A South Korean province has recently announced its intention to replace local currency with cryptocurrency. The cryptocurrency would be issued by the State; although there are some obvious obstacles that need to be overcome to reach its goal, the planning process has been set in motion.
The province, Geyongbuk, is located on the eastern coast of South Korea and currently has a system that includes gift certificates issued by several cities within the province. Originally, the gift certificates were a mechanism devised in an attempt to bolster the local economy.
They can currently be used to purchase goods or services only at select locations. Nine cities within the province of Geyongbuk currently issue the certificates. One such city is Pohang. Kyongbuk, a daily newspaper for the province, reported that as of January 2017, there had been just under $100 million in certificate sales in the city of Pohang alone.
South Korea’s Relationship with Cryptocurrency
According to CoinTelegraph, South Korea exchanges were responsible for 14% of Bitcoin trades in the month of July across the globe. There had been rumors of exchange bans earlier this year in South Korea. However, since the legalization of Bitcoin as a remittance payment in June, it appears the crypto industry has experienced significant growth. Another apparent previous setback to the industry occurred earlier this year, in June, when the Bithumb exchange was hacked. Despite the set-back months ago, it seems that at this point in time, the cryptocurrency industry, as it relates to South Korea, is stable.
How Will the System Look
Current plans for the local cryptocurrency system include an exchange. This exchange would provide a “venue” for the purchase and sale of the currency. The currency would be accepted at participating businesses and merchants would accept payment using QR codes. A benchmarking team, consisting of ten members, has been created and that team recently traveled to Zug, Switzerland, the home of several high-profile crypto firms, to explore the systems currently used by both the public and private sectors. Zug is known to be particularly crypto-friendly.
One of the ten members of the benchmarking team who was involved in travel to Zug stated,
I think we can utilize the experience gained through benchmarking by making identity cards for 5,000 Gyeongbuk provincial government employees like Zug as block-chain based digital ID cards.
In order to get the system up and running, significant education, particularly relating to businesses and merchants, would need to occur. Another obstacle to the actual implementation of the system is that the provincial government would need to issue the coins initially. These issues were outlined by Chung Sung-Hyun, head of Geyongbuk’s Science and Technology Department.