Earlier this week, Dunamu, the operator of Kakao’s KakaoStock, announced the launch of South Korean cryptocurrency exchange, UpBit which has been created in partnership with leading cryptocurrency trading platform Bittrex. According to the UpBit development team, all 111 cryptocurrencies that are currently listed on Bittrex will be integrated into UpBit.
Kakao, the parent company of KakaoTalk and KakaoPay, the largest messaging application and fintech platform in South Korea with more than 90 percent of market share, invested $3 million Dunamu in September 2015. Since then, Dunamu’s popular stocks application was rebranded to KakaoStock and has continued to operate as an independent company.
Bittrex confirmed with Coinjournal that it is directly collaborating with Dunamu, not Kakao, to launch UpBit in the South Korean cryptocurrency exchange market. But, Kakao and its fintech arm KakaoPay will directly help UpBit in penetrating the South Korean cryptocurrency market by allowing the UpBit development team to connect KakaoPay with UpBit.
According to Forbes, nearly 100 percent of households in South Korea use KakaoTalk as the main messaging application. Apart from having the fastest internet connection in the world, South Korea also has one of the highest internet penetration rates at over 90 percent. More importantly, of the 90 percent of internet users, 88 percent use mobile messaging applications and KakaoTalk is used by 90 percent of the users.
“Of internet users age 6 and up, 88.3% use a messenger service, and 99.2% of those use KakaoTalk, a local messenger with more than triple the penetration of Facebook Messenger (29.2%) and Naver’s LINE (13%),”
South Korea is emerging as a true powerhouse in the global cryptocurrency market and through the support of some of the country’s largest internet conglomerates such as Kakao and telecommunications giants including SKT, the South Korean cryptocurrency market will mature at a rapid rate.
Some of the existing cryptocurrency trading platforms like Korbit, the South Korean market’s second largest cryptocurrency exchange, were acquired by large-scale companies with large amounts of capital and resources. Most recently, NXC, the parent company of Nexon, the Japanese gaming development company with a $10 billion market cap, acquired a majority stake in Korbit, purchasing 65 percent of the company’s shares for $80 million, valuing the company at over $140 million.
In 2015, Kakao vowed to focus on improving the South Korean fintech sector by providing better alternatives to traditional banking systems. Its $3 million investment in Dunamu allowed the company to become the most popular online stocks platform operator in the country. Earlier this year, Kakao launched KakaoPay, the first fintech application in South Korea which aims to compete with local banks and financial providers.
KakaoPay added 3 million users in its first month, attracting millions of users in their 20s with its simplified loan distribution system. Anyone in South Korea above the age of 18 can borrow up to 3 million KRW using KakaoPay, without the necessity of submitting documents and having credit scores issued by banks. Because South Korean telecommunications companies do not allow residents to use mobile phone networks or purchase sim cards without undergoing identity check, KakaoPay automatically verifies the identity of its users and offer services based on the information.
UpBit’s partnership with KakaoPay is important because it allows any user on the KakaoPay platform to invest in the UpBit cryptocurrency exchange platform. To invest in other trading platforms like Korbit or Bithumb, users are required to undergo complex Know Your Customer (KYC) and Anti-Money Laundering (AML) verification processes. But, UpBit eliminates that through its partnership with KakaoPay, simplifying the entire process for investors and traders.