In brief
- A key member of the blockchain advisory board for South Korea’s financial watchdog has said that lack of real-world usage is preventing growth in crypto.
- Hong Ki-hoon said that the ambiguous nature of crypto assets has been a roadblock to regulation.
- The focus should be driving real utility for organic growth, said Hong.
Lack of real-world usage is the single biggest problem preventing the growth of crypto, according to a key member of the blockchain advisory board for South Korea’s Financial Services Commission (FSC).
Hong Ki-hoon, who teaches economics at Hongik University, said that the major roadblock in regulating the blockchain and crypto industries over the past two years has been the ambiguous nature of crypto assets.
“When users ask ‘where do we use this crypto asset?’ there is no clear answer,” Hong said during an interview with a local publication translated by Decrypt. “The description of cryptocurrencies as a security comes out when trying to answer that question. Then, when users ask, ‘Why is the price increasing?’ the answer to it is because the business behind it is expanding.” Again, he said, that raises the question of whether or not the crypto asset is a security. “It is a utility asset but companies end up describing it as a security,” Hong added. “That’s the biggest problem.”
Why crypto is struggling to achieve adoption
In the early 2000s, the most popular social media platform in South Korea was Cyworld; tens of millions of people bought its in-platform Acorn token to purchase songs, items, decorations and emojis.
Hong explained that there is not a single crypto asset—apart from the majors like Bitcoin and Ethereum—that has reached Acorn’s level of adoption. He pointed out that in-game tokens used on platforms like Twitch, Steam, and social media platforms have higher usage than most crypto assets.
It's like selling currencies to be used on Mars now when we’ve just started to send rockets to space
“There are so many roadblocks to actually implement blockchain technology,” he added. “Every time it gets to the execution phase, it fails. To operate a currency on top of this technology is burdening. It's like selling currencies to be used on Mars now, when we’ve just started to send rockets to space.”
Crypto assets’ low level of usage and adoption brings their viability and practicality into question, said Hong. In South Korea, he noted that many companies are trying to trade on the government’s pro-blockchain policies to force a technology that does not have high demand.
Hong added that attempting to please the government by creating technologies that have no real-world demand is not effective; instead, the focus should be driving real utility for organic growth.