The South Korean internet company Kakao is looking away from the financial application of blockchain technology to build a widely-used “killer app.” The firm believes that the monetary use of the technology is still too fraught with regulatory issues to explore — for now.
Kakao, the social messaging firm that more recently expanded into gaming, mobile banking, and other services, is developing the Klaytn blockchain under the subsidiary Ground X. Klaytn is a blockchain platform optimized for large-scale enterprise use. In an interview with EJ Insight, CEO of Ground X, Jason Han, revealed more about the company’s intentions in the industry.
Han claimed that the largest problem in the blockchain industry is the fact that there still isn’t a “killer app.” Rather than explore the financial application of the technology, Han said Ground X is working on other areas such as mobile games, entertainment, e-content, and e-sports. He added that mobile payments are already pretty well taken care of in Korea and, citing the regulatory backlash against Facebook’s Libra, argued that any financial application of blockchain was still too uncertain legally.
Han and Ground X are hoping that, by creating a successful non-financial application on the Klaytn blockchain, Kakao’s existing user base will quickly start using the technology. KakaoTalk reportedly accounts for as much of 96 percent of the South Korean messaging application market and, according to the CEO, each user will soon have a crypto asset wallet as part of a service they are already very familiar with.
Another project that Ground X is working on is a digital identity system. The proposed platform would allow users to prove who they are without needing to provide physical documents — which, for Han, is often a “time-consuming, complicated process.” He says that, eventually, such a digital identity platform would help smooth out a lot of the regulatory hurdles facing digital assets intended as payment systems and the rapidly expanding decentralized finance (DeFi) industry.
However, Han admits that a major flaw of the current Klaytn blockchain relates to decentralization. The project has just 30 corporate members on the Klaytn Governance Council. These include large firms such as LG Electronics, NetMarble, and UnionBank. The council members are responsible for the platform’s governance model. Arguing the need for adoption to prove the worth of the technology, Han explained how Ground X has decided to sacrifice full decentralization for efficiency and speed.
Han claims that the Governance Council plans to expand to 50 members early next year.