Starting with Bithumb Cash, many simple settlement services based on cryptocurrencies are being launched one after the other. These simple settlement services emphasize cryptocurrency’s function as a type of ‘currency’ to prove practicality of blockchain despite a fall in cryptocurrency prices.
However, there are also limitations such as the fact that these settlement services are not much different from current point-based settlement services due to lack of relevant laws and systems.
According to industries, cryptocurrency-based simple settlement services that can actually be used in South Korea are starting to be launched. After Bithumb, a large South Korean cryptocurrency exchange, launched ‘Bithumb Cash’ earlier this year, Gopay and others are also starting to launch cryptocurrency-based settlement services. GLOSFER, a first-generation blockchain company, recently announced at a press conference about its plan with ‘HYCON PAY’.
Many of these settlement services either use their own network or join forces with current POS or VAN (Value Added Network) companies.
Bithumb is currently providing ‘Bithumb Cash’ service at 10 of its franchise stores as part of a demonstration project. People with Bithumb accounts can decide whether they are going to use Won or Bithumb Cash in advance. They can input payment amount on their Smartphones after scanning QR codes that are located at stores through their Smartphones.
Gopay, a credit card-based QR code settlement solution, pays its cryptocurrency ‘TENA’ as compensation. Accumulated ‘TENA’ Coins can be used as points at 63 franchise stores. Gopay is expanding its infrastructures based on its partnership with VAN companies. Just like Bithumb Cash, its settlement service is also based on MPM method.
GLOSFER’s ‘HYCON PAY’ is set to be launched this month. GLOSFER is planning to introduce this service for the first time at ‘Over The Mountain’ Hotel in Gapyeong. ‘HYCON PAY’ is only available in certain areas because GLOSFER does not want it to be affected too much by variability in cryptocurrency price. GLOSFER is also discussing with Shinhan Card about establishing a next-generation settlement system.
Although number of cryptocurrency-based settlement services is on the rise, there are also skeptical views surrounding these services due to the fact that these settlement services are not much different from current point systems provided by franchise stores and that there has yet to be any regulation on how cryptocurrency will be handed legally. In July, Ministry of Strategy and Finance could not decide on how to tax profits from cryptocurrencies while it was working on revised bill of 2018 tax system. As a result, it is still impossible to sell and buy products with cryptocurrencies in South Korea.
Actually, Bithumb Cash is not based on a system where a person buys products with cryptocurrencies.
“Because there are not any relevant law, there can be problems whenever products are sold or bought with cryptocurrencies.” said a representative for Bithumb. “Our Bithumb Cash is based on a system where cryptocurrency is converted into Won based on its market price at the time of a payment.”
This indicates that a person has to have an account with a cryptocurrency exchange if he or she wanted to use cryptocurrency-based settlement service like Bithumb Cash. Fact that this service requires a person to go through KYC (Know Your Customer) system even for small payments can be inconvenient for consumers.
“Although variability problem with cryptocurrency price can be resolved through escrow and others, ‘100% cryptocurrency settlement’ is impossible due to lack of relevant laws.” said a representative for the industry. “Current cryptocurrency-based simple settlement services are not much different from current point-based settlement systems.”
Staff Reporter Ham, Jihyun | goham@etnews.com