A national banking group in South Korea is to roll out a blockchain-based ID verification system for domestic commercial banks in just weeks.
According to a notice revealed on Monday by the Korea Federation of Banks (KFB), the new system – dubbed BankSign – is scheduled to be launched in July following a testing phase that began in April of this year.
Built on top of Nexledger, a private blockchain platform developed by Samsung’s enterprise solution division, BankSign will offer local banks an option to replace the existing ID verification system that has been in place for decades in South Korea, the KFB said.
I know Samsung Group is a huge company, but I wonder why Samsung Pass is using theloop’s CHAIN ID instead of an authentication solution built on Samsung SDS’ Nexledger. Since a number of firms in Korea have already been using CHAIN ID for authentication, I wonder if we’ll see cross-chain communication between Nexledger and CHAIN ID via ICON.
June 8th, 2018 — ICON and Deloitte Startup Advisory Group (Managing Director, YS Kim) signed an MOU to develop, empower and commercialize blockchain based projects. Collaboration between Deloitte Blockchain Lab, which has developed and commercialized more than 30 blockchain projects, and ICON’s technology is expected to strengthen both companies’ competitiveness in the blockchain industry.
Deloitte is one of the largest professional services companies in the world, specializing in auditing, assurance, taxation, management consulting, advising, corporate finance, and legal services. Together with PwC, EY, and KPMG, Deloitte makes up the “Big Four” – the four largest accounting firms in the world. In 2017, Deloitte led the Big Four in revenue with an estimated earnings figure of $38 billion.
Through this agreement, the Deloitte Startup Advisory Group will provide professional services for the commercialization of blockchain based projects through accounting/financial consulting, tax advisory, risk consulting, investment sourcing and overseas advancement support. In addition, the two companies will continue to search for promising blockchain startups.
So, what can we gather from all this?
Deloitte’s clients are some of the largest companies in the world, and they’re serious about implementing blockchain technology to stay competitive and ahead of the game. They have blockchain labs around the world that are busy implementing private blockchain solutions to make their clients’ businesses more efficient and profitable. Now, they’ve partnered with ICON, an interoperability-focused blockchain. Why? My guess is they’re looking for a standardized way to make meaningful connections between private blockchains, and from a business standpoint, there’s no better solution than theloop’s ICON at the moment.
J.H. Kim, ICON Council Member:
We expect to expand our blockchain network and activities with the collaboration of Deloitte’s global network and partners.
Y.H. Kim, Deloitte SAG Managing Director:
“Collaboration between leading companies in the blockchain business is essential. By working with ICON we look forward to creating best practices for applying blockchain technology in the real world and expand our strength in the blockchain industry.”
These quotes say it all. ICON expects to expand their network by making connections with and between Deloitte’s partners. Deloitte is looking to adopt blockchain technology to stay competitive in the real world by using ICON. This partnership is mutually beneficial.
On May 28th, the Korea Customs Service hosted an MOU ceremony with eight other organizations including Nomad Connection, Matrix2b, CJ Korea Express, and Lotte Global Logistics. The ‘Blockchain based Customs Clearance Platform’ will be utilizing loopchain, the underlying blockchain technology used by ICON and several other companies and consortiums in South Korea.
Last week, Chosun reported that KSC (Korea Customs Service) had partnered with eight Korean organizations to develop and test a blockchain solution to make the ecommerce industry more efficient. The listed companies included Matrix Tobi Co., Ltd., Nomad Connection Co., Ltd., CJ Korea Express Co., Ltd., and Lotte Global Logistics Co., Ltd.
At the time of the MOU ceremony, the blockchain solution to be used was not revealed. Today, we have confirmation from ICON Foundation that theloop’s loopchain has been selected as the underlying blockchain technology.
The goal of KSC’s blockchain solution is to reduce logistics costs, aid in processing low volume ecommerce sales (I assume this means B2C volume), provide efficient and accurate data validation for customs clearing, and reduce smuggling and other illegal activities.
Malltail, Korea’s largest parcel forwarding service, is also a participant in this blockchain development process. While ICON Foundation’s announcement didn’t specifically mention Malltail, it did say “KCS plans to launch a pilot by the end of the year, and apply blockchain technology to all e-commerce import and export services shortly thereafter”. My guess is the mentioned entities will pilot the blockchain solution first. If all goes well, the rest of South Korea’s ecommerce industry will follow suit.
Now, the question is if any of this affects ICON. The answer is yes. First of all, this announcement was made on ICON Foundation’s official blog – not theloop’s company blog. Secondly, this adds yet another industry to ICON’s extensive network of partners. Other blockchain projects are busy trying to secure partnerships with individual companies, meanwhile ICON is silently signing on entire industries in one of the world’s most technologically advanced countries. As a reminder, ICON and theloop currently has its’ hands in the following industries – banking, healthcare, insurance, education, gaming, authentication, and trade. Many of these industries are already using theloop’s blockchain solutions in production environments. In the near future, all these private blockchains are going to have to talk to each other through an interoperable public blockchain.
