Korea is waging a losing game in the global blockchain race. Hindering the growth is the perception of South Korean policymakers about blockchain and cryptocurrency.
First of all, the government adopted a wrong policy of fostering blockchain but blacklisting cryptocurrencies. Policymakers falsely believe that blockchain and cryptocurrency are separable. This dual policy would not serve to the development of blockchain, however.
The government said that blockchain might be positive for the economy. However, policymakers have yet to gauge how important and crucial blockchain technology is for the future.
The government has the myth that cryptocurrencies are the raw materials for speculation and tools for fraudsters. The Financial Supervisory Service likened the initial coin offering (ICO) market to a casino.
It is understandable for the government to protect innocent investors from fraudsters. However, all startups are not fraudsters. In 2017 when the Bitcoin speculation was rampant, the government blacklisted cryptocurrencies.
The government portrayed blockchain and cryptocurrencies as tools criminals and fraudsters use for the underground economy. The government banned ICOs, threatened to shut down cryptocurrency exchanges and cautioned banks against opening accounts for cryptocurrency investors.
However, startups need money to produce viable and competitive blockchain technology. They need to raise capital through initial coin offering (ICOs). Coins are like fuel for cars. Startups need fuel to run business and develop blockchain technology.
Many analysts said like Dotcom bubble in the 1990s ahead of the full blossoming of the Internet; blockchain bubble was inevitable as a long-term process.
Unlike South Korea, many foreign countries began to embrace cryptocurrencies. Goldman Sachs’ blockchain subsidiary Circle got a banking license. Coinbase, the largest American cryptocurrency exchange, teamed up with Visa Card for business.
The United States and Australia have issued guidelines on ICOs. The G-20 finance ministers officially categorized cryptocurrencies as ‘assets.’ The group would recommend each country adopt regulations on cryptocurrencies when the ministers meet in July.
About 45 countries, including the United States, China, and Europe have been using blockchain in personal identification, medical and public health services, property ownership management, social security service, and election.
South Korea lags behind the United States, the European Union, and China in blockchain technology.
The Ministry of Science and ICT reported that South Korea is 2.4 years behind the United States in blockchain technology. Only 600 professional blockchain developers are available here, the report said.
The Software Policy and Research Institute reported that the domestic blockchain market has been growing by 60 percent each year since 2016, reaching 356.2 billion won in 2022.
The Gartner predicted that the global blockchain market would top $3.1 trillion in 2030, from $176 billion in 2025.
Blockchain is the next big thing that would replace the Internet. Will South Korea be able to see the emergence of global blockchain giants?
The article is the summary of staff reporter Cecilia Myeong’s coverage.
