The non-fakeable token (NFT) space in South Korea is expanding rapidly throughout 2021, driven by the growth of cryptocurrency and NFT services offered by Kakao, but competitors are entering the fray.
South Korea’s NFT market could be on a more expansive path after the government ruled on Nov. 5 that NFT purchases will not generate taxes.
Klaytn, a blockchain developed by South Korean tech startups Kakao and GroundX, is apparently the go-to for South Koreans looking for a network to buy and sell NFTs.
Klaytn’s market dominance in South Korea is unparalleled, as KakaoTalk, Kakao’s flagship product suite with over 52 million active users, integrates Klaytn’s Klip cryptocurrency wallet directly into its mobile app.
Sangdi, CEO of Spoon, a platform for NFT creators based in South Korea, told us, “If KakaoTalk pushes them, ordinary people who have no exposure to cryptocurrencies will become familiar with them and [they will] accept NFT as a culture.”
In addition, Klaytn is one of only three blockchains supported by the OpenSea NFT marketplace.Kakao’s own Krafterspace NFT minting service has posted over 37,000 NFTs for sale on OpenSea, of which nearly 7,000 have been purchased t
Korean NFT creators realize that the platform on Klaytn is tailored for Korean collectors, its target market. sangdi added, “We are targeting the Korean market first and then the global market. I think for now Klaytn will help us focus on Korea.”
As Korean NFT collectors become more accustomed to the global NFT trend, alternatives such as Polygon, the second tier of the Ethernet extension network, pose a potential threat to Klaytn’s dominance.
Polygon is the second of three networks supported by OpenSea, making it a relatively familiar platform for Korean NFT collectors. It also supports a strong NFT marketplace, which some Korean projects see as a better fit for their global business models.
Jisoon Lim, CEO of 3PM, a music-centric NFT curation and distribution platform, has deployed the platform on Polygon rather than Klaytn. Despite being located in Korea, Lim explained to us that Polygon was the best choice for the project.
Korean NFT enthusiast Karl Hyun also feels Polygon is a better fit for the NFT market than Klaytn. Although his favorite collection is not based in Korea, he feels that an Ethereum-based second tier solution is the best and helps increase NFT’s global reach.
In an interview, he said, “Polygon as a second layer would work best integrated with Ether, but isn’t Klaytn closer to a standalone sidechain?” He then added, “Since Polygon is based on Ether, the best way to increase the scalability of NFT while minimizing centralization is to go Polygon.”
Kakao’s involvement in the blockchain space also extends to the venture capital space, where it has a long-standing relationship with Dunamu, the owner of the South Korean Upbit exchange.
Dunamu is preparing to launch an NFT platform with HYBE, the entertainment company behind popular Kpop group BTS. kakao is also planning an NFT marketplace and meta-universe called Kakao Games.
For now, Kakao’s foothold may be compromised by its slow global expansion efforts. However, Sangdi said that concerns about globalization are a temporary obstacle, adding that the company wants to become a global brand.