Samsung is one of the best-positioned companies to help the Korean central bank effectively implement the digital won. Samsung’s status as a dominant player in multiple industries within Korea lends itself well to digital won implementation, especially considering the two-tier implementation structure that the Bank of Korea (BOK) seeks to implement. Samsung was not part of the initial bidding process for piloting digital won, but Samsung was able to secure a spot in testing by usage through its Galaxy smartphones. Therefore, Samsung subsidiaries like Samsung SDS, 5G, and its IoT ecosystems can help the BOK effectively implement the digital won.
Hugh writes about cyberspace, digital currencies, economics, foreign affairs, and technology.
The current rush to create and test CBDCs has become a trending phenomenon with increasing momentum throughout the globe. Some countries like China have internally developed their entire distributed ledger platforms, while others have relied on startups and niche businesses to pilot test their CBDCs. Samsung’s status as a dominant player in multiple industries within Korea lends itself well to digital won implementation, especially considering the two-tier implementation structure that the Bank of Korea (BOK) seeks to implement.
In America, Samsung is predominately thought of as simply a consumer electronics brand, with its mobile devices, appliances, and accessories being the most recognizable consumer-facing products. However, in Korea, Samsung’s dominance in multiple industry verticals has allowed it to single-handedly comprise nearly 20% of Korea’s total GDP. Therefore, while Samsung is certainly one of the world’s leading electronics manufacturers, its status as a premier market force in industries like textiles, insurance, shipbuilding, and real estate make it an extremely powerful organization within Korea and beyond for CBDC implementation. With this in mind, Samsung is one of the best-positioned companies to help the Korean central bank effectively implement the digital won.
Developing the digital won
In May 2021, the Bank of Korea released a request for bids to become the
technology provider for CBDC trials, sharing several key details for the testing of a future digital won. Utilizing a two-tier distribution structure to issue currencies to financial institutions for further dissemination to the public, the BOK also distinguished between two phases in its CBDC proposal. In this document, the BOK highlighted the first phase of testing basic use-cases like smartphone apps and bank deposit exchanges. A second phase would follow the successful completion of the first phase, with this second phase testing more technical details like cross-border remittance and regulatory compliance.
In early July 2021, the Bank of Korea confirmed that it had narrowed its potential providers to Naver’s Line Plus, Kakao-subsidiary Ground X, and conglomerate SK Corporation, with the eventual selection of Ground X as the primary tester for CBDC blockchain simulations in late July 2021. While Samsung was not part of the initial bidding process for piloting the digital won, Samsung was able to secure a spot in testing the digital won by usage through its Galaxy smartphones.
Samsung’s multiple industries in CBDC implementation
Some detractors might point to Samsung’s status as a regional monopoly as a reason to not utilize it for CBDC testing or implementation at any level. However, it is in Samsung’s best interests to help the BOK in its implementation of a digital won. Recent public-private partnerships to develop CBDCs are increasingly commonplace, as evidenced by Bitt’s Dcash solution for the Eastern Caribbean Central Bank and Ripple’s CBDC pilot with Bhutan.
Samsung is in a unique position to leverage the digital won for development as a public social good and to help streamline business processes. After all, Samsung could easily become a significant distributor of the Korean CBDC in addition to being one of the largest customers of the digital won through its various businesses and subsidiaries. Keeping this in mind, three specific subsidiaries that could help effectively implement the digital won are Samsung SDS, 5G, and Samsung’s Internet-of-Things (IoT) ecosystems.
Samsung SDS, formerly Samsung Data Systems, is a major provider of information technology (IT) services and research within Korea and beyond. In this respect, this subsidiary of Samsung can help the BOK for critical blockchain use-cases for the digital won. In November 2019, Samsung unveiled zero-knowledge proofs to enhance security for its
internally-developed Nexledger platform, with Nexledger being used by an
18-bank blockchain consortium in Korea. In September 2020, Samsung SDS developed a blockchain solution for pharmaceuticals for supply chain traceability. Samsung SDS could utilize Nexledger to provide smart contract solutions for businesses and consumers utilizing the digital won,
enabling seamless payment systems along the blockchain. Samsung SDS’ noted leadership within the blockchain space make it a perfect solution to help the BOK in digital won implementation.
Samsung’s emphasis on 5G development is another supporting factor for effective growth of potential digital won usage. The paralleled growth of 5G and blockchain as separate systems has created immediate use-cases that must have improved data security, mobility, and secured automation. For example, Samsung has recently played an integral role in establishing advanced Korean and American emergency infrastructure communications services. Integrating a secure payments system with digital won integration to resolve transactions between businesses, consumers, and emergency first responders could ensure the immediate distribution of funds in any type of emergency scenario. Therefore, Samsung’s 5G backbone could provide a communications mechanism in conjunction with digital won implementation within Korea and beyond.
Samsung’s IoT solutions also have significant implications for digital won
implementation. In terms of smart devices, Samsung has been a clear leader within the blockchain space. In November 2019, Samsung introduced a KlatynPhone version in the form of its Note10 and Note10+ devices, the blockchain platform that Ground X is using for BOK digital won trials. Additionally, in July 2020, Samsung announced a partnership with the Stellar Lumens Foundation, introducing the XLM blockchain within the Samsung Blockchain Keystore. May 2021 even saw the integration of Ledger hardware devices within the Samsung Galaxy Blockchain Wallet, demonstrating Samsung’s constant development of IoT devices catered to blockchain and CBDC usage.
Samsung’s IoT solutions also extend to critical business-to-business (B2B) applications, to include digital signatures and automation solutions, in addition to Samsung’s consumer-facing SmartThings platform. However, on the B2B side, Samsung could integrate its IoT devices effectively with the digital won, utilizing digital signatures from its Galaxy smartphones to facilitate transactions utilizing the digital won. Further implementation of the digital won might come in the form of smart contracts, with the digital won funds being released within a supply chain scenario after specific manufacturing requirements are met.
The Bank of Korea is currently testing digital won pilots, with its eyes on CBDC implementation within the immediate time horizon. While cooperation with large industry leaders like Naver and Kakao can help implement the digital won in the short and long-term, Samsung is better positioned as an enterprise to help solve many of problems that may arise from digital won usage. From blockchain-based solutions, to 5G implementation speeds, to IoT devices for B2B use-cases, Samsung can help spur CBDC growth and adoption within Korea and throughout the world.
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