South Korea to store ID cards on blockchain

South Korea has a reputation for being a country that is always at the forefront of innovation. It is proving this once again with the announcement of the forthcoming introduction of a digitised identity card system stored in a decentralised manner on a blockchain. This technological feat is linked in particular to advances in security tools for modern smartphones.

 FACTS

• The digital identity project presented by the Korean government's national digital agency is expected to be launched in 2024, targeting a potential market of 45 million citizens.

• After 2024, the blockchain-powered ID will replace Korean residents' registration cards, serving as a modular digital platform for accessing education, work and financial services.

• Use cases are not limited and other areas are mentioned such as: accessing healthcare, paying taxes, transportation, applying for government benefits, transferring money and even voting.

• Digital ID cards embedded in smartphones would replace existing ID cards. The government has confirmed that the solution will use decentralised identity solutions (DID).

CHALLENGES

• Substantial cost savings: Digital IDs facilitate web-based verification, eliminating the need for text-based authentication codes or taking paper photo IDs. According to the Office of Digital Government, this plan could save the country at least $42 billion, or 3% of GDP, in economic value within a decade.

• A decentralised storage: This new format will be deployed on blockchain technology, which is completely decentralised. The State, although it is the initiator of this project, will thus lose its control privileges. With this digital identity, the government will, for example, not have access to the information stored on citizens' phones, nor how and when this identification is used.

• Establishing a forward-looking position: South Korea is becoming a major powerhouse in the field of technology. Smartphone ownership is estimated at over 88% in South Korea - with some sources claiming that this figure could be as high as 95%. It is considered a leader in all things blockchain and metaverse.

MARKET PERSPECTIVE

•  By August 2020, more than one million South Koreans had implemented a blockchain-powered driving licence, which works via the Korean smartphone app PASS. SK Telecom, KT and LG U+, the country's three largest mobile operators, had reached an agreement to use the PASS mobile driving licence identification platform, a brainchild of the National Police Agency and the Road Traffic Authority.

• Banks, such as Woori Bank, also began accepting smartphone driver's licences as a form of identification in branches this year.

• With easy access to digital services, a central bank digital currency (CBDC) would find its logical integration. In early 2020, the Bank of Korea (BoK) launched a dedicated CBDC research unit. From August 2021 to June 2022, BoK conducted a cloud-based CBDC experiment with the help of its main internet service provider, Kakao, testing the CBDC feasibility.

• South Korea is not the first country to embark on such a project. Estonia, a forerunner in the field, has been joined by Germany in implementing decentralised online services.