Interview with Hashed Partner Alex Shin on the Markets and Korea
Hashed Partner Alex Shin on his Outlook for Korea and it’s Regulator Role in the Crypto Markets in 2019 and Views on Current Bear Market
Hashed is a Korean blockchain project accelerator and also the largest pure play crypto investment fund in Korea. Alex Shin is a cofounder and partner of the fund. Founded in 2017, Hashed has shaped the Korean blockchain industry through its unique approach to finding and nurturing nascent projects. It has helped accelerated projects such as Terra and ICON.
When I spoke to Alex, I found him to be extremely skillful at bridge building between east and west, and he along with his partners are committed to
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Announcing Guest for Our Latest Podcast Episode?—?Alex Shin, Co-Founder
Joyce Yang
Hi everyone.
Welcome to the global coin podcast. A podcast where we hear from leading global operators and investors in crypto, with their thoughts on the Asia Blockchain and cryptocurrency space. Asia is really a cryptocurrency hub, and understanding the region is as important as understanding what’s going on locally. We also have a newsletter that highlights all the important crypto news coming out of Asia, with many translated by our staff directly from the local media. Check it out at archive.globalcoinresearch.com.
I’m your host Joyce Yang and our guest today is Alex Shin from Hashed. Hashed is a Korean Blockchain project accelerator and also the largest pure-play crypto investment fund in Korea. Alex is a co-founder and partner of the fund. Founded in 2017, Hashed has shaped the Korean Blockchain industry through its unique approach to finding and nurturing nascent projects. He has helped accelerated projects such as Terra and ICON. When I spoke to Alex, I found him to be extremely skillful at bridge building between the east and west and he along with his partners are committed to put Korea on a global crypto map. In this episode, we discussed Hashed and its investments, Alex’s view on the crypto markets and Korea’s crypto regulators and the conglomerate participants there.
Alex Shin
Joyce
Joyce Yang
Yes, Alex. Can you talk about yourself and Hashed?
Alex Shin
I’m the coolest guy in crypto. Okay we are the leading crypto assets Venture Capital firm out in Korea, but none of us come from Venture Capital or Hashed fund. In the backgrounds, we are all entrepreneurs and for the most part everyone’s really techie, but with the exception of me. So we think a lot more about what it means to be a network participant. When you’re out in Korea,
A lot of people come out here looking for consumer adoption or trading volumes so we do all the biggest events. We do a lot of community events. In July, we did Korea Blockchain with those you know it’s normally successful and that’s us in a nutshell. I think Kyle from multicoin calls it generalized mining. I don’t like that. It just sounds a little too much like POW. In that same category, we call it network participant or network builders or something. No one’s quite coined that yet so we’ll see. Yeah that’s Hashed.
Joyce Yang
That’s great. And you guys have been around for some time right?
Alex Shin
Yeah. So a little over 2 years ago, so late 2016 when crypto was just kind of taking off in Korea, bear in mind South Korea was not online for Bitcoin, Japan and China was. So that’s why you see all the Bitcoin volume in Japan and in Korea, you see Ethereum and everything else. We were a syndicate of tech founders that were really savvy in his category. We called ourselves BPK, Blockchain Partners Korea and some of you might have heard that. We really wanted to put Korea on the headline because that’s sort of why we got together. We thought this rare opportunity you know for this new category to emerge and Korea of all places to be the eye of the storm and we thought that was really interesting. But that actually spun off into some really cool things.
So a year and a half ago at this time, South Korea was speculation volume and nothing else. And we thought about building out this ecosystem which would mean that we need some good projects, we need developer ecosystems. So we naturally ended up working with 2 guys in our syndicate who happened to be founders of ICON. The other two guys were Doctors and they’re like we’re going to go make this MeddieBlock thing in the Gig and the 6 of us didn’t have real jobs, so we got together and created Hashed. And we didn’t want to put Hashed fund or Hashed capital or Hashed anything because this is not really in our DNA, but that ended up being a good thing. Yeah, that’s history.
