Dear Cryptonauts,
Welcome to 2018!
ASTRATUM went recently to Seoul, meeting friends from the Korean crypto community. We got invited to speak at three different events about tokens and blockchain protocols, decentralized media platforms, blockchain regulation in Europe, crypto-trading and the future of DLT technologies. We enjoyed diner at an awesome Korean wine-house accepting crypto-assets as payments. It wasn’t our first time in Korea, our team member Gleb used to live and study there for a while, thus it was a great pleasure for us to be there, especially during the Korean crypto-craze.
Korean Traders and Crypto Investors, who are they?
Korea is a vibrant country when it comes to blockchain and cryptocurrencies. It has managed to combine eastern traditions and values with the cutting edge technology. A developed gaming industry and thus familiarity with digital goods and assets, 98% smartphone adoption and the fastest internet infrastructure in the world contributed to a very rapid rise of interest in blockchain and tokens and subsequent crypto-trading mania.
Current temporary absence of regulation of trading and mining activities, combined with the Chinese exchange ban, when most of the Chinese trading volume shifted to Korea, led the country to become the crypto powerhouse it is today which led to an increased attention from the regualtors.
Currently after recent developments in Korea, when Korean Department of Justice raided several largest exchanges and was proposing a total crypto shutdown, many news outlets like for example CNBC started to spread FUD about an outright ban of all trading in Korea. There has however been a pushback from Korean population with more than 200,000 people signing a petition against the DoJ proposal. Korean Finance Ministry and the Blue House have also put out statements saying that they do not share the views of DoJ.
Korean exchanges have been growing rapidly, with new top executive appointments from Korean chebol (conglomerates) and recent acquisition of Korbit by Nexxon and launch of KakaoCorp-supported exchange Upbit. Thus as with any FUD, for the most part it is ungrounded and regulation of exchanges in Korea has been discussed as early as October’17 and the outcomes are expected to be a stricter KYC and a possible tax bill.
However regulatory uncertainty can’t stop passionate Korean traders and investors. Recently, Korea was trading nearly 40% of all Ether, 35% of Bitcoin and 60% of BitcoinCash. Korean people can get very “hot” about new investment opportunities, causing up to 15–20% of a so-called “Korean or kimchi premium” on Korean-based exchanges like Upbit, Bithumb, CoinOne or Korbit. Many rises or “pumps” can be attributed to the excitement generated about a crypto-asset originating from Korean investors. Confirmed by many Koreans, the psychology of a Korean crypto enthusiast is less of an investor but more of a trader, where the speculative motives prevail. Not only do they get excited about new tokens but they easily can stop caring about the older ones once the initial hype passes by.
The “Korean Premium” has already quite for some time been a leading indicator of Bitcoin and Ether prices on western exchanges, if the spread in the BTC/KRW and ETH/KRW in comparison to BTC/USD and ETH/USD goes up, the price increase on non-Korean exchanges can be expected as well. The same can be told about the movements in the opposite direction, the decrease of the premium can lead to a correction.
Another interesting fact is that the average age of a crypto-investor in Korea is 40+ years, compared to Europe’s and US’s twenty-somethings. CoinoneBlocks, Korea’s first and so far the only physical location and hub for the blockchain community has invited ASTRATUM to speak at their meetup in November (see next chapter). Really interesting, they have recently opened a physical location in a futuristic design at the heart of Seoul’s financial district Yeuido for the purpose of supporting the Korean crypto-community. Anyone interested in investing can come and get introduced into various cryptocurrencies and tokens, use their bitcoin ATM, purchase a hardware wallet and get support with setting-up an exchange account and going through the KYC process. All this while reading various journals, drinking coffee and observing the Seoul skyline. We have personally witnessed an around 60 year-old man being explained the difference between ETH and ETC, a sight not to be underestimated. We are excited about this move, and intrigued about the opportunities in Europe to open such a retail crypto shop. It is still too difficult to get into crypto. Contact us, if you would be interested in supporting such a project.
2. Events
ASTRATUM together with MAD Network were invited by CoinoneBlocks to discuss the future of the advertising industry and how decentralized platforms, enabled by blockchain and tokens, will disrupt the traditional advertising businesses. The digital advertisement industry is mostly controlled by large centralized organizations like Google and Facebook with multiple intermediaries, capturing a large chunk of the value being generated and providing not verifiable key performance indicators of their activities. Only around $0.4 of every ad-dollar is actually being spend on advertisement, the staggering 60% of an ad-spent are grabbed by various intermediaries along the digital advertising value chain. This makes the ad business a great use-case for blockchain, tokens and smart contracts to reduce these frictions and provide more control over the company’s ad-spend.
ASTRATUM introduced our activities as well as provided an outlook on the regulatory situation in Europe. The main focus of the speech was that blockchain is not only a technical, but also a social and economic innovation. We have compared centralized versus decentralized business models and discussed why the later ones are superior and more efficient.
The topic was then picked up by the MAD Network team, which introduced their decentralized advertising platform as a solution to that problem. Later we also spoke at the panel about the future of blockchain technology and the most exciting developments we are looking forward. Gleb expressed his opinion that the combination of AI and blockchain will have a profound impact on humanity in the coming decades due to the fact that the blockchain as immutable ledger of data might encompass our entire financial system. Together with our identities and communications, the combination with self-learning machines can pose a threat to humanity in the future, if we are too quick to implement these solutions without considering their potential impact. This reflects, what our founder Sven Laepple repeats at every occassion: “Build not only, what’s feasible, but also desirable!”
