BITHUMB GETS NIP AND TUCK

South Korea’s top cryptocurrency exchange is set to undergo a host of revolutionary changes under its new owner.

Following the blockchain boom of 2017, today there are more than 2,000 cryptocurrencies in circulation. These include well-known cryptocurrencies like Bitcoin, Ripple and Ethereum, along with altcoins like Steem, Tron and Litecoin. While some investors have written off cryptocurrencies as a bubble, others are starting to integrate the new asset class into their investment portfolios. For these investors, the first step into the crypto world will be to visit a cryptocurrency exchange – an online platform that allows one to buy, sell, or trade cryptocurrencies for other assets, such as conventional fiat money or other digital currencies.

Just as there are many coins or tokens to choose from, investors can also pick from a slew of exchanges. One of the crypto community’s largest and highest-volume exchange is South Korea’s Bithumb. The exchange has a daily transaction volume of almost US$2 billion. In October 2018, Bithumb was sold to a new owner, BK Global Consortium, an investment blockchain division of the Singapore-based company, BK Global. BK Global is owned by Dr Kim Byung Gun, a prominent plastic surgeon and well-known investor, and more recently, blockchain enthusiast, who plans to take Bithumb to new heights.

A Leading Plastic Surgeon

Dr Kim is the founder and director of Seoul’s biggest plastic surgery clinic, the BK Plastic Surgery Hospital. Located right in the heart of Gangnam, the hospital first started 23 years ago as a small clinic. 10 years ago, the clinic was transformed into a 15-storey building which at the time stood as the biggest plastic surgery hospital in the world. “10 years ago, there was no such hospital like ours,” Dr Kim shares. “After I proved that plastic surgery can be a booming business, several other hospitals opened in Korea. Now there are maybe 10 big hospitals in China as well.”

Dr Kim’s hospital has set the global standard for cosmetic treatments today. While cosmetic procedures are available in a number of countries like Thailand, China, the US and Brazil, South Korea is still the world’s plastic surgery capital. The country has the highest per capita rate of cosmetic surgery in the world, and going under the knife is a normal occurrence. “There is no stigma to it,” shares Dr Kim. “Some Koreans start undergoing plastic surgery as early as their 20s. Others even start at 18 or 19.”

Since starting the hospital, Dr Kim has expanded his empire to Singapore with a clinic at Novena Medical Centre. The clinic has been in operation for four years. In comparison to South Korea, Dr Kim shares, “Singaporeans do not have surgery very early and people respect those who have not had any work done. But in Korea, people do not hide that they have had surgery. They disclose it to their friends, family, even the public. It is a different culture. Singaporeans are more conservative.”

Aside from the Singapore clinic and the hospital in Seoul, BK Global has also entered into joint ventures in Indonesia and China. With businesses all over Asia, Dr Kim has chosen to make Singapore his home, where he has been residing together with his twin daughters since 2008. In 2018, he was officially granted Singaporean citizenship. Taking up citizenship here was an easy decision, as Dr Kim states matter-of-factly, “I love Singapore and my kids love it here too.”

A Crypto Pioneer

While Dr Kim has undeniably carved a name for himself as a plastic surgeon, the high-profile venture capitalist has also made his fortune by investing in biotech companies. He is one of the largest shareholders of Hugel, a medical company and botulinum toxin maker worth about US$2.7 billion.

More recently, Dr Kim has shifted his focus to investing in blockchain companies. While blockchain was still in its early days and investors were largely sceptical about this new technology, Dr Kim foresaw its potential and dabbled in the industry by taking part in several Initial Coin Offerings (ICOs). His investments paid off handsomely and in 2017, he founded ICO Platform with the aim to bring promising ICO projects to potential investors. The company functions as a blockchain-based crowdfunding platform that allows users to back promising projects, start-ups and companies. The company also offers support and consultation to companies seeking to launch their own crowd sale. “Right now, everyone knows what ICOs are. But when I first founded ICO Platform, the concept was still new to most people,” Dr Kim muses.