Joyce Yang
Where did the name Hashed come from?
Alex Shin
So everybody in Korea was copying PPK. It was a BK, PK, BBP, it is a Blockchain Korean Associate whatever, it is too many. And everybody was in block or something X or up ground or something; just too many. So we just thought about what’s the underlying technology within a Block, which is hashing. But we didn’t want to just call it hash you know, it’s too close to hash brown or something. So we went with Hashed.
We have a fun story of the logo. We were supposed to print out business cards or something because we had a really big event coming around the corner, we called it Hashed Night. But we didn’t have a logo yet so we just grabbed like general font and made it and said we’ll eventually change it and if we never did. So it looks like a really fast shoe brand or something like an Athletic Cup Brand, but I think it’s recognizable. It’s differentiated and so we stuck with it. Hashed.
Joyce Yang
So let’s talk about what you’ve been seeing in Korea recently and the rest of Asia and you also travel a lot around the world actually. So what have you been seeing in the last few months while you’re traveling?
Alex Shin
Well let’s like Time Machine back to the beginning like the Kimchi premium era all right. So some of you guys might remember December January, early this year late last year, prices for crypto in South Korea were 45-50 % more expensive and I look at Twitter and the general sentiment is so sad. All-time high was Ethereum you know $1338 and now it’s at $700. In Korea, it was $2149. So that downturn hit everybody else much harder and I just want to explain why that happened.
So Korea is hyper-connected, it’s super homogeneous, everybody in Korea is
As the general sentiment for utility token approaches zero or negative zero depending on how you want to look at it, what we have left in Korea is a consumer market that understands crypto assets. So we’re generally bullish that people there will adopt new technology much faster than anywhere else. You have to look at Korea like if we’re in
So we look at it as a very distribution play, people are still somewhat bullish on utility tokens. They want to do something interesting with crypto, they’re not really worried about the security element stuff like that. It’s still kind of uncharted territories.
Crypto is still not an asset class in South Korea whereas it is in China, Japan, Singapore, all that good jazz. You had a really broad question which was what am I seeing globally. So we have 6 founding partners and the fund is self-funded which ended up being a really good decision because we don’t have any LP’s that are really mad at us or anything like that. But because I’m the only American partner in the team, by default I get shipped out the most.
What’s been pretty interesting is I have
And if you look at Venture Capital historically, Venture Capital is very much a local business so everything’s really contained in different regions. I feel like the bay is cooling down a little bit. It’s a lot of like really smart engineers from Google, Facebook, they see this new opportunity, a new category and they try to build on and nothing works. So what do they do? They build a bunch of infrastructural tooling stuff and then they raise absorbent amounts of money which I’m not sure if that makes a lot of sense because I feel like a lot of tooling; you end up just building toys. So the really big tooling, that infrastructure stuff that people use today are from the big tech companies that open sourced their tech stack so they can draw more developers. It is essentially a chicken and egg problem.
I still believe that if there’s some crappy Blockchain that’s not that great but has a ton of users, developers will flock there. And in Asia, it’s just that they really bought into just token economics idea. This utility token idea, this like coffee coupon idea. So that’s still pretty prevalent but that makes sense. I don’t think a new internet protocol is going to pop up in Korea or Singapore for that matter, but the really exciting part is I think adoption will come. So as cross-border Venture Capitalists, we’re trying to see where all of this is going. We’re trying to see where like there’s a lot of really cool novel technology that’s being built out in the bay. If you look at
Joyce Yang
That’s great. This is really helpful. So it sounds like you’re looking for use cases now for projects and a lot of the market that we’re seeing is also kind of gravitating towards that now that we’re in the bear market.
Alex Shin
It is not as noisy as it was before.
Joyce Yang
What are you thinking for 2019 in your investment thesis and generally if you could give the folks an understanding of how you guys are thinking about investing as in Korean Venture Capital fund.
