Journalist: April Cho | Editor: Teresa Wang
On October 8th, South Korea’s largest mobile platform Kakao Corporation officially launched the test net for its first affiliated public blockchain platform: Klaytn. The announcement is a soft launch revealing Klaytn’s technical infrastructure and the 10 partners initially invited to join the public blockchain. The launch will precede the platform’s anticipated launch date in Q1 of 2019.
While Kakao Corporation is most well-known for its wildly successful social messaging platform Kakaotalk, it’s a multi-arm conglomerate that provides a wide array of other services that span industries including entertainment, fashion, finance and transportation industries. In Korea, Kakao Corporation’s announcement is comparable to a tech giant like Facebook introducing its first blockchain prototype.
What is Klaytn?
Klaytn is a public blockchain platform officially backed by Kakao Corporation’s blockchain subsidiary Ground X.
Kakao Corporation’s venture into blockchain is run by subsidiary Ground X, an arm of Kakao Corporation dedicated to developing blockchain technology and its applications. Headed by CEO Jason (Jaesun) Han, Ground X aims to industrialize blockchain technologyand increase its applications “in the real-world.” Klaytn Is Ground X’s first official project.
According to its whitepaper, Klaytn is a public blockchain that “offers exceptionally high performance, solid reliability, stability, low costs, and a security model similar in complexity to that of private blockchains but with open access to allow auditing of blocks, thereby, decentralizing trust.”
In short, Klaytn aims to incorporate the efficiency typically associated with private blockchains to a decentralized and transparent blockchain system.More simply put, Klaytn’s value proposition is that it will provide a better user experience for users and developers than any existing public blockchain.
Why is Kakao Corporation looking toward the global market?
Its most profitable service Kakaotalk has no more room to expand domestically.
Paradoxically, the need for global expansion has become increasingly more pressing as social messaging platform Kakaotalk has achieved unprecedented success in its home court. Kakaotalk has virtually captured the Korean market, with a market penetration rate of near 100%.
In contrast to its domestic domination, Kakaotalk has “only” 50 million users in the global market. This is roughly 25% of key competitor Line which boasts a global userbase of 218.4 million. Kakao has expressed a clear willingness to look for opportunities to grow globally since as early as 2013. The end of Kakao’s domestic market growth (because of its unprecedented success) marks the beginning of Kakao’s global expansion
Given the existence of established competitors in the market for blockchain infrastructure it is unclear why a profitable institutional player like Kakao Corporation would faceoff against regional and global competitors. These include competitors like global heavyweights Ethereum, regional players in Asia like Chinese firm NEO, and importantly strongest South Korean contender ICON.
At a broader level, Kakao Corporation seems to be expanding on many fronts, and with a particular focus on incorporating frontier technologies like AI and blockchain. Take for example, Kakao Corporations announcement of different subsidiary branches that manage emerging tech for the conglomerate. In 2017, Kakao Corporation also announced that it would be launching a voice-powered AI app under subsidiary branch called “Kakao Brain.” Ground X, and blockchain infrastructure Klaytn seem to be the corollary projects for Kakao’s ventures into the blockchain space.
Kakao Corporation may be betting that these emergent technologies — despite problems like user adoption and usability — will be enough to take on the global market. These technological advancements could very well edge out global competitors in markets of interest like social messaging applications… if they can overcome the problem of user adoption.
As for Kakao Corporation, blockchain and global expansion? It remains to be seen whether Klaytn’s dual value proposition of usability and transparency will be enough to allow the highly institutionalized Kakao Corporation to pull ahead in the decentralized world of blockchain tech.
