It’s time to come clean. As much as I heard that the blockchain revolution was going to begin in Asia with countries like South Korea, Japan, and China taking the lead, I still felt confident that it would be the classic U.S. powerbase driving the industry early on. But, lo and behold, my biases based on traditional tech strength pulled the wool over my eyes. Or perhaps, better put, I misjudged the situation completely.
As members of our team spent time in South Korea, Singapore, Japan, and China this past week, we were presented with perspectives from leading industry players, tech companies, and traditional corporate powerhouses that speak to a unique level of potential and early strength.
So why is the blockchain revolution picking up steam faster in this region than elsewhere? Here are a few reasons:
According to a report from Gartner published earlier this year, the wider blockchain industry is in the midst of a period called the "Trough of Disillusionment." As can be expected from any 'trough related' analogy, the situation speaks of an environment where most usage is a minimum of two to five years away. But in fact, many experts believe that the next year or two will be more defined by proof-of-concept (this is not a consensus algorithm) activity than by real usage or solutions. This is not the case in South Korea.
In Seoul and other tech hubs, the largest companies aren’t just eyeing the sector or testing out the technology, but actively working on specific applications. Whether it be Terra’s push for a stablecoin to be used in a regional ecommerce effort, Hyundai’s leadership on blockchain payments, or Samsung’s myriad of projects leveraging the technology – the biggest companies in South Korea aren’t just testing, they are rapidly progressing to real usage. Even the industry’s top social player Kakao, the Korean equivalent of a combination of Uber, FB Messenger, and more, is diving in full force with a dedicated subsidiary and investments into the sector.
What makes the region so exciting is not just that companies are getting involved, but that the biggest companies are getting involved with the focus on creating real solutions in the very short term.
One of the key factors that make the involvement of this caliber of companies so important is that the region looks more heavily to the bigger players to drive disruption, as opposed to smaller startups. The involvement of larger companies is seen as a necessary predecessor to widespread regional adoption. This creates two parallel pushes. Firstly, it pushes innovators to identify the real places of value for a large business, sharpening the focus and moving beyond a blockchain for the sake of blockchain approach. Secondly, it helps to drive usage as most of these companies already have mass adoption for their products.
This is in stark comparison to other regions where the focus is more on the level of decentralization as opposed to the quality and applicability of the solutions being built. While a commitment to decentralization is clearly important, the East’s focus on business has allowed it to take a strong early lead.
This focus on usage above other indicators creates a perspective for how companies and projects are judged. If usage is the gold standard, then it determines what is a success – both financially and in terms of image. The latter is critical because so much of the success of a company is dictated by its ability to avoid the dreaded 'scam' label. If usage becomes the core component of that judgement, it could have major implications.
It is rare that a foundational technology like blockchain enters the mix, and countries in the region are looking at the widespread interest as an opportunity to establish a strong foothold in a growing industry that is global by nature. While, like in other regions, there is regulatory uncertainty, there is also significant interest from local governments in finding ways to support the industry’s growth.
Whether it be steps to attract foreign investment, drive entrepreneurship, or create global hubs, blockchain is seen by the regional government bodies as a unique opportunity to establish an economic strength for decades to come.