Alex Shin
Well first of all, I think it’s worth noting that we categories ourselves as a very kind of crypto native fund and it’s because none of us come from money management backgrounds so our risk profile is generally relatively high. Whenever there’s a category that everyone is talking about, to me I just categorize as it’s just too obvious. It doesn’t make a lot of sense like security tokens, STO platforms. Yeah that’s going to happen, but in general and you know I don’t necessarily speak for all of Hashed I speak for myself. I don’t think it’s revolutionary, I think it’s evolutionary.
It’s going to be a slow general transition you know you look at security tokens at a really macro level I just think that’s great. We’ll see more liquidity for stuff a decade from today. So that’s a category we’re thinking about, we’re looking at, but it’s not something that we are super specialized in.
We think we will look back at a lot of the things that was wrong about the first generation of fundraising ICOs and tokens and all that good jazz. And in general, I feel like everybody looked at web 3 from the lens of web 2 and that sort of didn’t really work or maybe it hasn’t proven itself yet. So maybe the real breakthrough is something that’s going to be completely digital native that we don’t quite understand today so we think a lot about that. We think about what’s going to build that digital universe, that future and what are some of the underlying technologies it’s going to get us there. I’m still not clear on where
Joyce Yang
Like the US.
Alex Shin
Yeah. There is a lot of the gambling stuff in the US, but they’re getting smart with it. It used to be dices and now, it’s like there’s a fishing game right. It’s still gambling in its core, but that does attract a lot of users in the beginning. And we see a lot of the biggest tech companies in Asia started out from gaming or started off from this gambling roots so maybe history will repeat itself and it will kind of grow out of that. So those are some categories we’re thinking a little bit more about as of late.
Joyce Yang
Yes, so you’re looking at adoption in Asia as a kind of a potential area of growth next year from these platforms and then in the West you’re expecting folks to continue building that platform and infrastructure?
Alex Shin
Sure yeah. At a high level, I think that’s a fair assessment.
Joyce Yang
How do you think Korea will play in this next year in a future landscape of crypto?
Alex Shin
Korea, Japan, China, Vietnam, these are all really interesting markets. But as you know all countries are very different like in histories and backgrounds and all that good jazz. I don’t think they’ll all move together in a lot of ways, but I believe this idea of transferability like knowledge
So this is why we have Baidu and we have you know DiDi and Grab and that’s why Uber is not prevalent out there etc. And the same thing will happen in crypto land. I don’t think that’s going to be very different, but this stuff is open sourced so my thesis is it’s going to happen even faster and it’s all software. So what’s defensible in crypto? It’s maybe some deep mindshare and some really specific tech stack like ZK snarks and maybe community you know because I could afford bitcoin tonight but no-one’s going to use Alex coin right.
And arguably, you can build
Joyce Yang
Yeah. And how does Hashed help projects like specially in your portfolios who are folks from the US to go to market in Asia or anything else that you’re kind of doing there to assist them in that area?
Alex Shin
First of all, I think at a high level we want this East Asian ecosystem to remain a really strong player in this new coming category and that’s why we have this really big fancy office. It’s free for everyone to work out of and all that good jazz. That’s number one. Number two; everything in Korea is in one city. A lot of the exchanges are in the same building or one block away. A lot of the other projects are in our office or next door. So there’s a lot of synergies that you can build around in Asia.
Our big thing is whenever we invest in a project, you know we’re not like Sequoia or Andreesen, our stamp of approval doesn’t go that far. In general, they bring Asian investors in because they want a lot of hand-holding in terms of localization or love community building
I can’t tell you how many times they’re really rigid founders that sort of
And what happens by the time they reach Asia is the valuations are too high and people feel like it’s a little scare me. It just gets lost in translation often. So we try to engage early on to get that messaging done right, to start building the ecosystem out there, because it takes a very different strategy. There’s a lot of farm founders that I know in the bay that are like “we want to build developer ecosystems in Japan and Korea. Can you help?” And we’re like “we can try.” But this notion of contributing to open source anything is really unfamiliar out there. People don’t really understand. The triggers that excite them are very different and understanding that is pretty important. So yeah that’s sort of the stuff that we contribute around. Also, big enterprises and Venture Capital are again all in one city so whenever you need partnerships from these big companies. I think that’s a lot of the work that we do as well.
