Transferring ownership and authority of information to individuals rather than centralization… YouTuber revenue and influencer revenue will also be converted into securities (STO)
Blocko CEO Kim Jong-hwan established the Bitcoin exchange ‘BTC KOREA’ in 2012. BTC Korea, which was sold to Xcoin in 2013, merged with Xcoin to create Bithumb, the current cryptocurrency exchange.
It was Blocko co-founder CEO Kim Won-beom who informed him of the technical potential that surpasses the monetary value of Bitcoin to him, who had aspirations in the early days of the exchange. While working as a researcher at Samsung, he researched a distributed file system and discovered the technical potential of Bitcoin and joined hands with CEO Kim Jong-hwan. The meeting between CEO Kim Jong-hwan, a law student who was fascinated by the contract-based principle underlying the Bitcoin mechanism, and Kim Won-beom, who was fascinated by the technological sophistication of blockchain as an engineer, has now become a reality with ‘Blocko’, which they founded.
Jonghwan Kim, CEO of Blocko.
– What does Web 3.0 (Web3.0) infrastructure mean and how does it relate to blockchain?
“Web 3.0 infrastructure is a technology that aims to overcome the limitations of information monopoly of big tech and platform companies, one of the problems of the Web 2.0 era, and to realize the value philosophy of Web 3.0, ‘fair and distribution’. Therefore, although Web 3.0 infrastructure does not necessarily work with blockchain, blockchain-based services that can implement distributed ownership of information are considered as technologies that can realize the value of fairness and distribution that Web 3.0 aims for. ”
-How would you easily explain the principle of blockchain technology in virtual space?
“If you introduce blockchain from a humanistic point of view, it can be described as similar to a ‘certified copy of the register’. While a computer database can be likened to an Excel-like format consisting of an X-axis and a Y-axis, blockchain has an ‘item’ such as land at the top, like a certified copy of a register, and changes in its ownership relationship continue below it. It has a continuous form. In addition, the data of such a copy of the register is stored by connecting block-level data like a chain by blockchain technology.
As such, the blockchain system operated as a registered copy system has an advantage in quickly grasping the current status of items. Therefore, because it is good to process the current state in real time, it is a system that can view the liquidity status or current status of all assets in the world. This is how the story came out that a world currency could be created based on this principle.”
-What does a token mean in a blockchain?
“In order for blockchain to work like a certified copy of a register, there must be a specific object pointing to an item, such as land in a land register. In the blockchain world, the main concept that plays a role in classifying the unit of value is ‘token’. Just as land can be infinitely subdivided, tokens can also be infinitely subdivided, and with this token as the main axis, the ownership relationship of a specific asset can be clearly indicated.”
-What is the difference between NFT (non-replicable token) and STO (security token issuance) based on blockchain?
“Tokens can be largely divided into FT (Fractional tokens = fungible tokens) and NFT (Non-fungible tokens). In other words, FT can be expressed as one of 10 thousand won bills, and NFT can be expressed as one of 10 paintings by Kim Hwan-ki. In other words, it is irrelevant to pay any of the 10 pieces of 1,000 won bills, but even if all 10 paintings of artist Kim Hwan-gi have the same value of 100 million won, which picture to choose among them makes an important difference.
The biggest characteristic of NFT is that it can be traced as a unique resource. Since blockchain on NFTs is unique data, it can never be erased, and like badges, it is a useful technology for proof and tracking. Therefore, money laundering cannot occur in NFTs.
On the other hand, FTs have the same value and characteristics of a particular asset. For example, in the case of Bitcoin, which is a representative FT, the characteristics of 1BTC are the same no matter which Bitcoin you hold. Also, even if you own 1 share of company A, the value and form of the stock are the same whether you hold A-1 shares or A-2 shares at the same time.
Going one step further, FT is classified into three types: payment type, security type, and utility token, depending on the purpose of its use. The classification of electronic money tokens, which represent payment types, asset-based tokens that represent security types, and utility tokens issued for non-financial purposes, is based on the European Commission (EC)’s Virtual Asset Market Act (MiCA, Mika) is the classification prescribed by. And among these FTs, one chapter of security tokens is STO. On the other hand, Bitcoin is classified as a utility token among FTs.”
-Does the application principle of tokens differ depending on the type of use, such as the classification of FT payment type, security type, utility token, etc.?
