Blockchain technology is all about decentralization and virtualization, so it's a bit ironic that people love to gather in person for large-scale blockchain events. Korea Blockchain Week, held in Seoul last week, attracted a record 17,000 attendees and featured 300 speakers.
Like any traditional tech conference, the event was attended by many big names in the field, including both well-known figures (such as Vitalik Buterin, Richard Teng from Binance, and Mark Karpeles) and lesser known names (researchers, professors, and founders of many new startups).
Unlike regular meetings, there are also ha profiles: apes, penguins, ducks and bears were also on the list.
No one would accuse the crypto world of not having its share of merry pranksters, but there remains a strong undercurrent of unease among the public, as mainstream adoption appears to be stalling and with the US elections looming, there is a big question mark over what future regulation will look like.
We walked around the event and spoke to many attendees, and here are some of our impressions.
Beyond Protocol
Until now, scalability has been a big problem for blockchains, with high fees and slow transaction speeds. Now, second-layer blockchains (so-called “layer 2 blockchains”) make transactions faster and cheaper, making scalability no longer an issue for most use cases. The most popular layer 2 blockchains can comfortably handle millions of transactions per day.
Despite this, usage is not necessarily increasing, in part due to continued gaps in applications.
“I think the expectation for actual application content has increased significantly,” Simon Kim, CEO of Hashed, a venture capital firm focused on blockchain and cryptocurrency, told TechCrunch, emphasizing the need for more practical use cases.
Signs of this are beginning to emerge, especially in the world of IP content tracking: Last month, Story raised $80 million to build a blockchain that will allow IP owners to more effectively track the use of their content, while Sony Block Solutions Labs, a joint venture formed by Sony and Startale Labs, announced Soneium, a new public blockchain network that promises to make it easier for users to protect creators' rights and distribute profits fairly.
“This is an industry first attempt to build a content-focused IP ecosystem,” Simon said.
Others at the expo said they were looking for more real-world applications that consumers could understand.
“For the last six years, we've been developing roads, highways, and all kinds of infrastructure in the crypto world. Now we need to focus on convenience stores, clothing stores, department stores, things that people enjoy and use,” said Steve Lee, co-founder of Neoclassic Capital, a Miami-based crypto investment firm backed by venture capitalists Marc Andreessen, Chris Dixon and Tampa Bay Lightning owner Jeff Vinik.
The company is focused on applications in consumer and financial services. “From a consumer perspective, we are particularly excited about use cases in gaming IP, entertainment and social applications,” he said.
Neoclassical is aiming to launch its first fund in April to pursue further investment opportunities in these areas. “While the West may continue to lead in infrastructure development, we believe Asia has greater potential in these areas,” said Neoclassical CEO David Schneider. [web3 consumer use cases] “Compared to Western countries, the Asia-Pacific region has a higher Bitcoin trading volume,” he said, citing sectors such as gaming and entertainment. Countries such as Japan and South Korea have “become pioneers in adopting new technologies faster than anywhere else in the world,” he said.
Old school with a touch of crypto?
While some crypto companies are still chasing a breakthrough win, others are trying to convince traditional businesses that they should add crypto elements to their existing products.
Justin Kim, Asia head of Ava Labs, a blockchain platform specializing in decentralized apps (dApps) and enterprise blockchain deployments, noted that more organizations are launching their own custom blockchains on Avalanche.
“The list includes the California DMV, Konami Digital Entertainment, the Nexon MapleStory universe, Otherworld solo leveling animation, and financial institutions such as JP Morgan and Citi,” he said.
Justin added that tokenization of new asset classes is also a recent trend. For example, New York-based investment platform Republic is tokenizing funds to help finance movies. IT consulting firm Questry and Japanese bank Mizuho Securities are tokenizing funds to help fund anime content production. Justin noted that both projects are based on the Avalanche platform.
Stablecoins are also being introduced into mainstream financial and messaging apps.
Notable developments include PayPal introducing a stablecoin called PYUSD, and messaging apps such as LINE and Telegram in Japan integrating crypto wallets. Naver, co-owner of LINE, also recently introduced a crypto wallet within its payment app in South Korea. “Stablecoin trading activity is picking up,” Simon said.
According to Simon, Hashed has also partnered with other traditional companies such as South Korean entertainment company HYBE, Japan-based gaming company Nexon, South Korean financial institution KB Kookmin Bank and Thailand's Siam Commercial Bank.
Another area that has been getting attention from the industry is gaming, Simon noted, which he added is one of the fastest growing sectors, especially due to the rise in online commerce.