Joyce Yang
So when you’re working with enterprises there and communities there, that sounds like those two areas are some of the areas where you could see potentially larger adoption next year versus you know developers it sounds like on that front they are probably still growing but at a lesser pace.
Alex Shin
Yeah. I think you have to look at Korea and Japan more specifically. These are countries that are dominated by conglomerates. You know in the US, we see Samsung like TVs and phones but in Korea, they do life insurance, they do toothpaste, they do apartments etc. That’s like 21-22% of South Korea GDP. So finding ways to really build synergies with big enterprises that carry a lot of authority and brand in these countries are interesting strategies. And bear in mind because the local penetration is so high, these companies are very interested in doing something in this category. Brands there are a little slow so I think it’s just good for the ecosystem. For them to learn what’s going on from Bay Area projects. And Bay Area projects and other international projects come to Asia and get a sense of you know who the powers are etc. That’s important. It takes time.
Joyce Yang
What are the enterprises doing there? Can you talk about it more in detail and who should we pay attention to?
Alex Shin
Kakao is the second largest tech conglomerate in South Korea. They’re like the dominant messaging app, uber app, music app, banking app etc. But they’re really contained in South Korea. I think their penetration is like 99.8%. The other 0.2% of the population just doesn’t have phones apparently. So they’re building out a permission chain as well and the goal is to be this Pan-Asian Blockchain project. So we’ll see how that plays out again. They have 100 million users, 50 million in Korea. So I think there’s some interesting distribution experiments that they can run that other messaging companies probably can’t. Like WeChat can’t do it, like Facebook messenger can’t do it. In a lot of ways, Kakao sort of has to do it because they want to grow outside of Korea. So those are some interesting categories. There are big companies in Japan looking at it. I met SBI, I met Mercari which is like this big used item marketplace. They’re all looking at this category. We’ll see what takes up there. And there’s even bigger movements in China. Just a little bit more quiet obviously.
Joyce Yang
Do you think any of the Asian companies will collaborate and push this Blockchain adoption along or are they off to spray in their different adoption cycles? Which is what I feel like is happening but it’ll be so much more effective if they work together.
Alex Shin
Again this is the foreigner who spent
A lot of the early momentum started because of formal that the Blockchain and the hot new topic brought up, but the difference is that the local penetration is so high. I still think these guys are very motivated in figuring something out. And a lot of the big conglomerates haven’t necessarily bought in on this whole “does it have to be super decentralized?” And that’s like US kind of Bay Area mentality like censorship
But I think you can’t deny that there’s distribution. You look at apps today with 100 DAU, 1000 DAU, I don’t know how sustainable that is. Like look billions and billions of dollars poured in the Blockchain, that’s what we got today. Like I’m not sure. If you can flip open 50 million wallets, now that’s interesting. So it’s a very different strategy in my opinion.
Joyce Yang
So for projects who are US-based who want to go to Asia, what would you advise them to do?
Alex Shin
I can talk about some really bad examples of like… yeah that’s a good start. So for one let’s take South Korea for example, the penetration of crypto is very high. You just randomly show up and start announcing that you’re doing a meet-up and maybe you get some traction. These days not as much because the FOMOS died down a little, but then you start getting weird people showing up to your Meetup like full-body tats and grandmas etc.
Because they probably hold your token and that’s not the first impression you want. You don’t have to be louder in Asia. South Korea is so homogeneous. Get 50 people who really matter to care about what you’re doing and a week later, the whole country will know. Try to work with really reputable media brands like the Wall Street Journal’s in the Forbes of Korea or Japan or China.
Joyce Yang
What are they called?
Alex Shin
I don’t know. There’s a bunch and they carry a lot of weight.