Which one do you think theloop is going to choose?
In order to fully grasp the potential impact of theloop’s CHAIN ID, one must first understand the current digital authentication landscape in South Korea.
South Korea has always been technologically progressive. In fact, the world’s first smart city is situated 40 miles southwest of the country’s capital, Seoul. Thus, it’s no surprise that South Korea was one of the first countries to encourage Internet banking, shopping, and other services in the late 1990s.
It’s hard to believe now, but shopping and banking on the Internet was a completely new technology in the not so distant past. With this new way of carrying out business, both customers and businesses were wary of fraud. To dispel this fear, the South Korean government implemented a nationwide digital authentication system in the Digital Signature Act of 1999.
Authentication Certificates in South Korea
There are two types of certificates in South Korea – private and accredited.
Private certificates are issued by institutions that are not accredited, or certified, by the South Korean government, and are only valid for specific services. For example, a bank might issue a private certificate to a customer that is only valid for services within the bank. Compared to accredited certificates, private ones are impossible to verify, valid only by mutual agreement by the parties involved, difficult to get compensation for, and are only valid for a limited scope of services. The only advantage of private certificates are that they are often easier to obtain.
Accredited certificates are issued by institutions that are accredited by the government. Currently, the following institutions can issue accredited CAs – KFTC, KOSCOM, KICA, KECA, and KTNet. Accredited certificates, while more difficult to apply for, offer quite a few advantages when compared to private certificates. Accredited certificates are seen as legal binding endorsements, are valid for compensation in the event of damages caused by the certificate, and can be used for a variety of Internet services without the need for multiple certificates. Thus, the accredited certificate is by far the most popular authentication in Korea with over 33 million issued certificates.
How Accredited Certificates are Generated
Accredited certificates are issued by government-accredited institutions through a process of manual verification of a resident’s National ID and other documents. Following verification, a resident’s identifying details are hashed into a public/private key pair along with the issuing authority’s digital signature. This process places burden of proof on the issuing CA.
After the certificate is generated, the resident can use his or her public key for online financial services such as banking and shopping.
The Age of Internet Explorer & ActiveX
In the late 1990s, Internet Explorer was the most popular web browser in the world. Hard to imagine, right? In addition to basic browser capabilities, Internet Explorer also offered a software framework for plugin development called ActiveX. South Korean institutions ended up using ActiveX to develop software which allowed users to upload their certificates to authenticate financial transactions online. Keep in mind there is no industry-standard software. Thus, Koreans are forced to install many ActiveX plugins in order to use their assortment of authentication certificates. This can only be described as a user experience s***show with glaring security holes.
Over the next decade and a half, the rest of the world moved on. The online shopping and mobile device industries experienced unprecedented growth, and the FIDO Alliance was established. In short, FIDO provided a standardized protocol for supporting a full range of authentication technologies including biometric, fingerprint and iris scanners, voice recognition, and more. Korea’s inability to adapt and integrate with FIDO left the country at a disadvantage in the global business and trade sectors.
In May 2014, the South Korean government announced that authentication certificates would no longer be required for financial transactions under ₩300,000 (approximately $280). This was a response both to complaints about a Microsoft-centric culture and also the inability for foreigners to buy goods online because they are unable to apply for accredited certificates. One notable example was Chinese customers not being able to purchase clothes and accessories worn by characters on the famous Korean drama, 별에서 온 그대 (My Love From the Star). While this particular situation may seem a little silly, it’s a great example of how South Korea’s absurdly complicated authentication requirements effectively put a bottleneck on the country’s economy.
An official statement from South Korea’s Financial Supervisory Service read, “the revision is expected to improve the complicated security system and diversify payment methods by giving more freedom to financial firms to decide on their own security.” As a result of this new regulation, new services would eventually find their way into Korea’s complicated authentication landscape, but accredited certificates are still issued and used to this day.
CHAIN ID is already being used by some of South Korea’s largest banks and securities companies.
CHAIN ID is being implemented in Samsung Pass. Samsung has over 57% market share in South Korea’s mobile smartphone market.
ICON revealed there will only be one kind of certificate in the future.
After a little reading between the lines and a tiny amount of educated speculation, I have come to the conclusion that the majority of digital authentication in South Korea will happen on the CHAIN ID platform in the near future. This blockchain solution is being aggressively adopted by the country’s biggest financial and technology firms. If there’s really only going to be one certificate in the future, it’s obvious they will be issued by the first mover in the space – theloop’s CHAIN ID.
What is CHAIN ID?
Now that we’ve established that CHAIN ID will probably take over South Korea similar to how Thanos took over the universe in the most recent Avengers movie, let’s talk a little about what CHAIN ID is exactly and how it may or may not affect ICON in the future.
