[Ko Ran] Is investing in Kakao's coin Klay a bad idea?
[Ko Ran] Klay has become the latest hot topic after the value of the coin recently shot up. Klay, which wasn’t even worth 200 won a coin, has recently risen as the cryptocurrency wallet Klip was installed on the messenger app Kakao Talk on June 3. But is the price of Klay — now nearing 400 won — at an appropriate level? We have created a Q&A based on answers from Ground X on June 8 to give readers the change to judge on what the appropriate value of the coin is. #Is Kakao interested in the blockchain business? Ninety nine percent of the value of Klay is backed by Kakao. In the industry, Klay is referred to as a coin born with a silver spoon. There’s a lot of limitless potential thanks to the strong support from Kakao. In response to the support, Ground X, the blockchain affiliate of Kakao, has launched the wallet Klip that was developed by the blockchain platform Klayton on June 8, installing it on Kakao Talk. Klips could be created immediately on Kakao Talk with only a few clicks. Just 21 hours after launching, subscribes exceeded 100,000 and the service reached the maximum 50 klays per new subscriber that were prepared for the launch event. This seems to demonstrate Kakao’s support for Klay. However, because of the public atmosphere against cryptocurrency, Kakao has never aggressively promoted Klay. If you look at Kakao’s 2019 business report, the Ground X headquarters address is in Japan and the blockchain platform Klayton's ICO address is in Singapore, even though everyone sees Ground X as a Korean company. Luckily, although it is mentioned at the end of the report, Kakao mentions the potential of blockchain in its new businesses and forecast. The report defines blockchain as a new core technology and stated that it is researching blockchain technologies, which will be the foundation of its next ecosystem, through affiliates in charge of blockchain projects including Ground X. #So what is the appropriate value of Klay? Let’s assume Klay’s current value at 360 won. The market capitalization of Klay based on the distribution next month would be 360 billion won. In total, the number of coins that will be issued, it would be worth 3.6 trillion won. Would it continue to keep that value? Nobody knows the future. When Kakao Talk first came out, no one imagined that it will be the most used messenger app in the country with 50 million people using it. When Kakao took over Daum, it was described as a snake swallowing an elephant. But today Kakao’s market value exceeds that of Hyundai Motor. It is questionable if Klayton will immediately be worth 360 billion won. Klayton’s main net was halted for 13 hours on March 29 with transactions and data failing to be stored. Yet no one knew. If the internet shuts down right this moment, it will create a major crisis. But the fact that nothing happened even when the main net was shutdown indicates no one was using it. Currently, the cryptocurrency wallet Klip on Kakao Talk seems useless other than for storing and wiring Klay. Let’s use the traditional evaluation methods used in the stock market. In the 2019 Kakao business report, Klayton’s total asset is 36.8 billion won. But wait. Past reports suggest that it plans to raise $300 million or roughly 360 billion won through Klay. Ground X says it’s not $300 million. In that case was the 36.8 billion won created through selling Klay? Ground X says it is mixed between Kakao’s investment and Klay sales. It added that Klay sales are spread across a different account. The company did not give a clear answer on how it would record the cryptocurrency in its accounting. However, it said they will soon post details related to the issue for public viewing. Evaluating the value of tokens using previous means is certainly not correct. Yet it seems the coin is overvalued considering the amount of Klay that will be released or the value of Klayton as a platform or the asset value of Ground X. So, what is the appropriate value of Klay? Fundamentally no one knows, not even Ground X. But one thing that is certain is that it will be determined by the market, said an industry insider. ※The writer currently subscribes to Klay and owns 50 Klay.