Glosfer; Disruptive Innovator?
Taewon Kim, CEO of Glosfer
Glosfer’s main business deals with blockchain but it also has a stake in cryptocurrency. The company was the third domestic player in the field to launch its initial coin offering (ICO) last September. The event made headlines as its cryptocurrency Hycon raised some KRW 14.8 billion won (approx. USD 13.6 million). Glosfer actually claims that cryptocurrency is one of the “derivatives” of the blockchain technology. Not only from the technical aspects but from the philosophical perspectives, blockchain is the calling of our time.
Business Diversification Using Blockchain
“I have been making contacts with local governments across the country. I tried to set up meetings with mayors and governors and tell them that I have a great idea to share. Public servants tend to be risk-averse, but fortunately, Nowon District was the first local government to open its door to us. It is the first ever case in the world to develop a cryptocurrency with a local authority,” says Taewon Kim, CEO of Glosfer.
Glosfer has signed a memorandum of understanding (MoU) with Nowon District and has developed a plan to launch a local currency called “Nowon” based on blockchain technologies. Nowon is a concept akin to that of “Youth Dividend” policy which has already been introduced in the City of Seongnam in Gyeonggi Province. It was first brought in with a good intention to help the unemployed youth who are going through difficult times and address part of their financial problems. However, some issues arose as youngsters who received the dividend in the form of a voucher ticket resold it to get cash.
Everyone has a different view on how the beneficiaries should spend the dividend. Some might raise an issue that the voucher could be used for unethical purposes. The point is that this was not expected when the Seongnam government put in place the policy. According to Glosfer, blockchain technology can be used to minimize possible adverse effects of policies because it enables real-time responses to various issues unlike the conventional way of dealing with them post-implementation. The blockchain system is useful in detecting system errors based on the information shared by multiple users. It guarantees transparency and easy-to-use cryptocurrency.
The project itself holds a special significance as well. The district government of Nowon plans to distribute its local currency to those who participate in volunteer works or donations. Mr. Kim places an emphasis on the fact that the cooperative project with Nowon District will provide a platform in which social values are transformed into economic values.
“In developed countries, you are respected not because you are rich but because you give back a lot to the community. In other words, your social status is recognized by your contribution and how committed you are to the local community. But this is not the case in Korea, so we had this idea of transforming commitment into economic values,” says Mr. Kim.
Another field in which the blockchain technology can be adopted is copyright management. On September 14, Glosfer signed another MoU with Gemmy Company, a music download platform provider, to build a secure platform based on blockchain technology together. Gemmy Company started its business with the recognition that the conditions are not favorable to newcomers in the industry and artists are not properly remunerated, thus undermining sound development of the music scene in Korea. Glosfer and Gemmy will work together to build a platform based on blockchain to detect illegal downloading of music and make sure that artists get properly paid for their creative work.
Other projects that Glosfer is currently working on include a healthcare project in cooperation with community health centers and a project to develop a cultural content platform with COCOV Entertainment. What these projects have in common is that both promote the public good and that the underlying philosophy is democratic. It is not a coincidence that the two projects have commonalities. Blockchain is decentralized in its structure and decentralization is the core value as well as the essence of the projects carried out by Glosfer.
An Ideology called Blockchain
Blockchain can be described as a ledger containing the public history of cryptocurrency transactions. Each ledger is linearly grouped at a fixed time interval to constitute a block. Each block is simultaneously recorded by every user in the system. It is easy to detect any erroneous blocks because the information is shared by all users. The security within the system is very secure that it cannot be breached by current technologies. However, it is the democratic structure and autonomy of blockchain that attract the attention of the world.
The democratic aspect comes from its structure. Every computerized system so far has adopted a centralized structure. On the contrary, blockchain allows individuals to become a focal point of the system and decisions are made by multiple users rather than a central authority. It is inevitable for blockchain to embrace the autonomy of individual transactions.
The relation between the conventional social system and blockchain structure is comparable to that of Panopticon and Synopticon. Panopticon is a system of control designed by the English philosopher and social theorist Jeremy Bentham in 1791. The basic setup is that there is a central tower with the watchmen surrounded by cells, allowing a few watchmen to monitor many prisoners. The French philosopher Michel Foucault cited the concept of Panopticon to elaborate on how the power structure is composed in modern society. In fact, most of the group structures of our times have adopted the Panopticon model, the prime example being the central bank. The centralized system of the bank monopolizes all decision-making processes. The bank does not have to consult anyone to enforce sanctions or accommodative policies, and all the relevant information is not shared. No client can actually have access to the information on how their asset is invested by the bank. Every decision is unilaterally made by the central system.
Centralized systems often lead to unreasonable situations. Although the greed of securities firms was cited as one of the reasons for the subprime mortgage crisis of 2007, it was the ordinary citizens who were the most affected by the crisis. Likewise, a few stakeholders’ decision is sustained by a vast majority of people in the existing economic system. Whether you support it or not, most of us have to share the unwanted burden under this system.
However, blockchain represents what Synopticon stands for. It is the concept of surveillance of the few, or those in the position of power, by the many, or the public. Introduced by the Norwegian sociologist Thomas Mathiesen, Synopticon enables the complete opposite of Panopticon, leaving room for correcting opinions raised by the few with vested interests by the many. As the horizontal relations on the internet could address the dishonesty of the corrupted few, blockchain allows everyone to participate and share their rights. In short, blockchain aims to promote active communication amongst users.
This is also what Mr. Kim pays attention to. “Blockchain captures the attention from around the world not because it is fantastic, but because there is something that can only be resolved by blockchain technology. It represents direct participatory democracy as participants themselves can benefit from it as well as should be held accountable. I would like to call it an ideology, rather than a technology,” says the CEO of Glosfer.
He also believes that blockchain will be helpful to realize law and order in our society, especially when it is utilized to improve a social system rather than being perceived as part of an economic phenomenon. In other words, the blockchain system can be trusted because of its own characteristics and does not necessarily have to depend on individual ethics. For instance, one or two military doctors cannot be held responsible for resolving the issue of dodging military services in Korea. However, everything can become transparent once a system to monitor each other is established using blockchain. The system puts more trust in the public opinion than that of a few with power and authority.
Blockchain, Cryptocurrency, Hycon
Mr. Kim agrees that Bitcoin is in a “speculative bubble.” Unlike cryptocurrency, however, blockchain has been selected as a core project of the Moon Jae-in administration. The government has also allocated a considerable amount of budget to this original technology. It can thus be said that the excessively speculative cryptocurrency market is one thing and blockchain is another. Mr. Kim asks to separate blockchain from cryptocurrency. After all, cryptocurrency is necessary for blockchain, but in and of itself is not sufficient.
Also, blockchain technology is not perfect. Hacking is completely prevented only within the system. On the one hand, abuse of anonymity could lead to a variety of problems. On the other hand, getting rid of anonymity altogether could tarnish the meaning of the technology. Depending on how it is used, it could even lead to invasion of privacy. In a way, blockchain is similar to AI. AI technology itself does not threaten human beings as people hold ultimate control, no matter how advanced the technology will be. Therefore, an original technology itself is not evil. Rather, it holds infinite possibilities. The importance lies in who takes control of those possibilities.
Cryptocurrency is at times regarded as being associated with darknet activities due to its traits of anonymity, autonomy, and decentralization. However, it could also be the breakthrough in technology that revolutionizes the world. One expects Glosfer to successfully create a system that will make the world more just.