A Smart & Distributed Network
South Korea’s current authentication system relies on a centralized network of government-approved entities who are allowed to issue accredited certificates. This system works because a certificate’s trust value is backed by the accreditation and approval of the government. CHAIN ID, on the other hand, provides trust via a decentralized or distributed network.
CHAIN ID leverages several aspects of a distributed network to provide a secure, scalable, and smart authentication platform. The decentralized nature of the platform makes it less prone to major hacks because data monopolization is not an issue. Secondly, decentralized networks are easier to scale than their centralized counterparts. Lastly, CHAIN ID runs on a system of smart contracts and extended feature sets can be easily implemented in the system. This means complex DApp ecosystems can easily integrate CHAIN ID for authentication services.
On the CHAIN ID platform, joint authentication certificates are issued through consensus of all the nodes on the network. These certificates are called “joint certificates” because they are generated through “joint consensus” of the network participants. As a result, these joint certificates are valid for all services offered by CHAIN ID nodes. Smart contracts ensure the network’s rules are being obeyed, keeping data secure and up to date.
The Future of CHAIN ID
On a philosophical level, the concept of identity is integral to the human condition. Proving our identity is part of our everyday lives, and this aspect of modern society moving over to the blockchain is absolutely fascinating. On a technical level, CHAIN ID is just a DApp running on theloop’s blockchain engine, but I believe it has the potential to have a profound impact on South Korea’s culture and economy. With so many major companies and institutions adopting CHAIN ID, it’s only a matter of time before we see more complex ecosystems governed by smart contracts with CHAIN ID acting as an authentication layer between the real world and digital world. Keep in mind that these DApp ecosystems will require an interoperable protocol to communicate with each other.
ICON and LINE PLUS, a global social platform with over 200 million monthly average users (MAU) worldwide, has co-founded ‘Unchain’ to build LINE’s blockchain network. Unchain aims to develop various DApp services while building synergies with ICON to expand the blockchain ecosystem.
Until now, every partnership announcement from ICON has only involved theloop (ICON’s parent company) building private purpose-specific blockchains for various institutions. While we have good reason to believe that private solutions developed by theloop will eventually use ICON’s blockchain for interoperability if needed, this is merely speculation. Thus, today’s joint venture announcement with LINE is groundbreaking. It’s the first time a large corporation has committed to using the actual ICON blockchain, and not just a private solution developed by theloop.
H.K. Lee, technical director at ICON, has been appointed as CEO of Unchain. H.K. Lee currently develops and reviews DApp teams looking to collaborate with ICON. He has garnered deep knowledge and experience of both blockchain technology and artificial intelligence through his work.
This joint venture is much more than a typical partnership. The appointment of H.K. Lee as CEO of Unchain confirms there will be a high level of collaboration between ICON and LINE.
Unchain will create a blockchain ecosystem fueled by a token economy, where the users are rewarded for their contributions to the network. DApp services discovered through ICON and Unblock, a subsidiary of LINE dedicated to blockchain research and to accelerate DApp projects, will be integrated with Unchain. This joint venture takes blockchain and decentralization another step closer to being a part of our everyday lives.
To clarify, ICON is an interoperability-focused blockchain platform that allows for DApp development. Unblock is LINE’s blockchain research subsidiary. ICON and Unblock will both brainstorm DApp projects that could be beneficial to LINE’s social ecosystem. The integration development will be done by Unchain, which is headed by ICON’s technical director.
What is LINE?
LINE is one of the world’s most popular social apps, especially in the Asian market. LINE is operated by LINE Corporation, a Japanese subsidiary of South Korea’s Internet giant, Naver. Think of Naver as Korea’s Google.
In addition to messaging, LINE also offers several social services to its users – LINE Pay, LINE Taxi, LINE Delima, LINE Points, and more.
Think of LINE Pay as Apple Pay, Venmo, and Splitwise combined into one app. It allows users to pay merchants, send money to each other, and split bills. For users who prefer physical payment cards, LINE also offers a LINE Pay Card via Japanese credit card company JCB. The card is linked to users’ LINE account, and offers rewards in the form of LINE Points.
Earlier this year, Bloomberg reported that LINE Corporation is “working to integrate cryptocurrencies into its messaging platform”. Now that we know LINE has committed to using ICON’s blockchain, we can speculate that ICX and its upcoming DEX platform may be used for liquidity between fiat (JPY, KRW, etc.) and LINE’s yet-to-be-announced crypto token.
I personally think LINEcoin (LNX) sounds cool.
LINE Points is the platform’s “reward and incentive token”, and can be earned by completing tasks on the LINE ecosystem. LINE Points can be redeemed by participating in LINE events or using the LINE Pay Card. LINE points can be converted to Lawson (a Japanese convenience store) Ponta points, Seven Eleven Nanaco points, Amazon gift cards, and more.