Bithumb Changes Hands

In October 2018, news broke that Dr Kim, through his Singapore-based blockchain consortium group, BK Global Consortium, had purchased Bithumb from its owners. Dr Kim was previously a minority shareholder of BTC Holdings, the exchange’s biggest stakeholder. The consortium then bought a 50% stake plus one share in BTC Holdings, essentially giving the company control over the exchange. The deal was worth a whopping US$353 million.

Sharing the reason behind the purchase, Dr Kim explains, “Bithumb has great potential. It has the top brand value in Korea. But the Korean government has introduced strict regulations to control the cryptocurrency market. Considering the more favourable market here, Bithumb’s potential can only grow once it becomes a Singapore company owned by a Singaporean,” Dr Kim continues.

Following the acquisition, Dr Kim shares that many plans are in the pipeline for Bithumb to scale new heights. Bithumb has to date launched a Decentralized Exchange (DEX) structured on the Ethereum blockchain. A DEX operates without central authority, meaning that it does not rely on a third-party service to hold customers funds. Instead, trading occurs on a peer-to-peer basis with funds held by the users themselves.

Bithumb’s strategic alliance with BK Global Consortium brought about favourable response from the market. A day after the sale, Bithumb reported a transactional volume of US$1.2 billion over a 24-hour period, making it the world’s second largest cryptocurrency exchange at the time.

When the BK Plastic Surgery Hospital was transformed into a 15-storey building 10 years ago, it stood as the biggest plastic surgery hospital in the world.

A Global Alliance

Leveraging on the success of Bithumb, BK Global Consortium is also eyeing global expansion with the vision to build the Blockchain Exchange Alliance (BXA), which aims to bridge traditional financial infrastructure with the nascent crypto assets market. BXA will be based in Singapore but will expand globally by building an alliance of cryptocurrency exchanges, offering multiple fiat currencies on the platform and most importantly, offering unparalleled liquidity for traders on BXA. Affiliated and acquired exchanges within the alliance will share their order books, connecting traders from different exchanges to a cohesive, highly liquid market.

Plans are in motion to launch eight localized cryptocurrency exchange platforms around the world, namely in the US, UK, Australia, Thailand, Mexico, Peru and Hong Kong. These exchanges will adopt a distributed centralized exchange (DCEX) model to enable localized fiat and crypto asset trading while connecting the different localized exchanges into a single platform. Through the DCEX model, users will require only a single account to interact with Bithumb and all other affiliated exchanges.

“We will launch these exchanges very soon. BXA will also launch its own token which will be used not only in South Korea’s Bithumb, but also at the eight worldwide exchanges,” Dr Kim reveals.

Almost a decade on from the initial launch of Bitcoin, crypto investors are today rallying for more real-world usage of crypto assets. Although the cryptocurrency industry has grown exponentially over the years, only a handful of businesses are open to real-world transactions using digital coins. With this in mind, BXA will also support day-to-day payment transactions with a physical infrastructure for crypto assets to be used and traded. Such a set-up will be made available globally, and include familiar technology such as payment kiosks, debit cards, and mobile wallets.

These are just some of the plans Dr Kim has in mind for Bithumb and BXA. “Frankly speaking, Bithumb is not a simple exchange. We have plans to revolutionize the entire infrastructure and we can do many big things in the future,” he believes.

Power Of Blockchain

While the cryptocurrency markets have stalled recently as evident from the slide in Bitcoin to below the US$4,000 mark, Dr Kim still sees huge growth potential in the market. “Blockchain is a new business, and very much a promising one. I believe blockchain will change the world, just like the Internet did. So we should invest in blockchain and Singapore should be at the forefront of growing this new industry,” shares Dr Kim.

Indeed, with the Singapore government’s emphasis on innovation and adoption of a light touch when it comes to regulation, the country has become a perfect destination for any growing crypto-related business. And with Bithumb in the hands of a newly minted Singaporean citizen with his eyes set on global expansion, the city state is on its way to be at the forefront of the global blockchain revolution.

Following the acquisition of Bithumb, BXA is now building an alliance of cryptocurrency exchanges across the world.

This article was first printed in MillionaireAsia Issue 50 - Dec 2018