[People Met Through Books] "The Blockchain World Is Coming... You Need to Have Crypto Literacy"

Author Jongbaek Park, Lawyer of 'Crypto Sapiens and the Changing World Order'
The Crypto World Requires Social and Policy Understanding of Blockchain and Tokenization
Blockchain Is Not Just for Finance and Investment... A Social and Institutional Technology Different from the Past

Attorney Jongbaek Park of Bae, Kim & Lee LLC, author of "Crypto Sapiens and the Changing Order of the World." Photo by Younghan Heo younghan@

The virtual asset investment craze in 2021 heated up South Korea. Bitcoin prices soared to unprecedented heights, even surpassing 80 million KRW. Although the recent enthusiasm has cooled down, many people still consider virtual assets as an investment destination. A significant number are aiming for quick fortunes. In this process, the focus was more on the appeal and volatility of virtual assets as investment targets rather than understanding and contemplating what virtual assets are or the meaning of blockchain. Viewing virtual assets solely from a financial and investment perspective is only half the story. Without social and policy understanding of blockchain and tokenization, it is easy to be left behind in the crypto world that may soon become reality. To address these concerns, Attorney Park Jong-baek of the law firm Bae, Kim & Lee, author of "Crypto Sapiens and the Changing Order of the World," has rolled up his sleeves.

- How do you see the concept of blockchain evolving?

▲ When a new concept emerges in the world, perceptions and reactions inevitably vary. The greater the meaning and extensibility, the more so. I see it developing in two directions. First, rights, assets, or social status will be recorded in a decentralized manner without physical tangible forms, and these pieces of information will be mutually recognized and transferred in a system that will proceed toward transnational unification. From an asset perspective, activities to tokenize things that are difficult to liquidate, like copyrights, based on blockchain will become active. I believe the world will have more diverse economic freedoms than before.

- There is unfamiliarity and skepticism about blockchain technology. How long do you think it will take to settle in reality?

▲ Many ways to utilize blockchain already exist. Of course, a so-called "killer app" that attracts users and causes a massive increase in (virtual asset) trading volume has not yet appeared, but attempts to develop it based on belief in its potential continue. Once a certain threshold is passed, everyone will accept it as natural. For example, if 16% or 17% of the population knows a concept, most people may still find it unfamiliar, but if it exceeds 20%, everyone can come to know it. Although it is difficult to specify an exact percentage, I believe there is a threshold for the blockchain concept. When this threshold is reached, decentralization becomes technically robust, more blockchain networks emerge, and token trading becomes active, blockchain technology is expected to be integrated and show its effects.

- Various terms such as cryptocurrency and crypto coin are used interchangeably to refer to virtual assets.

▲ The word "coin" tends to be used because it is perceived to have some monetary function, but the broadest general term meaning an electronic token existing on a network is "token." We need to distinguish between "virtual" and "crypto," and the Financial Action Task Force (FATF) uses the term "virtual" because it includes all forms of electronic technology, not just blockchain technology. Since blockchain technology includes cryptographic technology, I think it is more appropriate to use the word "crypto" to specify it. Therefore, when calling tokens assets containing economic value, I think the term "crypto asset" is better than "virtual asset."

- Centralized systems are established in modern society. How much demand or necessity do you see for decentralization?

▲ Fundamentally, decentralization seems to have an appeal to individuals. In centralized systems, someone is responsible for recording and storing specific ledgers. Decentralization allows anyone to participate in the system, and once a record is confirmed, no one can arbitrarily change it. This process creates expectations that individuals can play an autonomous role and be trusted. However, even with such expectations, implementation may not be easy. There may be possibilities of accidents, side effects, and resistance from centralized companies or institutions. Because it will proceed intertwined with these factors, decentralization may not happen suddenly even if individuals want it.

- What attitude should individuals have during the process of applying decentralization?