“The basic principle on which a blockchain operates is the same regardless of the type of token. A computer is an object that can only execute what humans promise, and a block chain is also executed by a smart contract, a specific promise system defined in the computer. Therefore, it is not that the technical principle is different for each token, but you can understand that the legal promise stipulated for each type of token within it is different.”
Blockchain solution architecture introduced by Blocko in the J Bank certification process in 2015.
-How far can blockchain technology be applied in everyday life?
“Blockchain technology is a technology that replaces the existing certified copy of the register and can be applied to anything that requires a certified copy of the register. Therefore, at the current stage, I think it will begin with the replacement of certified copies of the register, such as real estate and art objects. Furthermore, this technology is also one of the technologies whose scalability cannot be ascertained now, just as it was when the Internet first appeared in the past.
In the past, a huge central computer was used to verify and manage data. Therefore, a specific entity in the center functions as the entity that owns and has authority over data. Currently, telecommunications companies own a large number of individuals’ activity data and use it commercially. It is representative that the ownership and authority of the information is not the individual who is the information provider, but a specific central system. However, blockchain allows the ownership and authority of this information to be transferred to each individual rather than centrally.
For example, an individual owns my wallet that holds various badges proving their respective identities, such as job and vehicle information, and can only expose the badge information they want. In addition, payment is also to enable targeted marketing and information utilization optimized for individuals, such as enabling customized payments and services to subjects with specific badges. Making these technologies a reality has been selected as a national policy task by the government and is currently being pursued.”
-What is the relationship between cryptocurrencies such as Bitcoin and Ethereum and blockchain?
“Bitcoin is the key currency within the blockchain ecosystem. Therefore, it is an inseparable existence in the blockchain ecosystem. On the other hand, Ethereum is a computing platform (the operating system that makes the software run) within the blockchain ecosystem. That’s why I’m saying it’s more related to STO.
Simply put, Bitcoin proves that money can be sent within this ecosystem. On the other hand, Ethereum has been implemented so that other things besides money can be sent. So, taking bitcoin out of this ecosystem is the concept of just going back and forth as a piece of stock without paying a fee.
Above all, the reason why Bitcoin can dominate as a key currency over any other virtual asset as well as currencies such as the dollar or won is that there is no owner who controls it. Bitcoin is only operated by an automated mechanism and has a fairness that is not subject to anyone’s control or intervention. Therefore, it is also the reason why the United States, which exercises hegemony around the world as the key currency of the dollar, has no choice but to be extremely wary of Bitcoin, which can take away this hegemony.”
Blocko currently operates Silvermine, a managed token issuance platform that facilitates the establishment of a token ecosystem. Silver Mine is an Argo mainnet-based token issuance service that provides a service to create your own token with just a click on the web without building a system.
-Isn’t the activation of blockchain technology such as STO linked with the rise in the value of related virtual currencies such as Bitcoin and Ethereum?
“As the ecosystem of the blockchain grows, it is possible to go upward in the big picture, but it is not necessarily linked to the increase in the value of Bitcoin. I think the value will go up according to the idea that we will have to own and have a lot of Bitcoin as it is used a lot, but in fact, as technology develops, we do not use Bitcoin itself, but numerous Rapt Bitcoins on top of one Bitcoin. This is because it can be used like Bitcoin by creating an intermediate link such as As I said, these contracts are possible because the blockchain ecosystem operates based on contracts. So, as these technologies develop, owning a lot of Bitcoin becomes unnecessary.”
-Currently, Bitcoin halving is becoming an issue in relation to virtual currency. What is the Bitcoin halving and why is the market paying attention to it?
“Bitcoin is technically designed to work unconditionally as it was initially coded because it is operated by the aforementioned contract, i.e. smart contract. The funny thing is that these mechanisms are driving humans to do things. A mathematician named Alan Turing has stated that one of the requirements for AI is that ‘the subject must be able to make humans do things’. Bitcoin was not even demanded from humans, it just stipulated in the contract that if someone did this, they would give money called Bitcoin. However, many people are now voluntarily purchasing graphics cards to mine bitcoins, which is an activity called mining. In other words, what computers tell humans to do is actually being done.
And one of the stipulations written in the contract is that the amount of Bitcoin mined periodically decreases. So when people see the stipulated contract and share this contract, they decide that its value will increase because the amount decreases in that cycle with the halving.”
– How far do you think the scope of blockchain contracts implied by Bitcoin will expand?
