Blockchain gained massive hype in 2018 all over the world as organizations have started experimenting with the blockchain’s potential to transform the business functionalities. Korea has its large share of the blockchain implementation due to the fast adoption of the latest technologies. Though some significant exchanges and ICOs remained banned in Korea, it did not stop investors from exploring the adoption of blockchain technology.
The blockchain technology gained a lot of traction in Korea with mass adoption in industries such as finance, logistics, IP rights, trade and health. The blockchain was highlighted in Korea at the time of induction of Korea Blockchain Week – a week filled with a wide range of blockchain activities, investor forums, networking activities, knowledge workshops and meetups.
It has been a progressive period for Korea in terms of the blockchain ecosystem. Let’s discuss some of the initiatives and progress that have been made around the blockchain in South Korea.
Blockchain in Tax Law
South Korea has continued to make progress by providing tax incentives with its innovative fintech solution based on the blockchain technology. The South Korean Government has added blockchain to the list of R & D that offers a tax credit.
A report published by the local Ministry of Strategy and Finance has announced the updated tax law which came into effect from February 2019. It implies that the companies or businesses developing blockchain technologies can deduct some tax from their research and development expenses.
The amount of tax deduction depends on the size of the company. For example, small organizations can claim 30 to 40 % while medium to large-sized companies can deduct tax between 20-30% of R&D expenses.
In the current scenario, small businesses can only deduct upto 15-25% while large corporations up to 2-5%. It is a dramatic increase in the current tax breaks offered to companies.
Looking at the support of the Korean Government for Blockchain Development, the City of New York opened its first Research and Development Center for Blockchain and the local government provided the support of $100,000 as of the initial investment.
Support of Government in Blockchain Education
The Ministry of Science and Technology in South Korea has taken the initiative towards training to bring the next generation of blockchain specialists. The first blockchain-focused lecture hosted by the ministry’s Information and Communication Division in September 2018 influenced the government.
The lecture resulted in a $90 million investment by the South Korean government to launch a “blockchain technology development strategy” course.
Around 42 candidates for the training courses were chosen through a series of interviews and applications. Under this course, students will take on eight hours of tuition every day and training on the blockchain for the next six months. The program’s aim is to put the candidates straight to work after graduation.
This program will have a huge impact on South Korea’s blockchain vision. Considering the popularity of cryptocurrency trading in South Korea, the government is making its best efforts to ramp up education in the blockchain space.
Korean Government to do 6 Blockchain Pilots with $9 million fund
The South Korean Government has decided to invest around $9 million to support the development of blockchain technology in the country, with plans to carry out six blockchain project pilots.
The country’s Ministry of Science and ICT revealed that it would work with government agencies to do blockchain pilots in the public sector. This initiative by the government is focused on livestock supply chain management, online voting, cross-border e-document distribution, customs clearance, shipping logistics and real estate transactions.
The main motive of the program is to bring transparency and enhance the information sharing efficiency across public services with a distributed network.
Also, the ICT ministry disclosed that they would collaborate with the Ministry of Agriculture, Food and Rural Affairs to build and deploy a system for updating the information of livestock from breeding to sales on a distributed ledger.
Each party on the supply chain functioning as a node on the blockchain can be updated instantly in case a problem occurs. It can help to reduce the follow-up period from six days to less than 10 minutes.
Blockchain pilot on real estate industry will be performed in collaboration with the Ministry of Land and Transport. It is expected that integrating taxation, real estate and legal services with the blockchain; transactions can become more efficient for consumers as the information can be exchanged among all parties quickly and securely.
Moreover, the ministry revealed that they would spend $800 million a year for up to six years to broaden the blockchain research center.
Military Acquisition Agency Plans Blockchain Pilot
South Korea’s military acquisitions agency has launched a blockchain pilot project aimed at enhancing business operations in the defense field. The Defense Acquisition Program Administration (DAPA) has stated that efforts to build a blockchain platform can protect from the unauthorized alteration of defense business data.
The aim is to enhance the credibility of defense procurement functions by keeping records of the acquisition process from initial bids through final evaluation on the blockchain ledger.
The blockchain based solution will also help reduce the burden on defense companies with unified management of notifications and firearms transportation permits.
The senior planning and coordination officer at DAPA, Kim Tae-gon, said that the project is the agency’s plan to develop and deploy blockchain solution for defense business systems and offer innovative public services.
Government of Seoul is using a Public Blockchain in Administrative Tasks
The Government of Seoul is using the largest blockchain project in South Korea, ICON to issue documents, process information and perform a wide range of administration-related tasks.
By creating the Seoul Blockchain Governance Team, the Seoul Metropolitan Government initiated with its plan to build a blockchain ecosystem in February 2019.
The Seoul Blockchain Governance Team comprises of 30 residents, 40 college students, 10 industry experts and 20 blockchain developers. The team will design, build, test and deploy blockchain based solutions for the government.
The Seoul Metropolitan Government is planning to integrate blockchain applications into the core operating IT system of the government used for carrying out significant administrative activities. The government sent appointment letters to all 100 members of the governance team to establish the Seoul Blockchain Governance team.
The government processed the letters on the ICON network via a mobile app. Since the letters were processed on a public blockchain network, the appointment letters are accessible publicly with distributed ledger explorers.
The use of ICON network is the first use case where the government of South Korea utilized the blockchain technology for the processing of information.
The ICON team and the Seoul government are expecting to use the distributed ledger technology to run various administrative services, including citizenship card services, sub-contract payments, mileage points integration and authentication of documents.
LG U+ will provide blockchain-based payment services to overseas customers
LG U+, a South Korean Telecom Company, disclosed that they will bring a new blockchain-based cross-border payment system in collaboration with mobile carriers in Japan and Taiwan.
