In South Korea, officially the Republic of Korea, all able-bodied men are required to serve in the armed forces for at least 18 months. Courtesy of the ongoing war with North Korea, officially the Democratic People’s Republic of Korea.
Occasional exemptions are granted to people without medical conditions. Olympic medalists and world-class virtuoso pianists get a pass.
Jung Soon-hyung was neither an Olympic medalist nor a world-class virtuoso pianist in his early 20s. He was an undergrad majoring in economics, so he fulfilled his duty and served his country.
Jung is now the CEO of Onther, a blockchain research startup that focuses on scalability and sidechain solutions for Ether.
I sit in the meeting room of Onther’s office in Seoul’s ritzy Gangnam district. It is a breezy fall day. Jung and I just had lunch at a nearby pasta joint. We headed to a cafe afterward to talk, but it was too noisy, so we grabbed our coffees to go and trotted over to Onther’s headquarters.
The early days
It was during his military service that Jung first encountered Bitcoin and the world of blockchain. He enlisted as an officer after studying in an ROTC program, which gave him a little more freedom than the average soldier.
“I actually had a lot of spare time as an officer. When you clock out for the day, the evening is basically yours. So I spent a lot of time surfing the web and researching things I was interested in. That was when I first heard about Bitcoin.”
As an officer, Jung was paid a monthly salary of 1 million won ($857) for 20 months. He took that 20 million won ($17,147) and bought some Bitcoin. At the time Bitcoin was around $140. After that he discovered the world of alt coins. He soon sold all his Bitcoin and bought Litecoin instead.
According to Jung, that initial investment of 20 million ballooned into 200 million won ($171,473) within two weeks.
“That gives you an idea of just how volatile the market was back then. Through that experience, I glimpsed the potential of the crypto market.”
Six months later, however, Jung lost the entire 200 million won. All of it. The loss tumbled him into a period of serious self-reflection. He constantly asked himself, “What did I do wrong?” He concluded that he failed as an investor because he lacked a foundational understanding of crypto.
“So I decided to pursue a masters in computer science. My undergrad was in economics, so I didn’t come from an engineering background. Fortunately, there were a bunch of engineering programs back then for non-engineer majors.”
When Jung pitched the idea of writing his graduation thesis on blockchain technology, one of his professors actually asked, "What's that?"
“I actually had to convince him that this was a real thing worth researching.”
During his time as a student, Jung realized that blockchain technology wasn’t just about crypto, that it had the potential to fundamentally change how many of our systems operate.
“To me, crypto was no longer just an investment or a quick way to get rich. That's when I got the idea to start up my own company, and eventually Onther was born.”
Onther is the founder’s own neologism for “on Ether.” Jung describes Onther as a “bunch of public blockchain enthusiasts and Ethereum nerds.” Onther’s main project is the Tokamak Network, a Layer 2 platform developed to increase scalability and transaction speed.
For Onther’s first six or seven months, they had trouble finding work. Then, the market experienced its first major price surge. This helped Onther land a contract with Hanhwa Systems to make their internal systems compatible with blockchain.
Normally, when a small startup lands a contract with a major firm, the latter party is usually in charge. They adopt an authoritative stance and an air of arrogance.
“It wasn’t like that for us,” Jung says. “They actually sent people to our office to work, instead of us going to their headquarters in Yeouido. We told them the 63 Building (one of Seoul’s tallest skyscrapers) is too far!”
Jung releases a healthy laugh. He smiles and laughs often. Like any proper programmer entrepreneur, he’s dressed plainly: jeans and a hoodie.
The efficiency of inefficiency
We transition to Jung’s personal philosophy on blockchain technology and decentralization, the “why” behind his “what.”
A lot of people in traditional finance and blockchain haters like to harp on how slow and inefficient blockchain networks like Bitcoin and Ethereum are. In a sense, they’re right, Jung admits. But the more you understand the technology, he explains, the more you realize that the so-called “inefficiency” of blockchains is an intentional one. It’s an inefficiency that’s been purposefully designed into the system.
In traditional finance, you have something called a central securities depository (CSD). The CSD holds and manages all securities and assets. In a short-term sense, this system seems efficient, because all transactions can go through one institution that verifies and manages everything.
However, Jung thinks that the social cost of establishing and maintaining a CSD can be almost or entirely eliminated by converting everything to smart contracts.
Jung explains that from an engineering perspective, blockchain technology is actually a step backwards in efficiency, because it requires the consensus of multiple parties in the form of nodes before a transaction is verified.
When you take a small picture look at things, blockchain is cumbersome and slow.
“I eventually realized, however, that this inefficiency was intentional.”
When taking a big picture look at things, blockchains and smart contracts can actually save in terms of the overall social cost.
“There’s so much unnecessary labor cost and infrastructure in conventional systems. Think of all the expenses that go into maintaining a CSD. You can literally get rid of most or all of that through blockchains and smart contracts. Vitalik has expressed a similar perspective.
