In the first segment, Alex Jensen looks at cryptocurrencies. Are they the a good investment and a democratic way to transfer money, or are they a Ponzi scheme to lure those caught up in the hype? Alex talks with Dr. Nicolas Weaver, a crypto-septic from UC Berkeley and Dr. Merav Ozair Merav Ozair,PhD, a Leading Blockchain expert and a FinTech Professor at Rutgers Business School.
In the second segment, Alex talks with Mr. Alejandro Bernabe General Manager of the Four Seasons Seoul on the impact of COVID-19 has had on the local tourist industry as well as the positive side of vaccine passports.
Alex talks cryptocurrencies as well as the impact that COVID 19 has had on the local tourist industry.
Alex Jensen: It’s Monday, September 13. I’m Alex Jensen and welcome to the first ever edition of Korea biz cast with the KBLA. As we kick off our pilot week, it’s a fitting time for new beginnings with the world looking to reboot itself from a pandemic that’s affected our lives in ways we continue to define. Many of us have been taking even more interest in alternative sources of income. For some, that’s meant paying close attention to cryptocurrencies. And while the head of the country’s financial service commission doesn’t view cryptocurrencies, as a financial asset, amid a regulatory squeeze that comes to a head this month, more than 6 billion US dollars’ worth of investment poured into the four major exchanges here in the first half of the year alone, with those exchanges also being the one set to survive as they’re jumping through the regulatory hoops by agreeing to have real name accounts. And it doesn’t stop there. A whole metaverse is formed, fueled by virtual assets known as NFT’s take the recently launched Samsung global metaverse fund, it’s attracting up to a couple of billion won every day with the expectation of more than 100 billion by the end of the year. There is a lot to unpack there and we’re going to start today with NFT’s and their relationship to cryptocurrency with a pair of internationally renowned experts, one for and one very much against and if you’ve also had holiday plans canceled repeatedly during COVID-19 How is your staycation life, we’ll find out how even luxury hotels have had to work out how to survive due to the pandemic. And it’s fitting then that today’s program is brought to you by The Four Seasons, stylish elegance in the very heart of soul and which has a third night free till October 31. And before we kick off those interviews, your headline stories.
Alex Jensen: Gyeonggi Province Governor Lee Jae Myong has cemented his place as the ruling Democratic Party’s top presidential election candidate after winning the party’s first Electoral College vote yesterday, with 51% of nearly half a million ballots cast ahead of runner up in Oregon who took around 31% of the votes. He also won the Gangwon Province regional primary vote with an even higher percentage of votes at just over 55% and has won all four out of a total 11 Regional primaries. The former factory worker has made a name for supporting social welfare policies, including the adoption of a universal basic income.
South Korea is set to be affected by another Tropical Storm this week as Typhoon chanteur is forecast to bring heavy rain on Jeju Island and southern coastal areas from Wednesday. The storms expected to have its biggest impact on this peninsula on Thursday and were advised to take note of any official warnings by text message.
And the government’s caution that the upcoming Chuseok holiday will be a watershed moment in the battle against the covid 19 pandemic, with 10s of millions of people expected to travel within the country. But more than 20 million people have now been fully vaccinated or 39% of the population, with over 33 million having received at least one jab. The latest daily infections are down with 1407 cases confirmed as of 9pm last night 229 lower than the day before and an expected total of around 1500 when the next announcements made later this morning. finally catching up with some other numbers for you. The KOSPI closed up 11.06 points Friday at 3,125.76. ending a three-day losing streak and the Korean one also rose against the US dollar to close at 1,169.11.
Alex Jensen: Now then, as I mentioned before, we’re hearing more about NF T’s or non-fungible tokens in the world of investment. Even aside from the dizzy heights of one digital NFT selling for $69 million. Earlier this year. The blockchain based marketplace is certainly gathering steam, but our NFT’s a fad or the future. We first hear from Nikolas Weaver, computer science lecturer and researcher at UC Berkeley’s international Computer Science Institute. Thank you very much for joining us.
Nikolas Weaver: Thank you very much for having me.
Alex Jensen: I think we need to start with the question that many people might still be asking, What are NFT’s?
Nikolas Weaver: So let’s start with what they’re supposed to be. In theory. This isn’t actually what they are. But in theory, they’re supposed to be an ownership record. The problem is ownership records are something we’ve known how to do for centuries. So let us suppose that I want to sell you this lovely bridge in Brooklyn, it’s a fine bridge quite beautiful. Well, we get together, we write up a contract, you hand me the money, we sign it, and congratulations, you’re now the owner of this very fine bridge.