“The content is there, and AAA games will start to flood the market later this year,” Simon said. In the past, blockchain-based games with experimental tokens and NFT ownership have been released while still in an experimental stage. “Now we're seeing well-made, high-quality games being released.”
Yat Siu, co-founder and chairman of Hong Kong-based gaming and software company Animoca Brands, which also runs the Web3 venture capital firm, disagreed, saying gaming projects that are essentially launchpads for tokens haven't done so well so far.
“People aren't excited. [gaming] “Not now, but I think I'll come back,” Siu said.
Similarly, NFTs aren't garnering much attention at the moment, but their advocates are still hopeful.
“In the early days, when the internet didn't seem interesting or realistic, people just kept building it, and eventually it grew. That's how I see the internet evolving.” [NFT] The same goes for space,” Siu added.
Bigger supporters and bigger regional forces
Diederik van Welsch, regional director for ASEAN and Hong Kong at blockchain data platform Chainalysis, said that while low- and middle-income countries led crypto adoption in 2023, adoption will be more evenly spread between rich and poor countries this year.
“Cryptocurrency went mainstream due to the launch of the Bitcoin ETF, which likely sparked an increase in the total value of Bitcoin activity across all regions,” Van Welsch told TechCrunch.
In line with that, he said, institutional investors are driving crypto adoption in countries like Singapore and Indonesia. The U.S. followed a similar pattern. When the U.S. introduced a Bitcoin ETF, it was a big change for the market, Siu said.
“Tokens that have institutional backing tend to perform better. That's where crypto is going,” Siu said.
“Singapore is seeing an increase in the use of crypto merchant services, while Indonesia, where crypto is used as a means of transaction, recorded the highest growth rate of approximately 200% year-on-year, making it one of the fastest growing crypto markets in the region,” Van Welsch said.
But it's not all good news: As more people adopt cryptocurrencies, crime will also increase, he added. “As adoption increases, so will crime. And today, cryptocurrencies encompass all kinds of crime, including fraud and drugs.”
Image credit: Kate Park / TechCrunch
Bullish on Telegram's future (Despite Durov's arrest)
The arrest of Telegram founder Pavel Durov in France last month undoubtedly had repercussions for Telegram-linked Toncoin, whose price plummeted following the news, but by the time KBW emerged just a week later, the mood had brightened.
Movement Labs co-founder Rushi Manche told TechCrunch that Telegram has become a useful communication tool for many in the crypto community, and that's unlikely to change in the short term.
“What happened with Pavel Durov and what's happening with Telegram and TON is proof that decentralization is working pretty well. Even though Pavel was arrested, everything was still working,” Siu told TechCrunch. “I think this is a positive overall and shows the resilience and strength of decentralization and the benefits of running something on the blockchain. So I'm bullish on TON and Telegram long term.”
Animoca Brands is an investor in TON, a blockchain that is deeply integrated into messaging apps.
Simon acknowledged that one of the lessons learned from this incident is that since the digital world has no physical borders and nation states cannot control what's on the internet, it highlights the need for new regulations to be enacted to independently govern these virtual spaces.
Image credit: Kate Park, via TechCrunch license.
Regulation remains a major obstacle
Regulation was cited again and again as a top concern among those KBW spoke to, not just those working in the cryptocurrency industry in Asia, but elsewhere as well.
“Until a few years ago, many blockchain builders had their headquarters in Singapore,” Simon said. “More recently, the UAE has emerged as the most industry-friendly country, with clear regulations and guidelines in place.”
The clear establishment of regulations, especially light regulations, determined where development would flourish.
“The main concern we hear is the need for regulatory clarity across various jurisdictions in Asia,” Movement Lab's Mansch said, “but this is driving a push for more consistent, innovation-friendly policies. Regulatory clarity could improve globally, accelerating institutional adoption. We also foresee a focus on sustainable blockchain solutions and innovative token economics.”
But much of it has been piecemeal. Japan was the first to move in this area, and Singapore was also an early mover with light-weight regulations focused on anti-money laundering (AML) and combating the financing of terrorism (CFT), according to Cheng Yee Ong, head of Asia-Pacific policy at Chainalysis. Hong Kong and India then followed with their own regulatory frameworks. “And so what we ended up with was a patchwork of regulations,” she said.
The US presidential election in November could be the moment when some of this finally comes to a head in the US. “Depending on who wins, the industry will accelerate more, but I think crypto will grow in the US either way,” Siu said. “This is not an endorsement, by the way.”