(Kitco News) - South Korea is in the process of developing a system that would allow its citizens to use blockchain-based digital identification instead of traditional physical cards beginning as soon as 2024.
To accomplish this, the government has developed a plan that will see digital IDs embedded into citizens' smartphones via an identification app that will work in a similar manner as physical resident registration cards, Bloomberg reported Sunday.
The new digital IDs are expected to launch in 2024, and the government plans to have up to 45 million citizens registered with the new technology within two years.
Hwang Seogwon, an economist at Korea’s Science and Technology Policy Institute, touted the benefits offered by the new digital ID program while also warning that there needs to be a comprehensive risk assessment completed to ensure that the risks don't overshadow the rewards of such a system.
“Digitals IDs can yield huge economic benefits in finance, healthcare, taxes, transportation and other areas and may catch on quickly among the Korean population,” Seogwon said. “But there has to be more risk assessment technologically to make sure the danger doesn’t outweigh the benefits.”
The new program will be beneficial for businesses that haven’t fully completed the transition online, according to Suh Bo Ram, director-general of Korea’s Digital Government Bureau, who said that “Every service that hasn’t been able to fully transition online will now be able to do so.”
This could lead to a 60 trillion won ($42 billion) increase in economic value for the country, or 3% of its GDP, over the next decade, according to Ram.
Management consulting firm McKinsey & Co. suggested that a digital ID system has the potential to increase South Korea’s domestic output by up to 13% and cut business costs by trillions of dollars.
This would be achieved thanks to a reduction in payroll fraud, time saved on administrative work, an expansion of consumer credit, increased trade and the creation of new markets.
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While the citizens of some countries have shown more reticence towards digital IDs, South Koreans are expected to welcome the new technology with open arms. According to the Washington-based think tank the Portulans Institute, Koreans rank No. 1 in the world in enthusiasm and the ability to apply technology in everyday life, businesses and government.
In August 2020, the country implemented a blockchain-based driver's license pilot program that saw over one million Koreans ditch physical licenses for digital ones, and in September of that year, the Korea Internet & Security Agency (KISA) began pilot testing on a similar system.
This is a trend that is predicted to see increased adoption on a global scale moving forward, according to the market research firm ReportLinker. Its June 2021 study estimated that the blockchain identity market will grow a further $3.58 billion by 2025 – representing a compound annual growth rate of 71%.
