Kakao rules out ICO, plans blockchain platform for Asia by year’s end

South Korea’s mobile messaging giant Kakao will introduce its own blockchain platform by the end of this year, while ruling out the possibility of an initial coin offering as part of its blockchain business agenda, Kakao’s co-CEOs announced Monday.

Kakao’s primary focus now is to design an effective blockchain platform, similar to Ethereum, onto which various services can be built. With it, it hopes to court Asian developers interested in building new products and services based on blockchain networks, they said.

“We are not thinking of pursuing an ICO at this moment. We will focus resources on developing a meaningful blockchain platform which many partners in Asia can effectively use and share, with aims to debut it within the year,” Kakao co-CEO Joh Su-yong said during a press conference held in Seoul.

The remarks came during the first public appearance by Joh and his partner Yeo Min-soo since they were appointed the new co-CEOs of Kakao. The company currently dominates Korea’s mobile technology space with mobile chat app KakaoTalk and other services including content distribution, transportation and finance.

According to Joh, Kakao is working to build a proprietary blockchain platform of its own able to host large amounts of data. The firm said details of its envisioned platform could not be shared at this point.

If successful, this would allow Kakao -- which has so far failed to establish a global presence as its businesses are largely limited to only the Korean market -- to become a potential leader of Asia’s blockchain technology ecosystem, Joh explained.

To lead its efforts, Kakao set up a new subsidiary dedicated to the blockchain business, Ground X, in Japan this month. It tapped Han Jae-sun, co-founder and chief technology officer of local startup accelerator FuturePlay, to lead the unit as CEO.

Meanwhile, Joh dismissed widespread speculation that Kakao would raise fund by issuing its own crypto tokens via a reverse ICO and potentially integrate the token system into its services that involve payments.

Though it recognizes the benefits of such integration, the Korean mobile giant sees greater value in developing a proprietary blockchain platform that can serve as a baseline tool for developers building new services, he said.

The cryptocurrency trading business is also off the table for Kakao, Joh noted, explaining that the firm’s 23 percent stake in Dunamu, which operates Korea’s largest crypto exchange Upbit, is no more than a financial investment.
 

In addition to blockchain, Kakao sees the chance to go global with its content distribution business, in which platforms operated by Kakao help Korea’s original music, movies, webcomics, web fiction and mobile games reach not only local but global audiences.

“We believe that the key to going global lies in IP (intellectual property). Korea’s original music and film culture are the critical ingredients of finding success across borders,” Joh said.

Kakao hopes to build in overseas markets a strong distribution platform for content like webtoons, music and mobile games, as it did in Korea. And in doing so, the company believes it can assist globally competitive content from Korea in appealing to foreign users.

While blockchain and content intellectual property will underpin its overseas business strategy, Kakao’s road map for its core Korean market will be driven by service integration and the expansion of its artificial intelligence platform.

The Kakao chiefs said they will continue working on ways to forge synergies between its mobile services, setting KakaoTalk messenger at the core. .

Expanding and securing more partners for its proprietary artificial intelligence platform Kakao I is another goal. Kakao wants to create more cases where partners develop smart services powered by Kakao’s AI engine, while introducing more useful functions to its own AI-powered device Kakao Mini.

By Sohn Ji-young (jys@heraldcorp.com)