Make sure you approach each region with a fresh mindset. I see a lot of founders who show up and they’re like we’re from San Francisco, we’re ex-googlers and ex-whatnots and… people don’t care. When you come to Asia, they don’t care man. They don’t know. And being humble about that is really helpful as well. Just because you raise a bunch of
The same thing happens with Asian projects going out to the US. You know you could work at the biggest tech company in Japan, but you come to Bay Area like no one has ever heard of you. So understanding that distinction is pretty important as well. And a lot of people are always like “Alex, we want to hire somebody to lead our Asia.” No. Asia is big. It’s really big. That’s not how it works. You need maybe a team for China all right. A couple of people for Korea, Japan, like these are very old countries with very different histories all right. Don’t generalize it to be one thing.
Joyce Yang
Are there any model projects that you found that have done a relatively good job in going to the market in Asia?
Alex Shin
Let’s define good job. Like did they get a lot of people interested in their coin and was the volume really high? Yeah I’ve seen some projects do that. Did they build a really strong developed ecosystem? Not quite sure if a lot of people have successfully done that, but then even the local projects have a hard time doing that. So I think defining what your key objectives are is pretty important.
In general, the narrative I try to tell is you know at least the last generation of coin projects came to Asia looking for retail volume and I’m glad that that moment has died down a little bit because it’s just not good for the ecosystem. Just generating a lot of fomo and doing a lot of air drops or free giveaways just to artificially pop-up price or something that’s not sustainable. So the next generation I hope like good founders and good teams looking to build up really authentic ecosystems as people who actually care about what you’re building. People who are looking to localize and implement in their local regions. That’s really important to me so we have yet to see. That mindset shift is just now happened. We’re in this transitional period in my opinion.
Joyce Yang
Yeah that’s great. And lastly, if you could demystify some of the permits that people have out of Asia that if you could just name three.
Alex Shin
In Korea, we don’t call it K barbecue. It’s just barbecue. No, just kidding. Misconceptions, I don’t know there’s so many variables. I think the first and foremost thing that they think about is exchange relationships. How do you get on there and stuff like that and that’s a really tricky tango and if anybody promises you like I’m going to get you on this exchange or something like that, that’s already kind of weird. I would keep my distance from there. Even us we maintain a very professional relationship with all exchanges in Asia, but we keep a good amount of distance because it’s just weird. It’s very professional. We make a key introduction and from there, we let go and it’s up to the projects and the founders to figure that out or the exchanges will do it without ever talking to the projects etc. So if anybody else is promising you too many things around that, be careful.
Joyce Yang
So this is specifically the Korean exchanges?
Alex Shin
No all of these changes in Asia. And there’s some weird stuff that’s really normal in Asia that’s bizarre for US founders. Keep that in mind. It’s just very different out there. There’s still a lot of permission-less innovation movement that’s going on in Asia. Let me think about it like China has banned everything crypto for a while now and Huobi has 1,200 employees. They just keep growing faster and faster and there’s some merit behind that if you think about it like if somebody has to be challenging that domain. That’s just my opinion. Whereas in the US, the SCC is kind of like the big boss and in a lot of ways, it’s really stunted the growth here. So it’s just a very different play and these days, I think it’s harder now. If you’re trying to be really compliant here, then you can’t really compete in the Asian markets as well because you have to get really complied here and vice versa. If you’re like coming in from Asia, that is really hard to be competing in the US. So we’ll see how long that plays out. Those are some interesting things to really keep an eye out for.
Joyce Yang
It sounds like companies have to start thinking about how to target this divided from the Gecko to be able to really have that presence both ways right?
Alex Shin
It’s getting really complicated now all right. It’s very hard to stay on top.
Joyce Yang
The Korean government is especially innovative in my opinion and where they want to adopt Blockchain for voting, for lots of decision making.
Alex Shin
Did they say that?
Joyce Yang
Yeah it has happened. There is news about e-voting.