That stuff we’ve known how to do for centuries now. All the NFT is supposed to be is a digital version of the same thing, but with massive flaws that the real-world thing doesn’t have. So, in the real world, let’s say I don’t actually have the right to sell you this verify bridge. Well, we go to court, lawyers get involved, and you’ll get your money back, and I’ll probably get in jail for selling you a bridge that I didn’t have the rights to the blockchain world that the NFT’s existed for their ownership records, doesn’t have this exception handling mechanism.
So, if I sell you said bridge as a non-fungible token, and I didn’t have the rights to sell it, congratulations, there’s nothing you can do about it. That’s Problem number one. Problem number two comes with blockchain systems having the wrong security model.
So, people talk all the time about this immutable blockchain being super secure. But it’s not secure in very important ways. So if you lose your keys, you will lose your property. So, imagine a world where if somebody stole your keys, they could steal your house. That’s what an NF t promises. That’s not how the real world works. So, in theory, if they actually acted as ownership records, they would be far inferior to what we’ve been doing for centuries. But they are even ownership records, the NFT’s people are buying are simply a pointer to a URL. So, it is not even buying say the rights to said bridge, it is buying a receipt that just points to the bridge. And you are solemnly swore that your receipt is unique and genuine. And that’s it. So, it doesn’t actually offer any ownership rights. It doesn’t offer any control rights, and it doesn’t offer control rights in practice. So, if you want to view the original artwork behind that $60 million NFT, you can just go to the particular URL yourself and see it for yourself. The NFT provides no access control. And it doesn’t even provide a guarantee that the image will stick around, somebody could just as easily whoever controls that website, could replace that NFT video you bought with one of Rick Ashley, who does control the website, then whoever your quote unquote buying the NF t from. So, all you’re doing is paying somebody to say that you own this URL on their website. And that’s ridiculous. If you want to buy art, we know how to do this. I have a piece of art I commissioned myself sitting on my shelf, I go to the artist, I say here’s some money, they give me a print. And unlike an NF. T, the art I have on my shelf, I actually have an arrangement for reproduction rights.
So, I actually have a copyright license to go print out a bunch of these on T shirts. But with the continued rise in the value of cryptocurrencies themselves is this kind of thing, the inevitable future we’re facing regardless of how intelligent or otherwise it appears to be as an investment right now? No, because the entire cryptocurrency space is a massive fraud that it is a deeply negative sum world because although the transactions that drive up the price are a zero-sum transactions, there’s no income produced by a cryptocurrency because the only value is what somebody else will pay for it later on. And the systems themselves cost billions and billions of dollars to keep the power on there’s a that which means that in reality the cryptocurrency space is deeply negative, some burning the power of a significant European country just to keep the lights on. So why is the price so high?
Well it’s also because the cryptocurrency space by being unregulated investment is basically speed running 500 years of financial failures, and a lot of it is basically fraudulent exchanges and other stock behaviors that were banned after the 1930s. Why do you think otherwise intelligent people are spending 10s of millions of dollars? The dirty little secret is it’s not often actual money. But it’s cryptocurrency gains that are otherwise unrealized and unrealizable. That it turns out, it’s actually really hard to sell a lot of cryptocurrencies. But you can, if you’re somebody who has a huge amount, you can do a transfer, to finish with a question that will direct us for the future, whether virtual goods are here to say in other words, do you think virtual goods, Digital Goods can elevate themselves to a point where they are an everyday purchase across various industries, I’d say more that we have for 10 years now. We had Second Life a decade and a half ago. So we already have a thriving thing of virtual goods. Everybody who buys music these days is buying virtual goods, that’s fine. The thing is, is it’s a virtual good that you make sure you have a copy of and the NFT’s are not actual virtual goods, all they are is a receipt for a virtual good. This actually isn’t even the first go round of a tulip mania on NFT’s. So back in 2017, there was a blockchain quote unquote game called crypto kitties where you could buy sell, breed and trade these deformed looking cartoon cats, at the height of the craze of one have said, cat sold for a notional value of $120,000. Why did it sell for that? Because the salesperson or the person buying immediately tried to turn around and resell it for 180,000. That’s just classic tulip mania. And all these NFT’s are the same thing just with more money and more hype. Presumably that cat is now worth nothing like that. That cat is now worth exactly $0.00. And I may not own said cat but I have a picture of said cat and that is basically the same thing as owning.