▲ I expect many discussions during institutional debates and application processes. There may be confusion and conflicts, but in the long term, blockchain clearly expands individual freedom and rights. Therefore, to enjoy these benefits, the corresponding trade-offs must be considered. For example, in civil society, citizens have not only rights but also duties, and fundamentally, citizens should have culture and knowledge. Understanding, knowledge, and literacy (crypto literacy) about decentralization and blockchain technology must be intertwined.

- How do you see decentralized platforms improving through the process?

▲ Consensus algorithms and other mechanisms implementing decentralization may differ. The criteria for judging what is "good" or "bad" can be understood as "easier, faster, more efficient, and lower cost." These will become competitive points. Decentralized platforms with different characteristics will continue to compete and develop, and related decentralized applications will also go through this process to secure users.

Attorney Park Jong-baek thinks that in South Korea, interest in new investments is high. Analyzing buyers of his recent book showed that people in their 40s were the largest group, with a considerable number in their 50s and 60s as well. Since the age group with actual purchasing power is interested in new investments, the enthusiasm seems intense. He also sensed that quite a few people believe blockchain and crypto will occupy a large part of our lifestyle, society, and economic systems. Therefore, he feels it is even more necessary to correct perceptions about virtual assets.

- It is also a reality that perceptions of blockchain and virtual assets in South Korea are not favorable. Some see them as subjects of regulation.

▲ The country needs to seriously and deeply consider this. I think blockchain is different from ordinary technology itself. It is a social and institutional technology, especially because it largely replaces or complements social institutions. For example, it is not limited to improving server performance but also enables social expression through participation networks. For this reason, a dichotomous approach complicates matters. Instead of promoting technology and regulating financial aspects separately, an understanding that blockchain technology and virtual assets are inseparable is necessary. It is problematic to encourage technology unconditionally but say "don't do it" whenever the words virtual asset or crypto asset appear. Since it changes social methods, to advance ahead of other countries and gain added value, proper perception is essential. Approaching it from either technology or finance angles makes it difficult to design appropriate systems for the new order.

- Since last year, a downturn called "crypto winter" has continued.

▲ Crypto winter means trading volumes at exchanges shrink, and when accidents occur, regulations and crackdowns intensify. In such cases, related companies will certainly shrink or reduce investments. However, winter does not mean a complete freeze. It can serve as a period to prepare new businesses or investments. When the market is overheated, preparing new things becomes difficult due to shorter preparation times and higher costs. During crypto winter, it is possible to separate wheat from chaff and use it as a preparation period for serious competition. Many companies are using it this way.

- The first phase of the Virtual Asset User Protection Act, focusing on protecting virtual asset investors, is about to be implemented. The second phase is also expected. What direction should it take?

▲ The Virtual Asset User Protection Act was somewhat hastily prepared. When legislating the second phase, we need to consider the ultimate direction we want to take. More regulation may seem like more work, but doing so risks following existing financial market regulations. If it goes in a direction similar to existing financial regulations, questions about the practical effectiveness of virtual asset laws in the real world may arise. Ultimately, it could end up as regulation for regulation's sake. We need to create comprehensive and long-term laws that include the legal and institutional status of blockchain, crypto assets, virtual asset operators, the existence method of virtual assets, licenses, and industry foundations.

- Blockchain and virtual assets will ultimately need to fall under the law to gain stability. From a legal perspective, do you think it is possible to regulate everything by law?

▲ The legal system will accommodate current issues, but major changes often see phenomena outpacing the law. There is a big difference between viewing the law narrowly and broadly when establishing legal systems. Countries with broad perspectives after modernization developed capitalism, guaranteed rights, and created new capital. Originally, the law existed, and economic phenomena were born on top of it. I think it is necessary to first define what must be regulated and then transition to a regulatory system that grants autonomy for the rest. Even the West, which developed capitalism, was not perfect from the start.

Attorney Park Jong-baek

He leads the Blockchain and Virtual Asset team at the law firm Bae, Kim & Lee. He studied international financial law in London, UK, and engaged in various activities related to open-source licenses. After encountering blockchain, he sensed a major change was coming. He provides legal advice on domestic and international blockchain projects, DeFi (decentralized finance), and DAO (decentralized autonomous organizations).