The History And Present Of Blockchain In South Korea
As businesses began experimenting with the blockchain’s potential to change company functions in 2018, blockchain saw a primary buzz wave around the globe. Due to its rapid acceptance of the most recent technology, Korea has a significant portion of blockchain implementation. Even though several big exchanges and ICOs were still prohibited in Korea, investors continued to look into the use of blockchain technology.
Korea has experienced growth over this time in terms of the blockchain ecosystem. With widespread adoption in sectors like finance, logistics, intellectual property rights, trade, and health, blockchain technology acquired a lot of traction in Korea. The launch of Korea Blockchain Week, a week packed with various blockchain events, investor conferences, networking opportunities, information sessions, and meetings, emphasized the blockchain in Korea. Let’s talk about some of the projects and developments surrounding the blockchain in South Korea.
By offering tax benefits together with its creative fintech solution built on blockchain technology, South Korea has continued to advance. Blockchain has been added to the list of R & D projects that qualify for a tax credit by the South Korean government.
According to a regional Ministry of Strategy and Finance report, the new tax code went into force in February 2019. It suggests that organizations or enterprises working on blockchain technologies may be able to deduct some of their R&D costs from their taxes.
The size of the business affects the tax deduction amount. For instance, small businesses can deduct up to 40% of their R&D costs, while medium- and large-sized businesses can claim a tax deduction of 20% to 30%.
Significant represents a sharp rise in the current tax benefits provided to businesses. Ant firms can only deduct up to 2-5 percent, while small enterprises can only do so up to 15–25%. Based on the Korean government’s support for blockchain development, the City of New York created its first Blockchain Research and Development Center with $100,000 in initial funding from the local government.
Government support for blockchain education
Thanks to the South Korean Ministry of Science and Technology initiative, the next generation of blockchain experts is being trained. The government was influenced by the first blockchain-focused lecture presented by the ministry’s Information and Communication Division in September 2018.
The speech led to the South Korean government investing $90 million to start a “blockchain technology development strategy” course.
A series of interviews and application processes resulted in selecting about 42 individuals for the training programs. Students will enroll in this course and commit to daily instruction of eight hours and six months of blockchain training. The program aims to place the participants in employment as soon as they graduate.
This endeavor will significantly impact the blockchain vision of South Korea. South Korea has a thriving cryptocurrency market. Therefore the government is doing everything it can to promote education in the blockchain industry.
— 50 Shades of Green (@5OShadeOfGreen) August 9, 2022
The Korean government will invest $9 million in 6 blockchain pilot projects.
With plans to implement six blockchain project pilots, the South Korean government has chosen to invest about $9 million to encourage the growth of blockchain technology in the nation.
Government agencies will engage with the country’s Ministry of Science and ICT to conduct blockchain pilots in the public sector. The main areas of concentration for this government effort are managing the cattle supply chain, online voting, disseminating cross-border e-documents, customs clearance, shipping logistics, and real estate transactions.
The program’s primary goal is to increase information sharing efficiency and bring transparency to public services through a distributed network. The ICT ministry also stated that it would work with the Ministry of Agriculture, Food, and Rural Affairs to develop and implement a system for updating livestock information on a distributed ledger, from breeding to sales.
If an issue arises, each party in the supply chain acting as a node on the blockchain can be immediately updated. The follow-up time can be reduced from six days to under ten minutes.
A blockchain real estate industry pilot will be conducted with the Ministry of Land and Transport. Integrating taxation, real estate, and legal services with the blockchain is anticipated to make transactions more efficient for customers since information can be transmitted swiftly and securely between all parties.
The ministry also disclosed that it would expand the blockchain research center by spending $800 million annually for six years.
Military Acquisition Organization to Conduct Blockchain Test
South Korea’s military purchasing agency has started a blockchain pilot project to improve business processes in the defense industry. According to the Defense Acquisition Program Administration (DAPA), initiatives to create a blockchain platform can prevent the unlawful modification of defense industry data. By maintaining records of the acquisition process on the blockchain ledger from first bids through final review, the goal is to increase the legitimacy of defense procurement services.
The blockchain-based solution’s centralized management of notifications and firearms transit permits will lessen the load on defense businesses.
According to Kim Tae-gon, a senior planning and coordination officer at DAPA, the project is part of the organization’s strategy to create and implement a blockchain solution for defense business systems and provide cutting-edge public services.
The Seoul government uses a public blockchain for administrative tasks.
ICON, South Korea’s most prominent blockchain project, is used by the Seoul government to issue documents, process data, and handle a variety of administrative functions. In February 2019, the Seoul Metropolitan Government started working on its strategy to create a blockchain ecosystem by establishing the Seoul Blockchain Governance Team.
The Seoul Blockchain Governance Team comprises 20 blockchain developers, 30 locals, and 40 college students. The group will create, test, and implement blockchain-based government solutions.
The Seoul Metropolitan Government intends to incorporate blockchain technologies into its primary IT infrastructure, which is utilized to conduct critical administrative tasks. To form the Seoul Blockchain Governance team, the government issued appointment letters to each of the 100 members.
The South Korean government’s first application of blockchain technology for information processing was through the usage of the ICON network. The government processed the letters on the ICON network through a smartphone app. The appointment letters are publicly accessible via distributed ledger explorers since the notes were processed on a public blockchain network.
