We are Seeing the First Wave of Tech Conglomerates Coming into Crypto Globally
This space is getting increasingly more interesting. Facebook is looking to announce their blockchain initiative on June 18th, as will Korea’s messaging app Kakaotalk, which will be launching its layer-1 Klatyn blockchain on main-net on June 27th. Additionally, we are also starting to see Chinese tech conglomerates doing something they’ve never really done before- open sourcing their blockchain platforms.
Kakao’s User Acquisition Strategy Focus on Korea and North America
For folks not familiar with Kakao, Kakao is Korea’s leading mobile platform with more than 50 million monthly active users.
Back in early March, the company’s blockchain unit GroundX raised $90 million through a private coin offering. Venture capital and private equity funds including IDG Capital, Cresendo Equity Partners and Translink Capital participated in the round.
With just over a year under its belt, and over 100 employees in the team, the Klatyn blockchain aims to launch its main-net on June 27th.
In its announcement at Consensus in May, Klatyn, Kakao’s Layer-1 enterprise blockchain, shared that it has identified multiple large enterprises as early staking partners, which they deem them as governance council members, in Korea and outside of Korea.
The governance council members include the various business segments of Kakao, and also large local gaming and enterprises like PUBG and Netmarble.
And how it would go to market is through its service partners, or integration partners. It has announced that it will have 26 service partners within a quarter of main net launch, and that number to expand to 100+ by the end of this year.
It’s very clear to us that the company is seeking to go outside of Korea for adoption. In its ambitious layout of its blockchain reach, Kakao has emphasized that its service partners and global partners will extend to a user base of 400mn+ people. With most of the user base in Korea and surrounding regions, and the next largest base in North America, and then the next largest demographic in Southeast Asia with Europe being the last target market.
Check out the entire deck from Consensus here
While we are still waiting for Facebook’s cryptocurrencies, Telegram and Signal (+Mobilecoin), and Wechat to launch their tokens, we believe that Kakao will have an early mover advantage and there will be really interesting lessons learned from this experience.
Facebook’s strategy is still early but similar in approach
According to The Information, Facebook’s initial token distribution appears similar. But it seems that the focus is primarily within North America thus far and on the Fortune 500 companies:
“In the last few months, Facebook has held discussions with other companies about licensing the right to help operate the new cryptocurrency network, according to the people briefed on the plan. Facebook has discussed an arrangement through which the outside companies would each pay $10 million to operate a node of the network—hardware and software that will help process transactions involving Facebook’s token.
Node operators also could send their own representatives to the foundation to help steward the network. It isn’t known how the node operators will profit from their participation, but node operators are typically rewarded for their efforts through newly unlocked tokens or transaction fees from users.
Facebook hopes to launch the network with 100 nodes in an effort to limit the control a single entity can have over it, according to multiple people familiar with the matter, although that number is far lower than on other cryptocurrency networks. Bitcoin, in comparison, has thousands of nodes validating transactions.
Some of the people added that the number of nodes could be fewer at launch. The company has discussed designing the network so that it will become more decentralized over time, which could happen by adding more nodes.
Facebook plans to use the roughly $1 billion it hopes to generate from licensing fees to back the cryptocurrency using a basket of currencies and low-risk securities from various countries, people familiar with the matter said. Backing the token with reserves of traditional assets is designed to ensure the token’s price remains stable, unlike other cryptocurrencies, which are prone to dramatic price fluctuations.”
Don’t miss our conference call with The Information on June 18th, and be sure to email us at firstname.lastname@example.org should you’d like to rsvp 🙂
China Technology Companys’ Blockchains Opening Up
As many of our existing readers may have read from our previous posts, in the past couple of years, Chinese tech conglomerates all have been experimenting with blockchains and blockchain-based applications. But these projects over the years have been developing in stealth and none has reached large scale adoption.
Nevertheless, with the ongoing emphasis on blockchain technology from the regulators, these blockchain projects are all looking to advance further. Most recently, JD Digital’s blockchain JD Chain open sourced its JD Chain blockchain framework. The JD Chain is made available under the Apache 2 license and is now on Github.
JD is short for Jingdong, one of China’s largest public e-commerce site like that of Amazon. Five months ago, the company launched a service, the JD Blockchain Open Platform, which enabled companies to use JD’s platform but only via pre-built APIs. This platform targeted companies who don’t have the expertise to develop their own solutions. It includes applications like traceable e-invoices. Now JD has opened up its blockchain protocol which enables enterprises to build custom solutions. In the future, JD blockchain look to focus on two major areas, namely, supply chain digitization and fintech.
It has been reported that Baidu’s “Super Chain” will also become open source mid-year this year. While it’s still relatively early for these Chinese tech conglomerates, we think that the upcoming launches and announcements by Facebook, Kakaotalk, it could certainly ignite their global ambitions and accelerate the pace of blockchain adoption within China and in the surrounding region.