Think of the hundreds of employees at a securities company. Then you need the hundreds of staff members of various regulators to survey and police them. Not to mention you need dozens of legislators to formulate and pass laws to govern the securities companies.
On top of all that there's always room for human error or corruption. If you implement smart contracts, however, you get rid of anything superfluous.”
To Jung, when considering the overall social cost of traditional financial systems, the "inefficiency" of blockchains actually becomes "efficient."
“But still, there's room for improvement. I think Ethereum is one of the most innovative technologies of our time. But you can always make something better. That's what I set out to do with Onther.”
Jung talks about the idea of tradeoffs. In the case of cars, if you increase speed and power, you sacrifice comfort and smoothness and vice versa. In most engineering situations you're always going to have a tradeoff. It is the job of car engineers to improve all facets of the driver experience with as few tradeoffs as possible.
This kind of tradeoff is at the core of the blockchain trilemma: safety, scalability and decentralization. Common wisdom says you have to sacrifice perfection in one area to attain it in another.
“But that doesn't mean we aren't going to try and perfect all three areas at the same time. That’s what being an engineer is all about. Onther’s mission is to improve Ethereum’s scalability and speed while maintaining safety and decentralization. That’s what we’re trying to do with the Layer 2 Tokamak Network.”
So why Ethereum and not some other blockchain? Jung thinks that Ethereum has the most potential in terms of defi platforms.
“There might be something better that comes along, but Ethereum is still one of the most innovative blockchains to date. And it's dapp and defi ecosystem is the largest. I don’t have any sort of personal attachment to Ethereum, but if I’m a maker of smartphone accessories and cases, why would I choose to make accessories for some rare obscure brand when I could just make accessories for iPhones or Android phones?”
Surprises and disappointments
I ask him about things that have surprised him during his blockchain journey.
“I honestly didn't expect crypto and blockchain technology to get this much mainstream attention this quickly. Now all the major news outlets cover crypto.
When the former justice minister came out and declared that he was going to shut down all crypto exchanges, I initially thought, ‘Jesus, are we really THAT important? Are we really a big enough deal for the justice ministry to get all riled up?’
By the look on his face, you'd have thought he was the mayor of New York declaring war on organized crime, or something.
That was when I realized that people don't necessarily have to understand something in order to show interest in it.”
The way Jung looks at it, if you took 10 random people who trade crypto on Upbit (or Coinbase -- take your pick) and asked them specifics about Bitcoin or blockchain technology, only one or two would be able to give you proper answers.
"It's only after you lose a bunch of money that you begin looking into what this thing actually is!"
On the other hand, Jung admits that with every passing year he’s astounded at how much the public's understanding of blockchain evolves. He views this as a positive thing.
The more the community understands, the better it is for developers. A few years back, developers in Korea’s crypto community basically had to fight to even justify their existence. Now, they can skip the basic explanations and start the conversation on what's really important.
“When the public no longer has to be convinced of what you're doing, that's when you can start doing the really important work.”
In Jung’s eyes, the growth and evolution of Bitcoin and the blockchain ecosystem is unprecedented. Especially because this growth is grounded in the community as opposed to stemming from a corporate planning office.
“If Bitcoin were a company, I don't think you could have planned a better marketing campaign or implemented a better growth strategy than what's happened. But it's not a company. There IS no central planner. That's the incredible part. This growth is all organic.”
I ask about things that have disappointed him along the way. He pauses to reflect. He says he wishes that regulators would do more research and better understand what they're trying to control. Especially before they make any public statements that could cause major damage to the market.
Onther and Japanese master chefs
I transition to a more fundamental question: Why Onther? What separates you from the pack? Jung responds quickly -- no hesitation.
“There are plenty of firms that are bigger than us, but we've been working on solving Ethereum's scalability issues for longer and we have a better understanding of the fundamentals.”
Revenue and size aren't everything, he says. There are some Michelin star restaurants in Japan that are run by three or four people. They’re tiny, some of them don’t even have visible signs. But people line up, make reservations months in advance, for a chance to dine there.
“Those Michelin-star chefs are business owners, but they're also artisans and craftsmen. That's how I like to think of Onther. We're Ethereum craftsmen.
Sure, money is important, but at the end of the day it's about how you feel about what you do.
We don't need the billions of revenue like Upbit or the Gangnam real estate. We just want to create solutions that'll usher in the next generation of blockchain platforms and services."
I ask him if there’s anything he’d like overseas readers to know about the South Korean industry. He smiles mischievously.
“There's this image of East Asia -- Korea, China, Japan -- as being this exclusively money-driven market. But I'd like them to know there are people here that are sincerely devoting themselves to solving technical issues. On the surface, we may look like a society of altcoin-crazed investors scrambling for a quick buck, but if you look further you’ll find a vibrant community that’s genuinely concerned about the health and future of the ecosystem.”
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