The distributed ledger technology is anticipated to be used by the ICON team and the Seoul government to manage several administrative functions, such as citizenship card services, subcontract payments, mileage point integration, and document authentication.
For users in other countries, LG U+ will offer blockchain-based payment services.
A new blockchain-based cross-border payment system will be introduced by LG U+, a South Korean telecom company, in partnership with mobile providers in Japan and Taiwan. Customers can use the new payment system to make purchases from certain businesses in Taiwan and Japan utilizing their mobile phones and the carrier payment systems of those nations.
One of South Korea’s most prominent and oldest banks, Shinhan Bank, plans to use blockchain to expedite the loan approval process. Shinhan Bank uses blockchain technology to expedite load issuance. The bank will use a blockchain-based solution to verify goods necessary for credit lending, such as certification or qualification documents.
Customers formerly had to deliver the paperwork to the banks themselves to have it manually and laboriously verified as valid. However, Shinhan anticipates processing such documents quickly and inexpensively with a blockchain-based verification mechanism.
The Shinhan Bank has effectively included the blockchain in one of its loan products, “Shinhan Doctors,” which shortens the process from roughly three days to real-time verification of the customer’s membership in the Hospital Doctor’s Council.
Blockchain South Korean Beef Traceability Pilot Project
The South Korean government has started a pilot project that tracks beef across the supply chain using blockchain technology. The Ministry of Science and ICT collaborated on the project with the Ministry of Agriculture, Food, and Rural Affairs.
The platform will keep track of certifications and other important data using blockchain technology. A blockchain-based solution provides an entirely transparent, unchangeable ledger that offers immutable hashed entries. Consumers will have more faith in the integrity of the goods.
Container blockchain trial at the Busan port South Korea
The South Korean Ministries of Maritime Affairs and Fisheries and Science and Technology announced the commencement of a blockchain pilot for tracking containers in the Port of Busan. The second-largest transit port in the world is the port of Busan. Busan is in charge of 16% of the overall volume of containers transported from vessel to vessel.
It is crucial to move the containers between ships. However, ministries believe blockchain will solve the problem of moving containers between piers by keeping all parties informed from an immutable and distributed database.
Moving containers between vessels in the current situation entails several stages. The freight forwarder receives a list of containers to be shipped before creating a dispatch plan. In response, the terminal manager is informed by the freight forwarder. Whether it be wireless, fax, or email, the communication causes the issue.
Drivers must also submit paper container paperwork for inspection at the terminal gate. Documents can be shared safely and openly using the blockchain. Quantity and quality checks may be performed in real-time, with all the data constantly accessible on the distributed ledger.
Power Grid Blockchain Piot by the Korean Government
The Korean government also intends to build a blockchain-based virtual power plant in Busan City. A power supply system called a virtual power plant is run by combining several electrical producing sources, whether they are public, retail, or corporate.
The project will be built in collaboration between Busan City and the Energy Integration Control Center (TOC). The project is intended to serve as a successful and creative example of modern power generation and distribution techniques.
The World Energy Council also released research analyzing the benefits of deploying blockchain in the energy sector in partnership with PwC.
Blockchain and gaming are booming industries in South Korea.
In South Korea, one of the world’s largest gaming markets, the future of decentralized gaming has begun to take shape.
Esports competitions were first held in South Korea about 20 years ago. For instance, Starcraft-related events (where over 100,000 people fill stadiums to play together on giant screens). The nation has had gaming-specific TV channels for a long time.
Additionally, the nation’s game creators have solidified their position as the greatest in the world. The United States and other countries are still searching for blockchain use cases. But businesses in Korea are now funding and constructing a sizable decentralized gaming industry.
They are developing a blockchain gaming concept that the rest of the world will undoubtedly adopt. Magnachain, one of the decentralized gaming projects, recently teamed with the Korean Mobile Game Association (KMGA) to make the MagnaChain public blockchain network more accessible to KMGA members. There are more than 700 developers who are members of the group.
More than 700 Korean developers invest their time and energy in designing and developing blockchain games.
The South Korean government has created new industrial guidelines for blockchain.
The struggle for legitimacy between the cryptocurrency and blockchain industries is almost over now that the South Korean government has created new industry classification guidelines for blockchain technology. The National Statistical Office, the Ministry of Science and Technology, and the Ministry of Information and Communication in Korea collaborated to develop a final draught for blockchain industry standards.
A Blockchain Law Society was founded as a think tank and global education organization in Korea. Prosecutors, judges, and private practice attorneys were among the more than 210 members who attended the legal society’s inaugural meeting.
The Daejeon District Court’s presiding judge, Lee Jung-yep, stated in his statement:
Since blockchain technology is a social technology, how we design the regulatory framework and system will determine how far and how deeply it develops. I think it has the potential to alter the way our society is organized radically, and I propose that we start a legal think tank to help.
During the meeting, several legal issues arose that required consideration. Koo Tae-eon, a managing partner at the legal firm Tek&Law, suggested a “Blockchain Act” that would tax businesses engaged in cryptocurrency trading or blockchain technology.
What role can LeewayHertz play in Korea’s blockchain development?
We have a group of blockchain specialists who are very knowledgeable about the sector’s development in different nations. Utilizing various blockchain platforms, including Ethereum, Hyperledger Sawtooth, Hyperledger Fabric, Hyperledger Iroha, EOS, and Hedera Hashgraph, our blockchain developers can provide solutions for several corporate use cases.