South Korea has been making major progress in terms of development around blockchain technology. The nation has been focusing a lot of its attention towards the implementation for blockchain-based solutions, which according to the regulators, is a “golden opportunity” for the nation.
The use of blockchain technology and cryptocurrencies has moved far beyond just private industries, and it is disrupting the public sector as well. The market for Central Bank Digital Currencies (CBDCs) is heated up at the moment with most of the banks around the world either piloting a CBDC project or researching its use cases.
South Korea has also been researching CBDCs. The first hints about Bank of Korea, the nation’s central bank working on digital currencies, came back December 2019 when it announced that it was hiring experts to study CBDCs and analyze the digital currency initiatives of other nations. Last month, the nation made the headlines as it legalized cryptocurrencies.
A new report throws light on Global CBDC development
Recently, the South Korean central bank published a report dubbed “Overseas CBDC Progress Report” that studied how various central banks across the world are working with digital currencies. The report revealed that the popularity of CBDCs has grown substantially.
The report studied the CBDC projects from 14 different central banks across the globe; it came to the conclusion that the declining use of fiat currency and the increasing demand for distributed ledger technology (DLT) based solutions in payment settlement processes are some of the major factors that are boosting CBDC development.
“Most countries are investigating whether new future-oriented technologies can be applied beyond the centralized ledger management and account-based transactions that are currently applied to payment and settlement systems,” the report noted.
The report further noted that CBDCs have also being developed in two different types. Central banks in France, Hong Kong, Thailand, Canada, Switzerland, and Singapore are keen on implementing CBDCs for handling larger sums of money.
However, Norway, Sweden, China, and the U.K are more inclined towards micro-payments as the primary use for a state-backed cryptocurrency. China and Sweden have already completed their proof-of-concept and are piloting their CBDCs in the real-world.
South Korea continues CBDC development
Bank of Korea is also following China’s footsteps as it has also revealed its interest in focusing on micropayments as the primary point of interest in using CBDCs. Furthermore, the nation is also keen on leveraging DLT platforms such as Coda and Hyperledger Fabric as the base for their CBDCs rather than blockchain technology.
As previously reported by The Daily Chain, a survey had revealed that the majority of central banks prefer DLT, a broader category of network architectures that includes blockchain, as the platform upon which they’d develop their CBDC if they plan on issuing one.
Last month, Bank of Korea announced the launch of a 22-month pilot program designed to identify the technological and legal challenges involved to create and deploy a state-backed cryptocurrency. Technical challenges include the design of the cryptocurrency, the method with which it would operate, and the feasibility of blockchain technology in this area.