“Humans have already allowed a law-like order to be established on the computer world. It is the Bitcoin mechanism that proves it. As an idea, Bitcoin can be judged to have already reached the level of AI. The reason why the founder of ChatGPT showed interest in blockchain technology by mentioning that it is the endgame of AI is based on these characteristics of blockchain. This is because the final logic of AI, that is, the necessary means for it to function like an agreed-upon constitution written somewhere, is likely to be a blockchain.
STOs are likely to work like this in the future as well. For example, it is possible to make the system automatically operate within this mechanism based on blockchain-based smart contracts for corporate disclosure or sales related content.”
– Do you think that the activation of STO will be possible without Bitcoin or Ethereum?
“It is the foundation that eventually developed the virtual currency that has the driving force of this blockchain technology and the initiative of high technology. In addition, since a genius idea such as a block chain mechanism was implemented to operate voluntarily within the block chain ecosystem through the means of bitcoin, excluding this and discussing the block chain is the same as discussing the Internet without email. It’s not impossible, but realistically it’s going to be astronomical and incredibly difficult technically as well as out of the mainstream.”
-How do you see the future impact of the activation of STO on the financial infrastructure and the existing financial transaction method?
“This is a way to change the framework of financial transactions from the root, and since changes are taking place not only in Korea but also at the global level, blockchain-based changes will be inevitable in the domestic stock market in the future. Therefore, I believe that if domestic companies do not respond and prepare in advance, they will be at a disadvantage in gaining an edge in the global market.
On the other hand, as STO is legally adopted, the obstruction of coins listed on existing virtual currency exchanges will intensify. Representatively, coins such as Paycoin and Milk, which are listed based on points, are typically debt securities, so if STO is adopted, future delisting is inevitable. In addition, since 99% of the virtual currencies currently on the market are security tokens, these will be defined as incomplete sales and illegal activities and will disappear in the future.”
-What asset classes do you think STOs will be able to expand into in the future?
“Considering sunk costs, we believe that growth in assets that have not been traded in the existing market will be more prominent than penetrating into existing investments. It’s like securitization of YouTuber revenue or influencer revenue. For example, when PD Na Young-seok opens a new channel on YouTube, it is issuing securities based on STO. Through this, creators can not only secure initial investment funds, but also recruit early subscribers through marketing effects, and investors can share future YouTube profits with their shares. Also, according to this method, the growth rate of the channel can be accelerated by the investor functioning as the marketer of the channel. In other words, it can also work as a means to increase shareholders and fandom like an activist fund. In addition, I think there is also the possibility of destroying the PF market with higher safety than the existing PF (Project Financing) method.”
-What will be the role and business model of Blocko companies in the process?
“We are a SaaS (Software as a Service) provider within the blockchain ecosystem. Saas is a cloud-based software delivery model that enables specific entities to easily develop and implement services that can issue or distribute items such as STO (funding), NFT (data distribution), badges (credentials and certification), etc. It is a platform that provides the basic functions to do. In the case of badges, we are currently pushing for a regulatory sandbox, and companies are preparing for IPO tracks such as technical evaluation.”
– What is the strategy to first target the overseas market, which has less restrictions than the domestic one?
“In fact, there was a point in time when corporate growth was accelerated, such as by winning projects with Bank of Singapore, Credit Suisse in Switzerland, and Seed Group in Dubai, and expanding to a local branch in the UK. With Dubai CD Group, we promoted a distribution-related platform related to Sharia Law, and with Credit Suisse, we successfully carried out a PoC project related to STO and promoted business expansion. However, on the way, Corona was hit directly and all overseas business was liquidated.
CEO Kim Jong-hwan said that a technical evaluation is currently underway to promote the first blockchain listed company with special technology.
It also served as an opportunity to shift our business direction from solution-based to cloud-based SaaS. At the time, the business was operated by focusing on solutions, and developers were dispatched to local areas to build platforms and develop software locally, but Saas put products on the cloud and made them available to companies and consumers who wanted them. no see. Based on this, even in the case of the badge-related business, 40% of the inflow of customers based on Saas is coming from overseas customers. In particular, badge-related businesses are currently in high demand from global influencers.
In the past, there were no legally precise regulations regarding the issuance and distribution of blockchain-related services in Korea, but as the relevant laws are currently being established, the business will gradually start in earnest and we will preoccupy the market based on the technological superiority we have prepared. I hope to be able to.”
Reporter Kim Ye-eun