professional enter into this space and invest in ICO that fail, it can not only create a lot of economic problems but can also cause social policial problems.  Therefore because it is not healthy now the Korean government is looking to pause it.

What the Korean government is trying to tell us is that the ICO market to them has to first be healthy.  Until it gets healthy they do not want their citizens being involved in ICOs.  However, we all know that no policy lasts forever.  Every government will do their best for the country.

ICO, Blockchain, digital currency, crypto exchange, all those are very new phenomena that the Korean government need to gain experience in this field so they can learn how to regulate it.  Pausing ICO in Korea is a healthy way for them to gain the experience they need to set up regulations.  The biggest challenge for the Korean government right now is doing the research.  Doing research takes time and money, however to for the successful future of ICOs in Korea, this is a must.

When will ICO be allowed in Korea?

That depends on the market.  If Korea sees other countries finding success with ICOs then Korea might feel the need to allow it.  Or they can start off slow with pilot programs to only let the best ICO startups do the ICO so they can learn from it.  If it is a success then they have the data to make the right regulations.  If it is a failure than it really didn’t hurt Korea’s economy because of this pilot test under a controlled environment.  In the future investors in ICO will want to see more than just a white paper.  You will have to have a product, customers, and the right team.  So, in the end, it could look very similar to a traditional VC round.

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Six months ago the Korean government banned ICOs and new cryptocurrencies in Korea.  There was a huge uproar over this decision.  However, this did not slow the desire for companies to start an ICO.  Many Korean startups and companies have looked abroad to places like Japan, Singapore, and countries in Europe.  For example, ICON which many are calling Korea’s Ethereum was issued in Switzerland.  By setting up their companies abroad, Korean startups are able to avoid the legislation and regulations of the South Korean government.  There is really nothing the Korean government can do about this.  As more and more Korean startups are looking abroad, there has been a huge movement to reserve the decision to ban ICOs.

So far there are close to 20 South Korean companies that have done or started to do ICOs overseas.  Some are Korean startups but big corporates have also raised millions with ICOs overseas.  The trend will most likely continue in for 2018.  Most would have thought the ban on ICOs would have limited token exchanges in Korea, however, it has not slowed down.  Many Koreans think it is only a matter of time before ICOs are back in Korea.  This is only a temporary ban until the Korean government figures out how to regulate ICOs.

ICON Started the Trend

However, setting up an ICO overseas is not easy.  First companies will need to establish a branch there.  Hire the right lawyers as well as employees.  The amount of paperwork will also be huge.  Also, they will need to travel back and forth from the overseas country.  Not a huge deal if it is located in Hong Kong, Singapore, or Japan, but Europe could get expensive.  But ICON proved that this method can be profitable.  They set up their ICON foundation in Switzerland and had their coin listed in Korea’s top 2 crypto exchanges Bithumb and Upbit.  ICON traded at close to 10 cents and is now trading at over $2.50.

In the end, the banning of ICOs in Korea has really hurt the economy and have stalled the Korean startup ecosystem as investors are looking overseas for investments.  In order to establish a strong and flourishing digital currency ecosystem, Korea needs to bring ICOs back to Korea sooner rather than later.

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Korea is dealing with very few job opportunities in Korea and things have gotten worse with the ban on ICOs and strict Korean government regulations on cryptocurrency exchanges.  A lot of companies in South Korea as looking outside of Korea to start their business.  Cryptocurrencies and ICOs are very hot right now.  Therefore, many Koreans are looking to cash in while the iron is hot.  In addition, many are looking to countries like Singapore, Japan, and even countries in Europe like Switzerland to launch their ICOs.

Korea has a strong mobile/internet infrastructure.  They should be taking the lead when it comes to this new and fascinating world of blockchain and cryptocurrencies.  By banning and making strict regulations when it comes to digital currencies, Korea is starting to see a lot of tech companies leave Korea.  Therefore, the longer Korea takes in bringing ICOs back to Korea, the longer it will take for Korea to catch up with the rest of the world.

Will Korea be able to Recover?

Global investments in Korea has halted.  Many Korean investors that are eager to invest in crypto and blockchain companies need to look outside of Korea.  Even big corporations like Naver and Kakao have created blockchain subsidiaries in Japan recently.  By banning ICOs in Korea they have forced the hand of many Korean companies.  If they want to compete with the rest of the globe they have to establish these companies outside of Korea.  Korean government regulations have stopped the progress of Korean innovation.

The Korean government announced recently that they might allow ICOs in Korea when certain conditions are met.  But what are these conditions?  Nobody really knows.  Which means no one really knows how long this will take.  As more and more companies leave Korea, it could come to a point where even if ICOs return to Korea it will be too late.  The impact this could have on the Korean economy is huge.  Just imagine if a company is successful with their ICOs.  Do you think they will move their company back to Korea?  Will they be considered Korean companies?  It seems to be the countries that are benefiting the most are countries like Japan and Singapore that are embracing this new technology, not banning it.

