Up until recently, blockchain technology was just something for South Korea’s cryptocurrency geeks to obsesses about – but it has quickly become a matter for top-level executives and high-ranking government officials.
The mood started to change around this time last year. Companies who had no idea what a decentralized, immutable ledger was – or why they might need one – suddenly started getting very interested very quickly. The central government suddenly started talking blockchain with astonishing fervor, and remarkably well-funded blockchain startups began springing up everywhere. But perhaps more significantly, South Korea’s monolithic conglomerates – like Samsung, LG and Hyundai – suddenly decided that it was time to act.
Although none of the big conglomerate players have yet unequivocally thrown their lot in, most are now quietly asking their subsidiaries to proceed with blockchain pilot schemes post haste.
Samsung SDS, the Samsung Group’s IT service arm, has been one of the more noticeable movers.
The company had already been working on blockchain technology-powered credit card operations along with a local startup and a British security company. But following a somewhat cagey group-wide Samsung Group-wide CEO briefing session last year, it appears that the decision was made to let Samsung SDS go full blockchain. The hope, perhaps, was to let SDS carve out a path that the rest of the group could then follow on.
Earlier this year, the company announced a flurry of blockchain-related activity. It joined the Enterprise Ethereum Alliance in March. In May, it launched a government-backed, blockchain-powered logistics initiative. The scheme brought in a big name in the shape of Hyundai Merchant Marine, one of the country’s big two shipping heavyweights. A month later, Samsung SDS unveiled its own commercial blockchain services, with a view to following up with a financial concierge service for mobile platforms.
LG has followed suit, putting its own IT service subsidiary, LG CNS, to work on blockchain endeavors. These have already borne fruit, with LG CNS launching its own Corda-powered platform in July.
The government, meanwhile, will simply not stop talking about blockchain. While neighboring China has stolen the march on South Korea in the cryptocurrency stakes, it seems the latter does not want to see a repeat of this if and when blockchain starts to really take off.
Last year, the government’s Financial Services Commission head underlined the importance of “spearheading the development of technology and service in the blockchain field,” rather than “passively following in the footsteps” of other countries.
Banks, healthcare and education on blockchain
The rhetoric has stepped up a gear this year. Sixteen major banks and almost twice as many brokerages have signed up to a government-led blockchain consortium, whose leader has claimed that as South Korea’s IT industry is so advanced, the country “will be able to lead the international trend in the blockchain sector if the government, related industries and experts pool their wisdom.”
Healthcare and insurance ventures have teamed up start on city-wide blockchain ventures. Insurance firm Kyobo Life has struck a deal with some of Seoul’s biggest hospitals to conduct pilot data sharing projects, using a codebase developed by South Korea’s Ministry of Science, ICT and Future Planning.
Other healthcare providers are also getting onboard. Forbes recently quoted a Korea University Hospital professor as stating the hospital was applying blockchain technology to help with “data integrity and a cross-border digital signing system.” The hospital is now preparing to team up with other local clinics to launch a government-backed, cloud-based information system that will let hospitals synchronize databases.
Tertiary education also wants a piece of the action. Seoul’s Sogang University first started getting serious about blockchain pilot ventures last year, and is already looking to allow students to lend pay school fees, use vending machines and even lend each other money via a blockchain-based payment method.
Major banks have caught blockchain fever, too. KB, who last year struck an MOU deal with Coinplug, has also announced a new blockchain foreign exchange business model. In recent weeks, rival Woori has promised to launch a blockchain-powered cryptocurrency before the year is out.
Despite all the blockchain clamor of the past few months, it is still early days for the technology in South Korea. The finance and banking sectors appear to have been won over, and healthcare pros are also singing blockchain’s praises. Crucially, the conglomerates are showing interest.
But there is still a very long way to go. South Korea’s gigantic motor industry (which makes up over a third of the country’s export economy) has shown little or no curiosity in blockchain technology so far. While international rivals like Toyota start looking at blockchain pilot schemes, the likes of Hyundai Motor, Kia and SsangYoung have yet to make any sort of significant move.
And unless they are working behind the scenes, the country’s major IT giants are happy to let their service subsidiaries gently probe the blockchain landscape before committing themselves.
That said, in South Korea, the government has always taken a very interventionist role when it comes to setting the agenda for IT progress. Should its blockchain consortium strike gold, the rest of Korea’s industrial sector will surely quickly fall into line.
After all, government figures have gone so far as to equate the forthcoming blockchain “revolution” with the country-wide upheaval brought about by the internet in the 1990s. With some US$2.65 billion already pledged to cryptocurrency, blockchain and other fintech developments, it is safe to say that the government, at least, has already put its money where its mouths is.
Featured image by Ian Muttoo (CC 2.0)
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