South Korea Shows How It’s Rethinking Governance Using Blockchain Tech

South Korea Shows How It’s Rethinking Governance Using Blockchain Tech
Alexander Chua, Unsplash
18 October 2022

South Korean citizens could soon be using blockchain-based national IDs instead of physical cards, according to a report by Bloomberg.

Under the plan, which will be launched in 2024, digital IDs will be embedded within an app on smartphones in the future, with around 45 million citizens expected to adopt the new IDs within two years.

Suh Bo Ram, the director-general of South Korea’s Digital Government Bureau, noted that the government is aware of “Big Brother” concerns, referring to George Orwell’s “1984” novel, and claimed that the government would have no access to information stored on users’ phones, including the digital ID’s location data.

Suh also said that that the system will rely on “decentralized identity,” something he describes as an “advanced strand” of blockchain technology. It’s unclear how the network, which will most likely be a private ledger developed by South Korea’s government, will be decentralized, but the country has already successfully developed blockchain-based digital driving licenses.

The South Korean government also believes that digitalizing national IDs can pave the way for a more efficient economy, with the digital blockchain-based IDs expected to have an economic value of roughly 3% of the country’s gross domestic product (GDP).

“Blockchain has its strength in security over efficiency. Thus, it can contribute to the government’s public administration where security matters the most. Beyond DIDs, blockchain technology can be applied to preservation of public records, procurement systems and many other areas in the public sector for the government to ensure transparency and trust from the nation,” Shane Kim, CEO of global blockchain gaming platform WEMIX and vice president of its parent company WEMADE, told Blockhead.

Growing blockchain ecosystem

Kim also noted that Korea is a country with one of the highest digital penetration, and diverse technologies are already being utilised by Koreans in their everyday lives.

“Innovative new technologies such as blockchain could add value to national economic growth and development and hence, it is very natural for the government to adopt diverse digital applications and tools to leverage those technologies. In Korea, there are already many promising industry players working on blockchain projects, and if the Korean government could support the industry, Korea will have a well-earned reputation as a global blockchain leader.”

Earlier this year, a report by Ripple and Oxford Metrica revealed that Korea’s leading financial institutions are all actively pursuing the idea of adopting blockchain technology as a part of their mainstream operations, with 40% having already developed a proof of concept and 60% in the pilot stage of implementation. 

In terms of lines of business being pursued, 80% were focused on payments, while 20% were focused on capital markets. 90% of participants also indicated that CBDCs (central bank digital currencies) are the “preferred type of digital asset,” followed by non-bank stablecoins at 10%.

Beyond crypto

Other countries have also been exploring the use cases of blockchain technology beyond public cryptocurrencies, even as governments and traditional finance institutions continue to grapple with regulation and crypto investor protection.

According to David Shin, head of global adoption at Klaytn, a public blockchain backed by Kakao Corp focusing on the metaverse, gamefi, and the creator economy, there is further potential for blockchain applications, particularly NFT technology, by national governments going forward.

“I believe governments will start to use NFTs for national elections that would be held in the metaverse. This is for full transparency in terms of the voting process. I also believe that bills in the senate, house of commons etc. could embrace blockchain for voting on bills to pass and approve as again it would be public record on chain”, he told Blockhead.

“Governments could also create programs using incentives like NFTs as rewards representing municipal/city tokens for getting people to recycle, exercise, participate in civic programs etc.”, Shin added.

At home, the MAS recently announced the commencement of Project Guardian – a collaborative initiative with the financial industry that will explore the “economic potential” and “value-adding” use cases of asset tokenisation. Its first industry pilot explores potential DeFi applications in wholesale funding markets, and involves the creation of a permissioned liquidity pool comprising tokenised bonds and deposits.

Read more: What is Singapore’s Vision in the Global Crypto Economy?

In Malaysia, MY E.G. Services (MYEG) and Mimos Technology Solutions (MTSSB) recently signed a memorandum of understanding (MOU) to co-develop and operate the country’s national blockchain infrastructure to onboard the nation’s private and public sectors to Web 3.0.

Blockhead Team
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