Alex Jensen: Nicholas Weaver, thank you so much for joining us and giving us that critical assessment of where we’re at now with NFT’s Thank you very much. Now, you might be wondering at this point, how this madness goes on. But not all experts in the field are pessimistic about the prospects of NFT’s from here. Step forward. Merav Ozair, PhD, a Leading Blockchain expert and a FinTech Professor at Rutgers Business School, a proponent of cryptos and NFTs, thank you very much for joining us, too. It’s great to have you with us.
Merav Ozair: Great to be here and great to talk to you. Thank you for having me.
Alex Jensen: So we’ve just heard a very skeptical view of NF T’s and cryptocurrencies, more generally. I understand you’re more of an optimist. Yes, I’m a big believer in technology. I’ve been a technologist first before I became a finance person. So we have to thank technology for even, you know, in being able to continue our lives with doing COVID as you know, with the lockdowns and this communication and no flights and holidays and all that and we still were able to do business and then continue to live no nothing, nothing the most perfect way but semi perfect, you know, when close to perfect in many ways.
So I’m always been someone who always supported technology, and nothing, blockchain and everything that has to do with blockchain. That’s the next level. And some call blockchain basically, where point three, oh, because the internet is web 2.0 and walk down is consider and everything distributed ledger is web 3.0. And I do believe that this is the future. And this is where everything is going.
Alex Jensen: Can you also please just address for some of the safety concerns around NFT’s as an investment.
Merav Ozair: When you invest in something there’s always some risk. And some people like collective whether it’s physical art or real estate or, or clothes or whatever. And now they’re the new hype is is collecting data or so that’s what they do. Now for the authentication perspective. Here’s something that is misunderstood as an NFT and NFT is more authenticated than I think, any, you know, physical art that you could use the dukan
Merav Ozair: Because you know if they can even check that smart contract itself, they can, if they know how to code, or they can have a friend who knows how to code, they, that person can read the code and see exactly what the code is doing, and where they, he does what exactly it’s supposed to do. And on top of that, each and every NFT is has its own hash, which is very unique. So, if you show that this is your NFT, and that’s your hash, then this one cannot be copied by any means. The only problem today in my mind is that, you know, I can just, you know, take something from the twitch will form form because it’s public, right, and claim that it’s mine.
And I can see that the developers, the community are understanding the problems, you know, don’t get them wrong. I mean, they really want to help this technology grow. And I believe that, eventually, we will find a way whether it’s something like wearables, or something that will authenticate, verify, and be like a compliance type of decentralized compliance, that will authenticate the creators in making sure that it’s not like me, just claiming that it’s me. And this is my piece of art or my piece of tweet or whatever.
Alex Jensen: But even if we could vouch for the safety of NFT’s as an investment, can you see them becoming more widespread, as opposed to what looks like a kind of nice status symbol?
Merav Ozair: in some cases, I think that at some point, eventually, it’s going to democratize society and explain what I mean by that. Just to give you an example, today, you know, a lot of people you know, they post weather on Facebook, or Instagram, all kinds of other social media, posting that, you know, for all the followers and creating and trying to create, a network of followers is to, then monetize it, right, you know, in order for for later and over, these people will become the client and then you can sell them their services, right, that is what people are doing today.
However, basically, with NFT, you don’t need to go through all this process is long process and hoopla of you know, trying you know, to, to give you know, people all this information in order to create the followers and the networks and eventually you know, someone is going to come and buy something from you or ask for your service, you can NFT it right from the beginning and sell it and that will become an additional source of income for everyone. And this is why I believe that everyone can the more this is how it will serve society and to not be revert reserved, to celebrities that it is today. And it will not only be like something like a memorabilia or collectible or a status of you know, you’re in of living or who you are, with a sense of pride of ownership or something like that. It’s going to be more than that. And that’s the way I envisioned that. I’m not saying it’s gonna happen tomorrow. We’re not there yet. But hopefully,
Alex Jensen: I’m sure many people will appreciate that hope in your voice. Others might feel a bit more comfort from caution at this stage. But our previous guest was also critical of the cryptocurrency craze and the kind of practices that can go unchecked, more generally. And I think we’ll have to connect with you again on cryptocurrencies, broadly speaking, how about a brief rebuttal here for now.
Merav Ozair: Criticism does always criticism, because you know, like any technology, it’s at the beginning, so it’s not going to be perfect. There’s going to be I’m also a very realistic and pragmatic person. So, I know that it’s not perfect. I know, there are some problems, problems of interoperability, problems of security, sometimes privacy, that’s not perfect. There are things you know, that are still clunky, it’s like, you know, when I don’t know if you ever seen you know, the first iPhone, it didn’t have much of what you have today is this, like, you know, you It’s as if you carrying a computer in your pocket, so that give it some time. Let’s give it some time, it lets technology breathe and, and be believers in technology and then take it from there before we start, you know, criticizing and saying all the bad things about it. Because you know, at the beginning, nothing is perfect. I know there’s a lot of protocols and projects that developers are working on trying to improve on many levels, including energy, Including scalability, including interoperability, including all authenticity, privacy, security, you name it. So let’s give it some time.
