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.
Grid by Deloitte is an initiative by Deloitte that offers its clients “financial services capabilities, at the intersection of technology, customer, and innovation.” In addition to insurance and investment management products, the service also provides access to unique and potentially disruptive banking strategies. Deloitte’s website states that clients can “work with our development teams (both in-person and virtually) to build working prototypes and market-ready technology solutions that use the latest in financial services innovations such as blockchain, robotics & cognitive, digital banking and internet of things.”
Last year, in an effort to extend the services offered by Grid, Deloitte started two blockchain labs – one in Ireland and the other in New York City. There are plans to add more labs around the world over time. The NYC-based team of over 20 developers and designers will “focus on developing strategic blockchain capabilities and proofs of concept into functioning prototypes to create “ready-to-integrate” solutions for financial services clients.” Furthermore, Deloitte states, “the lab will work alongside specialist teams from other countries and with Deloitte’s network of more than a dozen preferred technology companies.” I presume ICON is one of those “specialist teams from other countries”, and ICON specializes in interoperability.
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, ??? ? ?? (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.
theloop, CHAIN ID, and ICON
Last October, theloop revealed that its blockchain-based authentication solution, CHAIN ID, was already being piloted by 25 banks and securities companies in the Korea Financial Investment Blockchain Consortium. Half a year later, theloop announced that CHAIN ID would be used by Samsung (one of Korea’s largest companies) in their biometric authentication technology, Samsung Pass. Recently, ICON Foundation wrote, “in the future it is expected that there will no longer be classifications of certified/private certifications, and all certificates will have the same authenticity.”
Connect the dots.
- 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.
That’s where ICON comes in.
On May 11th Korea Financial Investment Association (KOFIA), which theloop is participating as a technical partner to develop CHAIN ID, has signed an MOU with Samsung Electronics to incorporate CHAIN ID in Samsung’s ‘Samsung Pass’ service.
Samsung Pass is an “identity management as-a-service” that enables secure access through biometric authentication. For Apple users, Samsung Pass is essentially Samsung’s version of Touch ID & Face ID. Samsung phones account for over 50% market share in the South Korea mobile phone market, so this partnership with Samsung is quite significant.
In February, Samsung announced a partnership with HYPR, another decentralized authentication solution. From HYPR’s website, it’s obvious that this technology is a game changer—use cases include online banking, retail, insurance, employee access, VPN access, ATMs, cars, homes, and more.
After today’s announcement, I think Samsung is currently working with several decentralized authentication solutions targeted towards different purposes. For example, theloop has consistently mentioned CHAIN ID being used in the securities and banking industries. On the other hand, HYPR’s vision includes use cases like employee access and IoT security. From a business standpoint, working with multiple solutions is a good idea for Samsung in case one of the companies fail.
CHAIN ID is the world’s first blockchain based joint authentication system developed using theloop’s blockchain engine ‘loopchain’, and is being used by 11 securities companies in Korea.
ICON has already told us that CHAIN ID is being used by securities companies in Korea. On May 9, 2018, Korea’s Money Today revealed Korean banks will start using an unspecified blockchain identification service later this year. Interestingly enough, KEB Hana Bank and Woori Bank have reported they are currently preparing to support the Samsung Galaxy S7’s iris scanning feature, which is a module of Samsung Pass. Secondly, Yonhap News Agency also reports Shinhan Bank is also considering implementing this technology for their customers.
It’s worth noting KEB Hana Bank and Shinhan Bank both appear on theloop’s list of official partners, while Woori Bank announced a partnership with theloop and its parent company DAYLI Intelligence to cooperate in the blockchain and digital money business.
Connecting the dots, we can presume theloop’s CHAIN ID will see real world consumer use as a result of Samsung Pass integration very soon. While I’m not sure if any of this directly affects the ICON platform, it’s plausible that various CHAIN ID implementations in different industries will need to talk with each other at some point. Perhaps that interoperability can be provided by the ICON blockchain in the near future.
We believe that this MOU with a leading global conglomerate is a big step towards both real-world adoption and globalization of blockchain technology.
In order to understand the real impact of this partnership announcement, one must read in between the lines. By securing a partnership with a large conglomerate like Samsung, theloop and ICON have positioned themselves as the premier enterprise blockchain in Korea. Investors FOMO into ICX just like how other corporations interested in implementing blockchain technology will FOMO onto the ICON network in the not so distant future. This is the birth of ICON’s network effect—the true value of a blockchain.
Unsurprisingly, ICX/BTC rose only ~4% following the announcement of this incredible partnership. I generally try to stay away from discussing price action, but does anyone else think there’s some serious market suppression going on with ICX? It reminds me of XRP’s sideways action before a monstrous rise to $3. Just something to consider…