Alex Shin
Yo everybody, Joyce knows more about this than I do. What’s going on? No. So there’s like specific jurisdictions like Seoul city wants to make their own sole coin or whatever and Jeju wants to be a Blockchain island. Local city governments wanted to generate some fomo on this. It’s different than the federal systems. The really bizarre thing in my opinion is crypto assets is still not an asset class in Korea. I still can’t believe that. I think they’re thinking about it. The local penetration might be too high and people want to approach really carefully so that’s kind of interesting. But that does open up opportunities for people to test the boundaries. If you really think about the misconceptions we’ve had just as an industry as a whole, were there ever utility tokens or were they all securities with potentially some utility? And you start thinking about things like what is a DAP? How decentralized does a service have to be to be a DAP? If it has a CEO is it a DAP? All right because that really make sense. So I think there’s a lot of things we should reconsider. We should redefine a lot of ideas. And the regulators are smart enough to realize we’re so really early so they don’t want to set any really hard guidelines. I just recommend everybody to pay attention all right. What’s going on in Asia is probably going to be what’s relevant for you if you’re founders in the US or Europe or something like that and vice versa. That’s the same story I tell founders in Asia. There’s a lot of underlying technology that’s being built out in the US and other parts of the world that you should be paying attention to. In general, I feel like the word scam gets thrown around a little bit too easily. I like to give founders the benefit of the doubt. They just didn’t know where the industry is going to go or you know liquidy just suddenly disappeared. No one knew it was going to crash this bad. They didn’t know like there’s nothing you can build on in Asia. It’s very consumer driven so oftentimes it’s like the train is running full speed, but the tracks aren’t there yet. So understanding that is pretty important and a lot of stuff gets lost in translation. People still talk about ICO bans and I’m like you know that actually never happened. People announced it, but it’s never written in the law okay. The people forget that and at that time, market dip 50%.
Joyce Yang
This is Korea?
Alex Shin
Yeah.
Joyce Yang
Yeah I remember this.
Alex Shin
The bans in China are real but there’s a lot of other stuff that gets lost in transition. So if you ever have questions about what’s going on in Japan, Singapore, Korea, reach out to us you know we like to be transparent. We don’t take sides. We think being neutral is really important and everybody who’s working on interesting stuff on this Blockchain or like the web 3 stack, we want to engage with and learn from and help you localize and all that go Jazz.
Joyce Yang
How do they reach out to you?
Alex Shin
You can email me at alex@hashed.com. I think I’m also on Twitter most days just Alex Shin. Email usually works better for us. We’ll try to make time to respond everybody, jump on calls and stuff like that.
Joyce Yang
Are there ways that you advise folks to better understand Asia other than just going to Asia and taking time to be physically there?
Alex Shin
You know I’m going to be honest. Prior to crypto, I actually did a lot of cross borders like tech startup and the language barrier is a thing. It’s really a thing and like find the right partners, do your due diligence as best you can and come out and do a wave of meetings and definitely meet face to face especially like even Japan. The language barrier there versus outside of the world is even greater this is why it’s so insolated. I run around the Bay Area and people look at Japan like it’s a big dark hole. Don’t get me wrong. I’m in Korea, we still look at Japan like it’s a black hole and they’re our neighbors. So I try to spend a lot more time out there and it’s just that the cultural gap is really big. Definitely bring business cards and plan on spending a lot of time. You’re not going to get a lot done in one day. So you got to commit to it if this is a segment that’s interesting to you. So I think I would definitely recommend visiting especially China. I think on the outside, everyone is like they’re banning this that, but behind the scenes, there’s a lot of movement that’s going on and maybe it’s not something you can capitalize on, but if understanding that is important, you’ve got to make the time to come out.
Joyce Yang
Thank you so much Alex that was so helpful and super insightful. To learn more about the topics discussed today, check out the descriptions under the podcast episode. Also be sure to follow us on Twitter at globalcoinrsrch. New episodes come out once every two weeks, so if you have already done so, rate, review and subscribe on Apple podcast. If you like this episode, share with your friends on Facebook, Twitter or LinkedIn.
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