South Korea Aims to Boost Economy With Digital ID on Blockchain

—

Within a population that is the most tech-savvy in the world, South Korea aims to provide residents with a digital identity that is protected by blockchain, on their smartphones.

South Korea is a digital economy that has grown as more individuals work from home, engage in cashless transactions, and explore the metaverse. It is supported by a number of developing technologies, including smartphone-implanted IDs.

Digital IDs make online verification easier since they eliminate the need for photographs of certificates or text-based authentication. Instead, actions like transferring money, voting, or even qualifying for government benefits are as close as a pin or fingerprint.

—

Going Digital

The advantages of digital IDs differ based on the economic maturity of a country.

According to Hwang Seogwon, an economist at Korea’s Science and Technology Policy Institute, “Digital IDs can offer substantial economic gains in finance, healthcare, taxation, transportation, and other areas and may catch on swiftly among the Korean populace.”

However, he added, “additional risk assessment needs to be done electronically to make sure the risk doesn’t outweigh the benefits.

Digital IDs have the potential to enhance a country’s gross domestic product by up to 13% and reduce company expenses by trillions of dollars, according to the World Bank and McKinsey & Co.

The McKinsey projection is predicated on widespread use of digital IDs, time savings in administrative tasks, a decrease in payroll fraud, an increase in consumer credit, improved trade, and the emergence of new markets.

Suh Bo Ram, director-general of Korea’s digital government office, who is leading the initiative, claimed that “any service that hasn’t been able to fully shift online will now be able to do so.”

Within a decade, he claimed, Korea may gain at least 60 trillion won ($42 billion), or 3% of GDP, in economic value.

The eagerness for early adoption among Koreans may also be helpful. According to the Portulans Institute, a Washington-based think tank, South Korea leads the globe in enthusiasm for and proficiency with the use of technology in daily life, industry, and government.

—

The Tech-Savviest Nation

Koreans are the leaders in using technology in life, business, and government.

For identification purposes, Koreans currently use resident registration cards, which resemble social security cards in the US. The plan calls for an app to incorporate such IDs into mobile devices.

In 2024, Korea will introduce digital IDs, with a goal of having 45 million people use them within two years. The requirement for each person to come to a town office and pay a charge in order to renew their registration card may hinder that goal.

Suh acknowledged the issues but expressed certainty that they won’t be as significant as the advantages. He referred to George Orwell’s 1949 novel when he claimed that the administration government is aware of the “big brother” fears.

As the plan revolves around a complete reliance on the cuttin-edge application of blockchain technology and decentralized identity, the government will not have access to any of the data stored on individual phones, including specifics about who uses their digital IDs, how they are used, or where, he said.

Blockchain is a term used to describe a digital log of data that is constantly updated and is widely recognized as the driving force behind Bitcoin. Since there is no central server storing the data, hackers would need to break into each individual device in order to change the data, decreasing the likelihood of theft.

According to Heather Vescent, head of the IDPro (a US-based association for digital ID experts), “Korea is becoming a silent power leading the future of global innovation.”

The advantages of digital IDs have been acknowledged by other countries as well.

—

Readiness for Digital Transformation

According to its website, Estonia’s government permits phones to be used for verification if a particular SIM card is attached. The majority of the country’s 1.3 million eligible citizens in Estonia have digital IDs that can be used to vote, pay bills, and sign papers. A comparable chip-based program exists in Germany.

Other advantages of digital IDs, in their view, include:
– enabling access to internet tele-medicine services without in-person doctor visits
– Scanning smartphones to enter hotel rooms
– Preventing ID theft and fraud
– Remotely approving contracts without having to physically sign them
– Improved airport boarding procedures (fast-track)