Alex Jensen: Merav Ozair: Thank you very much for joining us today. It’s been a pleasure.
Merav Ozair: My pleasure as well.
Alex Jensen: You’re listening to the first ever Monday edition of Korea biz cast with the KBLA. And if you want to get involved as a sponsor, or you have a business opportunity you want to share, email us via kbla.net.
Now, let’s head straight into part two, because I recently took a trip across town to Seoul’s luxurious Four Seasons Hotel.
So yes, here at the Four Seasons, it’s a weekday it’s relatively quiet because it’s before the lunchtime rush. And so I’ve been able to find a nice corner in the Boccolino bar with Four Seasons General Manager, Alejandro Bernabe. It’s fantastic to have you welcoming here.
Alejandro Bernabe: Thank you very much, Alex, it’s a pleasure being here with you.
Alex Jensen: So, obviously now is not the best reflection of how busy you can be. But it has been a tougher time for hotels and the tourism industry generally we understand as a result of COVID-19 how vital that is domestic tourism been for you?
Alejandro Bernabe: To be honest with you since 2020, when the pandemic started here in Korea. Without the domestic tourism we would not have been able to survive. Last year, as of March, I will say 95 to 97% of our business was local this year at the moment is probably between 85 and 90%. So still without them, and we will not be here today.
Alex Jensen: What about the staycation culture within domestic tourism? Has that changed? Because I’m sure many of us will remember the idea of using hotels just for fun weekend’s before COVID-19.
Alejandro Bernabe: So, it has not really changed. The difference is that in previous years, the weakends the staycations was they were they the cherry on the cake. And the hotels were doing very well. And then Saturdays were extremely busy. Because of this the staycation and today, Saturdays are very busy because of the staycation. And we found this the case and then there is no business. So we see high occupancy on Fridays and Saturdays. And now even on Sundays, it’s high. And then as of Monday, then until Friday morning, the hotels are relatively quiet with regards to room occupancy.
Alex Jensen: How does Seoul compare? Do you think to other regions, though, especially for domestic tourism? We know Jeju Island has seen quite a spike in recent months. So many people have been going there that they’ve seen their own infections rise.
Alejandro Bernabe: I think that there is some peculiarities to Korea, number one and there is not a lot of places to go. So, people that do not stay in Seoul and want to get away, then they will go to Jeju or they will go to Busan. But there is not a lot more destinations. In general, with international hotels and a lot of facilities. Many of the people living in Seoul, they live in apartments, which are smaller, definitely they don’t have swimming pools. So, in our particular case, we have a lot of families come in to use the facilities. And so that’s something that a peculiarity as well in the winter is very cold. So, people want to be indoors in the summer is very hot, so people want to be indoors as well. So that’s something that the people look for. And finally, I will say the purchasing power of the average Korean is still quite high. So, the majority of the population can afford to go into into a hotel. If you are in some of the Southeast Asian countries. Even though the hotels might be cheaper, maybe then what they are in Korea, majority of the population don’t have the means to afford it. And that’s an advantage for us.
Alex Jensen: The other thing that we’ve seen is I think hotels offering more and more deals creative deals, though that would appeal to domestic visitors even for example, daytime visits. Just to elaborate further on how your hotel has had to adapt.
Alejandro Bernabe: When you are in in the luxury business. I think one of the most important things is to look after your reputation and your brand reputation. So, we want to make sure that we still are a luxury hotel. The guests that come to Four Seasons, they expect today even more service than they use expect before COVID. Because in addition to the normal service that we will provide, now, they are asking us as well to provide a cleaner environment a safer environment and sanitize, we need to have people checking the temperature controlling every door.
So, this adds to the cost. So if we start providing discounted rates, then at the end of the day just becomes not economically feasible. However, that doesn’t mean that we cannot create special offers. And what we are trying to do is to stimulate the demand. Outside of the weekends, we know that the weekends are busy with his staycations. So, we still will add value into it maybe stay in 30 hours, instead of the regular 16 hours that you will be able to stay before being flexible with check in times with checkout times. And we have some packages where part of the rate that you pay for the room, you can use it as credit in any of the services that we provide in the hotel, from the sauna to the spa, to breakfast to any meals included in room service.
