South Korea to boost economy with blockchain-secured Digital ID

Tuesday 18 October 2022 13:17 CET | News

South Korea has announced plans to offer citizens with a smartphone blockchain-secured digital identity in a wish to boost economic growth.


As more people work from home, make cashless payments, and explore the metaverse, smartphone-implanted IDs represent one of the latest technologies that underpin a digital economy under expansion. 

Suh Bo Ram, director-general of Korea’s digital-government bureau leading the Digital ID plan has stated that the services who have not yet been able to have a full transition into the online space will now be able to do so; in addition, he believes Korea will have an approximate USD 42 billion, or 3% of GDP economic value increase within a decade. 

Digital IDs are believed to be a ‘game-changer’, as per information provided by the World Bank, with McKinsey & Co. estimating that they have a potential of increasing a country’s gross domestic output by up to 13%, with business costs being cut by trillions of dollars. This estimate is based on digital IDs’ wide take-up, saving time in administrative work, reducing payroll fraud, expanding consumer credit, and facilitating trade, amongst others.

Digital IDs in Korea – what they change and how they work

When it comes to the application of technology in everyday life, businesses and government, Koreans rank number 1 in the world.

To identify themselves, Koreans are currently relying on resident registration cards, with the proposal aiming to embed those IDs with an app into mobile devices. Korea is set to launch digital IDs in 2024, looking to have them adopted by 45 million citizens within two years, ambitions which might be affected by the individuals’ need to travel to a town office and pay a fee to have their registration card renewed. 

Suh has also addressed the fact that the government is aware of surveillance-related concerns and confirmed that under the plan, the government will not be able to access information stored on individual phones, including whose digital IDs are used, the way in which they are used, or their location. This will be ensured by the fact that the system will rely completely on decentralized identity, a blockchain technology strand. Blockchain refers to a digital log of data that is verified by devices on the network whenever it is updated. For hackers to be able to manipulate data, they would have to break into each individual device; having no central server storing information, the technology reduces the chances of theft.

Digital IDs’ benefits vary depending on the economy’s maturity; Hwang Seogwon, an economist at Korea’s Science and Technology Policy Institute has stated for Bloomberg that digital IDs are believed to bring increased economic benefits in finance, healthcare, taxes, transportation, amongst other areas, and are also thought to be quickly adopted by the Korean population. However, he has stated that more technological risk assessment needs to be done to ensure the benefits are not outweighed by the risks of the technology. 

South Korea has announced plans to offer citizens with a smartphone blockchain-secured digital identity in a wish to boost economic growth.

Digital IDs benefits and readiness in the global space

Digital IDs simplify web verification, removing the need for photographing certificates or logging-in via authentication codes sent by text, while simultaneously allowing for activities such as state benefits applications, money transfers, or even vote casting to be a fingerprint or pin away. 

Some other benefits of digital IDs, as per the technology’s advocates, include:

  • Online medical services facilitation, without the need for an in-person doctor’s visit

  • Hotel room access by scanning smartphones over kiosks

  • ID forgery and theft prevention

  • Remote contract approval without the need for a signature

  • Enhanced fast-track boarding processes at airports

The benefits of digital IDs have been recognised by other governments as well.

The Estonian government allows phones to be used as a verification method if they have a special SIM card attached, as a large majority of its eligible 1.3 million people have a digital ID to vote, pay bills and sign documents. Similar to Estonia, Germany has a chip-based programme.

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Keywords: digital identity, online authentication, fraud prevention, identity verification, online security, blockchain
Categories: Fraud & Financial Crime
Countries: Korea, Republic of
This article is part of category

Fraud & Financial Crime