[Korea and the fourth industrial revolution <10-2 Finance>] The blockchain promises to be the ledger for all ledgers
Blockchain technology promises safer and tamper-proof transactions over existing systems. Currently, transfers of assets require a centralized ledger to track transactions, but such systems could be susceptible to slow processing time and hacks.
A blockchain-based system, on the other hand, can keep a shared digital ledger of transaction data on a network of computers to ensure security and preserve transaction records more accurately while facilitating transfers at a faster rate.
Kim Jin-hwa, co-founder of Korea’s oldest bitcoin exchange, Korbit, says that a more important potential lies in the blockchain’s capacity to allow for transactions that have not been possible before.
“What makes blockchain really relevant is its broader applications,” said Kim, who founded Korbit in 2013. “It has the potential to facilitate peer-to-peer exchanges of electricity, which means that you can sell your extra electricity or even electric car batteries.”
Despite its promise, the blockchain is still in its infancy. Two consortiums in Korea are testing operations based on shared-ledger technology. One of the them comprising 16 Korean banks plans to establish a blockchain-based system that will simplify international wire transfers. The other consortium, consisting of 25 securities companies, wants to apply the technology to identity authorization.
Brokerages currently all have different identity verification systems, meaning clients have to install multiple software programs if they want to work with different companies. The blockchain would make tracking transactions easier by giving securities firms a common digital watermark for their clients.
Kim believes people will be able to see tangible outcomes from the technology after 2020. “Presently, we are undergoing a proof of concept stage for the technology, and it will continue this year,” he said. “Then, the results of pilot projects and prototypes will pop up in the next two to three years, and after that, people and industry participants will see diverse applications for the blockchain.”
Applications vary depending on industry, but early examples have centered around identity verification in the financial sector.
“At the beginning stage, companies will likely focus on identity management,” Han Jeong-wook, the financial services sector leader at IBM Korea, said in a forum in April.
But the more brazen in the industry will search for wider applications like clearing/settling payments and issuing debt/equity. In an IBM survey on the impact of blockchain technology, clearing/settling payments and issuing debt/equity were cited as two areas that could benefit most from the blockchain.
In Korea, major IT solutions companies including Samsung SDS and SK C&C have developed blockchain systems, mostly for record-keeping in logistics.
BY PARK EUN-JEE [email@example.com]