March. 24. 2022
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2022-03-24 16:47
Crypto exchanges seek new business models in metaverse, NFT
Seen above is a screenshot of Korbit’s metaverse platform, Korbit Town. Courtesy of Korbit |
By Lee Min-hyung
Korea’s cryptocurrency exchanges are seeking new business models in the emerging metaverse and non-fungible token (NFT) markets.
The moves are part of their efforts to diversify revenue streams into untapped areas with high growth potential by taking advantage of their expertise in blockchain technology.
Major exchange operators such as Dunamu, Bithumb and Korbit have achieved eye-catching earnings growth in recent years on increased crypto-trading commission profits.
But the industry has been agile in finding its next cash cow due to the volatile nature of cryptocurrencies. While the two emerging markets do not currently guarantee any immediate profits, the cryptocurrency exchanges are stepping up their competition to take the lead in the nascent business sectors.
Bithumb recently established its metaverse-focused subsidiary, Bithumb Meta, investing 17 billion won ($14 million). The subsidiary then launched its own metaverse platform through a partnership with Unity, a global software developer.
Bithumb aims to turn the affiliate into a company that operates a leading social metaverse platform here. It remains to be seen how the company differentiates itself from others at a time when a growing number of existing financial and tech firms, particularly in the areas of banking and games, are widening their investments to build their own virtual reality platforms.
Korbit, the nation’s first cryptocurrency exchange, has also launched its own metaverse platform called Korbit Town. Korbit’s strategy is to expand its metaverse influence by enhancing ties with its key shareholders such as NXC and SK Square. NXC is the holding firm of game developer Nexon, and holds a 65.2 percent stake in Korbit. The investment affiliate of SK Group is the second-largest shareholder of the crypto exchange.
Korbit plans to build a unique metaverse platform by using Nexon’s intellectual property in games and SK’s IT expertise.
Dunamu, the operator of Korea’s largest crypto exchange, Upbit, is also scheduled to launch an NFT marketplace with HYBE this year in the United States. The platform will allow users to buy and sell digital products featuring HYBE’s star-studded acts including BTS. Dunamu also operates its own metaverse platform, 2nd Block, featuring a video chat function.
Industry officials said competition will continue heating up in the NFT and metaverse markets, as crypto exchanges as well as existing tech-savvy companies identify the sectors as their next fresh revenue sources.
“Crypto exchanges have no choice but to tap into such businesses powered by blockchain technology, as part of efforts to reduce their heavy reliance on commission revenues,” one industry source said. “Even if they achieved unmatched earnings growth last year on the global crypto investment boom, it is hard to say this will last for a long period of time.”
As the crypto industry has not yet been institutionalized, exchange operators also understand the inherent uncertainty of the market, so they are more willing than other industry players to invest in NFTs and the metaverse, according to the source.
But investors are advised to pay careful attention when investing in metaverse platforms and NFTs and take multiple factors into consideration.
“Many conglomerates and their subsidiaries are also jumping on the bandwagon by building their own metaverse platforms and issuing NFTs,” the source said. “Even if the markets have massive growth potential, they have not been widely recognized as authorized investment areas, which means they carry inherent risk. Some people, particularly in the younger age groups, even engage in a buying spree of NFTs on hopes that their valuation will surge, just as cryptocurrencies have been doing in recent years. But this is a very risky investment pattern at a time when financial authorities do not have specific legal guidelines to protect investors’ rights in the digital asset market.”
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