In it’s current form, LINE Points already offers an incentive-based reward system to users who participate on the network. I wouldn’t be surprised to see LINE Points rebranded as “LINEcoin” in the future, with the purpose of functioning as a platform token for LINE’s upcoming blockchain ecosystem.
LINE Taxi is a service that allows users to call taxis in over 90 cities in Japan. Bloomberg reported that Uber has less 1% of market share in Tokyo, Japan, which happens to be the world’s largest cab market. Part of Uber’s difficulty in the Japanese market is due to local taxi operators like Nihon Kotsu Co. (Tokyo’s largest cab company) releasing their own apps.
Interestingly enough, LINE Corporation has a confirmed partnership with Nihon Kotsu Co. giving users “access to approximately 3,340 cabs throughout the Tokyo area for the initial release”. LINE is planning to “increase cab availability by capitalizing on the nearly 23,000 taxis owned by Nihon Kotsu’s network of 129 partners as it expands to attain the industry’s largest taxi pool” in the future. With over 50 million LINE users in Japan, it’s no wonder why the nation’s largest taxi company has chosen to partner with LINE instead of an overseas solution with minimal Japanese adoption like Uber.
It’s important to know the LINE Pay is the only payment method accepted on LINE Taxi. If we do see a LINEcoin in the future, it could be used as both a payment method for LINE Taxi and also as a reward incentive for users to use LINE Taxi to call taxis. On many blockchain platforms, rewards are correlated with a user’s activity on the platform. Thus, it’s possible that a theoretical LINE Taxi DApp incentive system could be tied to the user’s contributions to other DApps on the network. Secondly, Japan’s taxi industry is worth approximately $15 billion, and LINE Taxi’s respective transaction volume could theoretically be leveraged as a liquidity source for LINE’s crypto token on its parent blockchain – probably ICX on ICON.
For example, an advertiser like Coca Cola can instruct a user to download its official app, add Coca Cola as a friend on LINE, watch a video about a new drink, and then complete some sort of scavenger hunt in the physical world, in exchange for LINE Points.
There are quite a few blockchain projects in the advertising include AdEx, Basic Attention Token, and most recently Blue Whale on the ICON platform. This section of Blue Whale’s white paper recently caught my attention.
Big Data & Machine Learning Solution. The decentralized network, based on the same SaaS architecture as the Blue Whale’s Booking Software, is the optimal solution for collecting data. Data collected in this manner will be saved to the database in real time.
Blue Whale Big Data & ML Architecture
The saved user data will be tagged according the type of goods/services purchased through the Booking Software. The tagged and categorized data will then be used to train the Machine Learning algorithm for two different uses.
Using visitors’ data to aggregate and create a predictive list of potential future purchases.
Analyze target visitor’s purchase data to find lookalike visitors.
I think LINE could also implement some sort of machine learning into its own advertising tools. By leveraging user data stored on the blockchain, this advertising platform could take into a user’s activities on other LINE services to create extremely targeted advertising funnels and flows that appeal to the user’s interests and lifestyle. On the advertiser side, data generated from analysis of user behavior could be used to optimize ad spend.
LINE in Popular Culture
Lastly, I want to mention LINE’s brand image. The ecosystem has a number of recurring characters called LINE Friends, whom have manifested themselves into global business opportunities in the physical world – stores, cafes, media content, character goods, character licensing, and more.
LINE Stickers like these can be purchased in the LINE app.
In a blockchain environment, this model can be thought of as “asset tokenization”, and is similar to what Cryptokitties has managed to achieve. Imagine a blockchain-based marketplace that allows P2P exchange of tokenized stickers of varying degrees of rarity. Stickers could be exchanged for LINEcoin or other assets in the LINE ecosystem (perhaps a ticket to a sold-out LINE event), and the value of all these digital assets (denominated in LINEcoin) could be determined by live market dynamics calculated by user data recorded on the blockchain. I think this model could actually be fairly successful in the Japanese market where people love the concept of seasonality and “limited edition things”.
No matter how you look at it, this joint venture between ICON and LINE is groundbreaking. As far as I know, it’s the only partnership between an Internet giant and a blockchain platform that has been publicly disclosed.
Over the next few years, I expect to see a few of LINE’s current services transition into DApps on the ICON platform governed by AI-enabled smart contracts (DaVinci, Korea’s leading artificial intelligence and machine learning platform is made by the same people who created ICON) with “LINEcoin” acting as fuel for the network, a user-incentive token, and a liquidity source for ICON’s DEX.
Update (May 17, 2018) – In an interview with Joseph Young from CCN, the ICON team stated that “the joint venture between ICON and LINE could lead to hundreds of millions of users of LINE potentially utilizing the ICON blockchain on a daily basis to access dApps.”