Alex Jensen: I think we’ve spoken a fair bit already about the vital importance of domestic visitors to this hotel and to hotels across the country, but have foreign visitors also started to return in greater numbers.
Alejandro Bernabe: Not really, to be honest with you this still some regulations, or restrictions that we are facing in Korea. Number one is most of the countries in the world today, they have to apply for a visa to be able to come into the country. If you want to come as a tourist, you don’t even have to bother trying to apply for that visa, you will not get it. And if it’s for business, it will depend. So, there is still a lot of restrictions. If you manage to get a visa, if you’re fortunate enough, then when you come to Korea, you still need to have a PCR test at the airport. And that means probably spending six to seven hours waiting for a result even longer depending on what time you arrive. And then unless you have an exception from the government, you will need to follow a 14-day quarantine. So, if I’m a businessperson come in for a two-day meeting in Korea, and I have to spend 14 days in quarantine, I’m just not going to come. So, you see a little bit more business coming. But that’s essential business. And some foreign dignitaries coming to visit the Korean government, but still minimum.
Alex Jensen: The quarantine situation though we’ve heard I’m sure many of us have people having to stay in particular facilities during that quarantine period. Have people been doing it here?
Alejandro Bernabe: We decided not to have not to accept people for quarantine in the hotels, because we felt that the rest of the guests will feel maybe that is not safe. If we are hosting people in the hotel, which we don’t know if they infected or not. And I believe there is no luxury accommodation in Seoul that is accepting any guests during the quarantine period.
Alex Jensen: But what about those domestic people those living in this country who would normally also be used to attending events at large hotels such as this? Even if we’re not expecting an influx of foreign visitors? Can we expect the return of the big events, the balls, the daytime lunches, that sort of thing? with any kind of element of normality?
Alejandro Bernabe: It depends on which day of the week you ask me on which week of the month you ask me the regulations have extremely fluid in it depends on the amount of infections that we are having in the country, then according to that the government will lift restrictions or will enforce even stricter restrictions. At the moment, we have seen a big increase in weddings mean every hotel, the numbers are smaller, because at the moment is maximum 99 guests in one space. But we have more weddings today than we had in 2019. Already.
With regards to social events. At the moment. There is no social events allow whatsoever besides weddings and, and all parties. So do I anticipate any big balls or any big celebrations happening? I don’t think before the vaccines are well introduced into the market. I don’t think so. Do we see business meetings happening? Yes. We have seen and we continue to have a number of bookings. But that It’s 99%. They are all domestic meetings. So, we don’t see any big groups coming from outside to have incentives into the country. And I don’t anticipate that before November.
Alex Jensen: You talked about vaccines there. Clearly, that’s the big solution for people across the world. But is there anything else that you’d like to share that you’d like to see happening that would help the tourism, industry, hotels and any other aspect that you could perhaps address during this interview?
Alejandro Bernabe: Well, I think that the country has done a great job in in managing the pandemic. And we are extremely fortunate that we did not have to suffer a single day of lockdown in the country, the amount of people going into hospital has been minimum in comparison to other countries and, and the deaths, even though any death is tragic. Also, the numbers are very, very minimal in comparison to other countries, I believe they there’s only two things left to do. One is to push for the vaccines. At the moment, vaccines are being brought out quite fast. But we have gotten quite late in comparison to other countries. And the second, it’s start working on protocols on where we can accept vaccines from other countries. So, people vaccinated in other countries to be able to come here, the European Union is launching digital passport that will allow people with have been vaccinated to travel within Europe freely. And hopefully we can do something like that in Korea with the rest of the world, which will allow people to come for a vacation to come for a meeting to come and meet relatives.
Alex Jensen: That sounds wonderful to me, with relative standing by I think for the last best part of year but perhaps a bit longer to come over for family celebrations and that sort of thing. I’m sure every family has their own similar story to tell, including your own. And so we wish you all the best. Thank you very much for taking the time out of your schedule here at the Four Seasons General Manager, Alejandro Bernabe, thank you very much,
Alejandro Bernabe: Alex and thank you for everybody that is listening please use us we need your help. The pandemic has not finished yet. And without you would not have been able to survive this very, very difficult year. So, thank you.
Alex Jensen: We all hope you enjoyed that window into life at the Four Seasons Hotel in Seoul. A big thank you to them for supporting our podcasts and thanks also to our guests earlier in the show Nicholas Weaver and Dr. Merav Ozair. You can head to kbla.net for more info on upcoming and when we get there past episodes. Otherwise we’re Monday to Friday from 7am Korea time. So see you tomorrow.