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Joseph Poon the co-author of bitcoin’s Lightning Network which is a Thailand-based payment gateway network is building a decentralized exchange based on Ethereum, arrived in Seoul to speak about the potential of Blockchain technologies.  Recently he spoke at Deconomy which brought to Korea the brightest entrepreneurs, thought leaders, investors, developers, academics, policy groups, and blockchain enthusiasts.  He then made headlines by calling out chief scientist at nChain Craig Wright.  His comment might have been the highlight of the conference.

“I wrote the lightning network whitepaper and still didn’t understand your talk”

However, before this conference, Joseph Poon sat down for a round-table discussion on blockchain technologies as well as promote the launch of OmiseGo blockchain.

Blockchain Roundtable

At the roundtable, Joseph Poon spoke about how Asian countries, including Korea, were all well-organized and had large enterprises.  They have had success within a well-organized structure of large corporations.  Therefore with a new technology like the blockchain coming onto the scene, it is a slightly different structure than what these Asian countries are used to.

He feels there should be a structure in Korea that can trust different participants.  This structure needs to be created.  The consensus system of the participants and the method of financing are totally different.  This is why he feels it is a difficult challenge.  It is a different structure from the existing success these Asian countries have experienced.

He went on to say that he thought many people in various fields such as business, academia, and politics should have more studies and discussions on this topic.  This is because moving forward this is going to be a very difficult challenge.

Joseph spoke about the internet in the 1990s and how it changed society a lot due to the development of telecommunication technologies.  He feels that the blockchain will have the same effect and make a huge change in our society.  It might even bring a much deeper level of change.  The change will come in the form of how an organization is structured.  How intercompany trust will work.  Lastly, how to raise funds like ICOs.

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Vitalik Buterin, the founder of Ethereum arrived in Seoul to emphasize the need for a more proactive stance on blockchain and cryptocurrency regulation in Korea.  This meeting was held a few days before Deconomy.  The round-table conference was held by the National Assembly’s 4^th Industrial Revolution Forum and ZDNet Korea.  500v2 CEO Jimmy Kim and Foresting CEO Daniel Eom were also at the roundtable to listen and learn from one of the most respected minds when it comes to blockchain technologies.

Buterin stressed the importance of fostering the young and passionate generation in Korea so they can access blockchain technologies and be active in the developer community.

Buterin talked about the great potential for society to change from blockchain’s underlying technology.

“In the next 1-3 years, I think that the block chain technology will be dramatically improved, “At that time, the level of service based on the block chain will also improve significantly.” He said.

In 3 years, Buterin feels that more and more blockchain technologies will be utilized.  Therefore, projects that can be said to be successful are expected to emerge.

ICOs in Korea

In regards to Korea, Buterin felt that ICOs vary from country to country.  Some countries prohibit ICOs, while others treat it as securities or Fintech.  He mentioned that he didn’t think it was right to put a cipher or blockchain into the current regulatory system.  For example, if coins are treated as securities, the regulations become too severe.  There are also cases where utility tokens are created to avoid being treated as securities, which can also lead to even more severe restrictions.  He stressed the importance of setting clear standards for ICOs.  Efforts should be made to create a transparent system to ensure investors know where they are investing.

What is DAICO?

Buterin: DAICO is a combination of decentralized distributed organization (DAO) and cryptographic disclosure (ICO). It means the decentralized distributed organization for ICO.

The ICO goes directly to the project team with the funds raised. But DAICO can control the funds through smart contracts. It is a way of voting directly through how investors will distribute the money raised.

ICO is fundamentally structured (although funding for decentralized projects). This is because the investment is delivered directly to the project team and is executed according to their intentions.

Using the DAICO method, investors can set a period of time to provide funds, rather than giving all the funds to the project team at once. Indeed, investors can transfer funds while reviewing the project team’s capabilities.

The Ethereum Foundation

Buterin went on to talk about the Ethereum Foundation which is looking to actively engage with the community to foster blockchain developers.  He hopes that many Korean developers will have the opportunity to understand the blockchain and experience its development.

Finally, when asked by Foresting CEO Daniel Eom about whether Buterin thinks the service will be available when the use of the blockchain service is still inadequate, Buterin responded by saying that the blockchain is not perfect in terms of user efficiency and that the limitations of the blockchain technology will be greatly complimented.

“Currently, block chains are mainly used for financial services such as overseas remittances. However, if the blockchain limit is overcome within one to three years, I think there will be a use case. “

Buterin also emphasized that overcoming technical limitations is “the current block-chain industry challenge.”

Currently, his focus is on improving the transaction processing performance of the blockchain.  The blockchain is designed to allow all nodes participating in the network to record all transactions. This allows verification through distributed nodes even if the data of one node is modulated.

However, due to this structure, the processing capability of the whole network cannot be limited to single node processing capability. No matter how many computers you connect, you can not exceed the processing efficiency of a single node. If the user suddenly increases, the transaction cannot be efficiently processed.

One of the technologies being studied by Buterin to solve this problem is the ‘plasma’ project. It creates a side chain, processes the data, and passes only the optimized data to the main chain. This can reduce transaction fees and improve network throughput.

Recently, Plasma Cache, an upgraded version of the plasma, was also released.

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