The new payment system will allow customers to purchase products via their mobile phones at specific retailers in Taiwan and Japan using the respective country’s carrier payment systems.
Shinhan Bank implements blockchain to speed up load issuance
Shinhan Bank is one of the largest and oldest banks in South Korea that has planned to implement blockchain for speeding up the loan approval process. The bank will utilize a blockchain based solution for verification of items required for credit lending, for example, certification or qualification documents.
Til now, customers had to submit the documents directly to banks for undergoing manual and time-consuming verification of their authenticity. However, with a verification system on the blockchain, Shinhan expects to process such documents fastly and at a lower price.
The Shinhan Bank has successfully implemented the blockchain in one of its loan products, “Shinhan Doctors” that reduces the time taken to verify if the customer is a member of the Hospital Doctor’s Council from almost three days to real time.
Blockchain South Korea Pilot Project for Beef Traceability
The South Korean Government has initiated a pilot project that uses blockchain technology to trace beef throughout the supply chain. It is a joint initiative between the Ministry of Agriculture, Food and Rural Affairs and the Ministry of Science and ICT.
The platform will utilize the blockchain technology to store records of certification or other crucial information. A blockchain-based solution offers an immutable ledger and complete transparency with hashed records that no one can tamper with. It will result in increased confidence in the product’s integrity for consumers.
Blockchain Pilot for containers at Korea’s Port of Busan
Ministry of Maritime Affairs and Fisheries and the Ministry of Science and Technology in South Korea also announced the launch of blockchain pilot for tracking of containers in the Port of Busan.
Port of Busan is the second largest port of transit in the world. Containers are moved from one vessel to another and Busan is responsible for 16% of the total volume.
Moving the containers between ships is critical. However, ministries assume blockchain as the solution for the movement of containers between piers, by keeping all parties updated from an immutable and distributed ledger.
In the current scenario, the movement of containers between vessels involves multiple steps. Firstly, a container list is given to the freight forwarder who prepares a dispatch plan. In return, the freight forwarder notifies the terminal operator. The problem occurs because of the communication, whether it is email, fax or wireless.
Also, drivers have to rely on paper-based container documents to get checked at the terminal gate. Using the blockchain, documents can be shared in a secure and transparent way.
Quantity and quality checks can be done in real-time with all the information available on the distributed ledger at all times.
Blockchain Piot for Power Grid by the Korea Government
The Korean Government has also planned to develop a blockchain based virtual power plant in Busan City. A virtual power plant is a power supply system which is operated by integrating various electricity generation sources whether they are public, retail or corporate.
Busan City is going to build the project in partnership with the Energy Integration Control Center (TOC). The goal is to utilize the project as a successful and innovative example of new distribution methods and power generation.
Also, the World Energy Council in collaboration with PwC, has published a report exploring the advantages of implementing blockchain in the energy sector.
South Korea is leading Blockchain and Gaming Industry
The future of decentralized gaming has started to take shape in South Korea, that is one of the biggest gaming markets in the world.
South Korea was the first country to introduce eSports events almost 20 years back. For example, events organized around Starcraft (where over 100,000 people fill stadiums to play together on giant screens). The country has long dedicated TV channels to gaming.
Moreover, the game developers in the country have cemented a reputation as the best developers in the world.
The country like the United States is still looking for blockchain use cases. However, companies in Korea have started to invest in (and building) a vast decentralized gaming ecosystem.
They are in the process of creating a model for blockchain gaming that the rest of the world will surely replicate.
One of the decentralized gaming projects, Magnachain has recently partnered with the Korean Mobile Game Association (KMGA), to aid KMGA members in using the MagnaChain public blockchain network. The association is comprised of more than 700 developers.
It means over 700 developers in Korea are utilizing their time and efforts into creating and developing blockchain games.
South Korean Government has drafted new blockchain industry standards
Since the South Korean government has drafted new industry classification standards for the blockchain technology, the battle for legitimacy between cryptocurrency and blockchain industry is near to its end.
Korean ministries, The Ministry of Information and Communication, The National Statistical Office and the Ministry of Science and Technology, have worked together to create a final draft for blockchain industry standards.
A Blockchain Law Society has been established in Korea as a global education group and think tank. More than 210 members, including prosecutors, judges and private practice lawyers were present in the first meeting of that law society.
Lee Jung-yeop, a presiding judge at the Daejeon District Court, said in his statement:
Blockchain technology is a social technology, which means the width and depth of its development will be dependent on how we create the regulatory framework and system. I believe it can fundamentally change the structure of our society and I suggest that we establish a legal think tank so that we can make a contribution.
Several legal issues were raised in the meeting that needed attention. A managing partner at law firm Tek&Law, Koo Tae-eon proposed a “Blockchain Act” that would apply a tax on cryptocurrency trading or blockchain companies.
How can LeewayHertz contribute to Blockchain Development in Korea?
We have a team of blockchain consultants who have an in-depth understanding of the blockchain industry across various countries. Our blockchain developers can deliver blockchain solution for multiple business use cases using different blockchain platforms including Ethereum, Hyperledger Sawtooth, Hyperledger Fabric, Hyperledger Iroha, EOS and Hedera Hashgraph.
Start a conversation by filling the form
Once you let us know your requirement, our technical expert will schedule a call and discuss your idea in detail post sign of an NDA.
All information will be kept confidential.
Here is a step-by-step tutorial of creating, testing and deploying an Ethereum Smart Contract using Solidity Language and Remix IDE.read more
What are dApps? – dApps are decentralized applications that run on a P2P network instead of a single computer and are not controlled by a single entity.read more
Blockchain Real Estate Process: Implementing Blockchain in Real Estate can reconstruct the real estate industry by eliminating middlemen and reducing costs.read more