We have rounded up the evening with delicious Korean fried chicken, a few beers and a lot of networking.
ASTRATUM was invited by Bitcoin Center Korea to speak at their meetup, where we introduced ASTRATUM, the activities of the German Blockchain Association and also dived deep into the “fat vs thin” protocol investment thesis from Joel Monegro (while at Union Square Ventures). Bitcoin Center Korea is a community center and incubating space for all things Bitcoin and more. Founded in 2015, it is the oldest offline hub for connecting developers, startups and investors from the Bitcoin industry in Seoul and beyond. We also learned that the Korean Blockchain Association is working closely with the Japan Blockchain Association. We are very interested in observing which direction Korea goes in terms of regulating the space, especially in light of the recent ICO ban by Korean authorities and upcoming restrictions imposed on Korea-domiciled exchanges. We are looking forward to joint events and are open for potential collaboration.
The “Fat Protocol” thesis states that in blockchain, most of the value is captured by the protocols themselves, Bitcoin, Ethereum, Neo, etc. while the DAPPs (Decentralized Apps) are capturing relatively less of the total value. This is unlike the Internet, where most of the value is captured by applications like Facebook or Google on top of protocols like TCP/IP.
This led many investors to believe that since investing in DAPPs is risky, just like angel investing due to high failure rates, it makes more sense to invest in the “Fat Protocols”, the infrastructure for those DAPPs. As it is with DAPPs, protocols capture some value generated by DAPPs in form of transaction fees. However the “Fat Protocol” investment thesis is rather one-sided, since it does not capture the value creation of the DAPP itself and demand for its tokens. Another argument, brought up by Jake Brukhman from Coinfund, against the “Fat Protocol” investment thesis is that the technology stack has become layered, meaning a DAPP on top of a protocol can at the same time be a protocol for the DAPP built on top of it. Thus in any investment decision and analysis, one has carefully to look into exact value flows and token usage to figure out whether and to which extent the value created by the DAPP is being trickled down to the protocol level. Also, Web 3.0 applications are build as decentralized systems, combining easily the robustness of one blockchain like Bitcoin with the processing power of Ethereum and other Web 3.0 components.
ASTRATUM organized together with the Kangnam Crypto Club a discussion-style meetup, where we discussed with a group of Korean blockchain enthusiasts and traders about the future of DLT technologies such as blockchain in a cozy atmosphere of Seoul with a cup of coffee. There we discussed various consensus mechanisms, PoW, PoS, DPoS and non-blockchain such as IOTA’s Tangle and Hashgraph. The Meetup was traditionally continued with Korean fried chicken and beers and further networking.
3. The Jell, wine from 1880 for your Bitcoin
We met Hans Lee, the founder and owner of the well-known restaurant “The Jell”, at Bitcoin Center Korea, who invited us to his restaurant. We had no idea about the experience we were about to get. Hans toured us around several awesome wine cellars of his 5-storied restaurant in the center of Itaewon district with a great unobstructed view on the Namsan Tower. The Jell, which was founded in 1992, was featured in Times Magazine for its cuisine and collection of wines dating as far back as 1880. Across several floors, we have seen differently-styled rooms and a great collection of art.
The Jell has been accepting payments in cryptocurrency for the last 3 years. Hans himself is a passionate crypto investor, who lived in Berlin for 16 years, long before it became a center of blockchain activities in Europe.
We have enjoyed great crypto discussions with steak and wine at the fireside while appreciating the Korean hospitality.
We would like to thank ASTRATUM’s friend Joon Young for the great welcome in Seoul, with him there is always a part of ASTRATUM in Seoul. Also a warm thank you to all the people we were lucky to meet during our time in Korea. We loved it and we are back soon with projects, insights and news about the cryptoeconomy and ASTRATUM!
As for now, ASTRATUM wish you a Happy New Year! We are looking forward to see all our friends in 2018 and will continue to bring crypto in all possible forms to our friends and partners. If the year 2017 seemed like a year of blockchain and tokens, wait until you see 2018!
Sincerely yours,
ASTRATUM team
—
ASTRATUM is a blockchain venture studio, developing blockchain strategies, solutions and ventures. For example, we developed a next generation mobility solution with blockchain, smart contracts and IoT devices for a global leader in the automotive space. We also developed a blockchain strategy for one of the world’s largest business network operators. Further, we assisted a leading European venture capitalist with a large investment in the leading decentralized crypto exchange. We also organize regularly “dine&talk” events to introduce cryptocurrencies and blockchain to top executives from leading German financial services. Further, we are also involved in the tokenization of assets, ranging from the token design, whitepapers, due dilligences, audits, token sales, advise on the right structures, technical implementation, cryptotrading strategies and additional services around the monetization and tokenization of digital and physical assets. Our international team relies on experts with outstanding professional experience and the necessary skillset to address the interdisciplinary challenges, coming with the cryptoeconomy. We believe that decentralized tech like blockchain is a game changer, and that a blue ocean strategy is the best approach to develop meaningful innovation.
Besides corporate innovation in e.g. mobility, fintech 2.0 and real estate, we develop together with partners our own ventures. One of them, project Vaagnar, is a distributed Unmanned Aerial Traffic Management system. It is based on the research done by our founder around blockchain and drones and marketplaces for the Internet of Autonomous Things. Another one is in real estate. For our ventures, we are collaborating with investors and team up with exceptional individuals or teams.
ASTRATUM is founding member of the Blockchain Association Germany (Bundesverband Blockchain) and of the Distributed Sky Alliance. Further, we are Industry Partner of the Technical University Berlin for Sustainabilty and Mobility Management.
