Latest news on NFT market and Metaverse in Korea
The blockchain industry worldwide has been nurtured by the NFT industry during the first half of the year. With the multiplication of applications related to the technology, new business opportunities are appearing in Korea. A long with the emergence of the NFT market, the metaverse technology is also growing significantly, leading experts and academics to look for approaches to optimize the technology so that it can reach a broader adoption.
2021, the year of NFT in Korea?
On July 1st, a conference about NFT digital asset was held in Seoul where various topics related to the non-fungible tokens were discussed such as how to consider this technology in the legal field and how taxes can be applied to it. It was also a great opportunity for companies developing NFT-related platforms and applications to announce their last works.
In particular, Korean blockchain industry’s stakeholders have expressed their ambitions to drive the adoption of digital asset in the morning calm country. One of the approaches to do so consists in enhancing the development of a new digital value chain in the industry by multiplying applications of NFTs that can prove individual’s ownership of data online. By representing ownership of physical and digital items inherently distinct and scarce, NFTs have attracted attention of companies belonging to a variety of industries (e.g., gaming, art, sports, etc.), and developing and deploying NFT-related applications to existing services or creating NFT platforms for auctioning NFT assets online.
In this regard, Korea’s leading blockchain companies are actively expanding their NFT businesses based on their own blockchain platforms. One of the businesses they are focusing on is to enable their blockchain platforms to issue (mint in jargon) NFTs to create a specific ecosystem so that not only companies (B2B) but also individuals (B2C) can easily create and trade NFTs based on standards established by these companies. In addition, blockchain companies are developing NFT trading platforms based on their own blockchains so that the NFTs issued on their platforms can be traded and exchanged. Among the projects under development, an NFT trading platform allowing only pre-certified companies or individual creators to mint NFTs will be released within this month. The project will ensure that the quality of NFTs proposed on the platform is above a certain level by introducing a curating function. The company which is behind the platform will also applied a Decentralized Identifier (DID)-based service to prevent any potential NFT copyright issues that may arise in the near future.
Another Korean company introduced an eco-friendly platform enabling the issuance of NFT. Through a Proof of Authority-based consensus algorithm, the platform provides a solution to the energy consumption’s issue (caused by the block generation method) faced by platforms such as Ethereum, where most NFT assets are currently issued. The release of such platforms reflects a growing need in the industry amid the emergence of anti-NFT movements overseas against Proof of Work-based mining method. For example, the International Olympic Committee (IOC), which has recently released posters and mascots in 3D form, plans to issue NFT leveraging an environmentally sustainable technology lowering the environmental impact of the NFT’s minting process.
The conference was also the opportunity for the industry stakeholders to point out that policy discussions should be followed up so that Korean NFT companies can expand their businesses in a stable environment. One of the main concerns in the industry is the lack of clarity in the regulation as there is no detailed definition of digital assets in Korea.
For example, the revised Special Act, which is the first virtual asset law in Korea that was released in March 2020, provides a broad definition of virtual assets without mentioning clearly whether the scope includes NFT. This situation is raising concerns among companies launching or developing NFT services as they are not sure whether they should be considered as virtual asset operators as required by the amended Special Act. In this regard, definition of virtual assets should include further details and a section dedicated to NFT should be established. In particular, NFT requires a fine-grained definition since this type of digital assets can be applied to a wide variety of industries. Providing further clarity on the status of NFTs will also enable stakeholders to take appropriate measures. For example, if the NFT falls under the category of virtual assets, the technology will likely be subject to regulation for Anti-Money Laundering (AML), requiring companies to perform additional process accordingly.
The application of taxes on NFT income is also quoted among the concerns that the Korean NFT industry stakeholders are worrying about as the Korean government plans to tax virtual assets, considering them as other income starting next year. According to the Korean law, if the transfer price is less than 60 million won or if the work has been created by a living artist in Korea, art works are tax-free. Considering the existing laws regarding art works, it will be interesting to see how NFT-based art works will be considered.
Source: https://www.fnnews.com/news/202107011726285081
Enhancing metaverse technology by developing new OS and form factors
Metaverse is another hot topic that is currently being actively discussed in Korea. Some experts are arguing that the development of a new operating system (OS) and dedicated form factors are crucial to bring out the full potential of the metaverse industry, which is spotlighted as a new growth engine in the future. The Korean Academy of Science and Technology (KAST), which is a Korean academic institution that serves as an integrated think-tank for the country’s science and technology, provided some advice accordingly in its latest policy proposal, which presented tasks and solutions to implement metaverse.
Metaverse is a combination of the prefix “meta” (meaning beyond) and “universe”. The term serves to describe the concept of a future iteration of the internet, consisting of persistent, shared, 3D virtual spaces connected to a perceived virtual universe. Most of the popular metaverse platforms take the form of games or virtual reality applications such as Fortnite or Decentraland.
In its policy proposal, the KAST suggests not to consider metaverse as a game or virtual reality application only but as a new type of platform that encompasses reality and virtual reality. To enhance such platforms, the South Korea’s highest academy of science recommends to enable associated technologies to be connected organically. In particular, the KAST pointed out that it is necessary to develop a new OS and various hardware technologies exclusively for metaverse to enable metaverse to serve as a platform that can be widely used.
The think-thank recommended to focus on developing new form factors that can be seamlessly compatible with the metaverse OS. Currently, smartphones are the most likely form factor for using metaverse, but it is expected that demand for new form factors that can be used complementary to smartphones will increase in the future. Various efforts should be made in this regard to enable the public to effectively use new metaverse platforms such as the development of human-computer interaction (HCI) technologies for the organic use of platforms, the development of related networks and devices.
The institute also pointed out the need to develop display technologies for the effective implementation of metaverse since display field is considered as a bottleneck in terms of research and development of metaverse-related devices. For example, by developing high-definition displays and increasing resolution, it is possible to implement ‘ultra-realistic metaverse’ that can maximize the realism of the experience. Amid active hardware development to implement metaverse in Korea, ‘OLEDoS’, a next-generation of Organic Light-Emitting Diode (OLED) technology, is considered the most optimized display for Augmented Reality (AR) and related technologies. Since OLEDoS directly produces light, it does not need to have a separate optical system, making it possible to make the display smaller, lighter and thinner.
That said, the KAST warned about the potential challenges that metaverse may arise such as (1) information gap (2) misuse of technology (2) new type of crimes (3) emergence of a new type of ‘disease’ characterizing persons who only want to live in virtual worlds (4) data bias during the AI utilization process. The institute eventually warned the platform companies about potential privacy issues that should be monitored in advance.
Source: https://www.sedaily.com/NewsView/22OTKYFE5N
Our View: since the beginning of this year, a variety of existing technologies became popular. Among them, NFT and metaverse gained attention from the public as they both pave the way for disruptive applications enabling the creation of new business opportunities. In Korea, high tech companies are currently dedicating a part of their R&D budgets to capture the potential benefits that such emerging technologies could provide them. It seems that the Korean government is also interested in these technologies as reflected by its support to NFT related project through ‘2021 Blockchain Technology Verification Support’. Eventually, this is worth noting that linking NFT into metaverse can create new business opportunities, providing metaverse’s users with the possibility, for example, to acquire a unique item (under the form of a NFT) they could find while exploring their favorite metaverse. In other words, user experience when trading NFTs could be enhanced thanks to the integration of NFTs in metaverse; an application already developed by some companies in the industry.
