The move to digitize the won could be well suited for South Korea as 86 percent of all transactions conducted in the country are cashless.
Bidding for an operator to oversee a blockchain-based CBDC pilot program in South Korea has ended. The program is slated to begin next month. Bidding commenced in May and ended on Monday, July 12. Prior to this, the Bank of Korea (BoK) had released a book on Central Bank issued Digital Currencies along with an announcement that it was planning to look into the feasibility of a digital won. The digital won pilot program is expected to test the use of digital currency in various scenarios.
Korean news agency Yonhap reported that the BoK had announced preliminary bid results. Social media network Kakao’s blockchain subsidiary Ground X, Line Plus – which is jointly owned by SoftBank and Naver and conglomerate SK Group are reportedly the top three contenders.
The Bank of Korea is expected to choose a CBDC operator by next month. The ten-month winning bidder will run a simulation program for a contract period of ten months. A 4.96 billion won ($4.3M) budget has been set aside for the pilot project.
The goal of the project is to test the digital won on a blockchain-based virtual simulation environment. Among the use cases expected to be tested in the program are CBDC issuance, redemption, electronic payments and settlement, and purchases of digital artworks and copyrights.
Line Plus on July 9 had announced the creation of a blockchain platform dedicated to the issuance and maintenance of a digital currency. The source code is open source and based on the company’s blockchain tech.
The first phase of the program is expected to run from August to December. Its main focus will be the creation, issuance and redemption of the digital won. Private keys and wallet functionality will also be looked into in this phase. The second phase will begin in early 2022. it will delve into more advanced features like cross-border payments, offline payment, and possible integration with digital asset systems. Programmable money and privacy-enhancing tech are expected to be involved in this phase.
South Korea joins other economies looking into the issuance of CBDCs to ease payments and curb the use of volatile cryptocurrencies. Countries currently testing CBDCs include Japan, France, Turkey, Sweden, Switzerland, The Bahamas and The Philippines.
The move to digitize the won could be well suited for South Korea as data by Coin Insider shows that 86 percent of all transactions conducted in the country are cashless.