Note: Below is an article attempting to put together some of the pieces as it relates to today’s news that several Korean companies are working together on a blockchain service. Much of the information has documentation supporting it, but this also includes speculation — please keep that in mind as you reach your own conclusions.
Followers of ICON have almost certainly heard the news by now, that a consortium of seven major Korean companies have agreed to develop a blockchain network focused on decentralized identification (DID):
“Tech giant Samsung Electronics is joining six other major South Korean firms to develop a blockchain-based certificate and ID authentication network.
Announced on Sunday and reported by CoinDesk Korea, the other founding firms include mobile carriers SK Telecom, LG Yuplus and KT, two banks — KEB Han and Wooriand — and government-founded securities infrastructure provider Koscom.
The service will provide a “self-sovereign” authentication solution that does away with middlemen services and allows users to verify their identity or qualifications over a blockchain, keeping more control of their own personal information. Individuals can store their data on a smart device and submit only the data they choose when certification is required.”
To begin unpacking today’s new development, we need to go back all the way to 2016. In November that year, the following news broke:
“South Korea said Thursday it will launch a government-civilian consortium on “blockchain” within this year for joint research and pilot projects.
The Financial Services Commission (FSC) presented a roadmap for the project in a meeting of the blockchain council, joined by representatives from the financial industry.
South Korea’s 16 major banks are scheduled to set up a joint task force next Wednesday, followed by the participation of more than 20 brokerage firms here on Dec. 7, according to the FSC.”
The following month, more information came out:
“On December 7, 21 financial institutions and five blockchain companies signed a memorandum of understanding to develop collaborative projects and share all the expertise available with blockchain technology in the framework of the creation of South Korea’s first distributed ledger consortium.
The consortium led by the Korea Financial Investment Association (KOFIA) is part of an initiative of the South Korea Financial Services Commission (FSC), a state agency that is committed to block innovation through the creation of a laboratory of ideas where members can investigate the use cases of the blockchain directed by the information technology committee of KOFIA. KOFIA is a non-profit organization that since 2009 has been dedicated to self-regulation, market management and the improvement of the investment culture.”
At this point, we have the Financial Services Commission — a government run agency — encouraging the development of blockchain technology, with the Korea Financial Investment Association — a non-profit whose members span nearly the entire Korean financial industry.
The following year, KOFIA announced that:
“Korea Financial Investment Association, KOFIA, introduced the world’s first blockchain- based joint authentication service for the financial industry dubbed “Chain ID” on October 31, 2017.
The consortium is hoping to widen the adoption of the Chain ID across the entire financial investment industry within this year, and introduce it to other financial industries such as banking, insurance and credit card next year.”
Several months later, ICON announced the following:
“Answering to the needs of a new method of personal authentication, theloop has joined the Korea Financial Investment Blockchain Consortium as a technical partner to develop CHAIN ID.”
This was the first declaration that ICONLOOP — the private chain partner of ICON — was the entity charged with implementing the breakthrough authentication technology for KOFIA and it’s participating members.
If you’re unaware of just what ChainID does — or just as a reminder — here is a quote from the ICON announcement:
“While the issues of trust and universality can be solved via blockchain technology, the issue of data integrity still exists. Simply applying blockchain technology can’t ensure that the data in the system is secure, complete, consistent, and without human error.
To solve the problem of data integrity, smart contracts based on theloop’s proprietary blockchain engine, loopchain, were used to create CHAIN ID. Smart contracts are self-executing contracts with the terms of an agreement written directly into lines of code. Smart contracts ensure the implementation of the network rules, making the data secure and complete, while also lowering the risk of fraud or malicious alterations.
CHAIN ID issues a joint certificate through the consensus of the nodes (participants) in the network. The joint certificate is already authenticated through the consensus of the nodes and can be used freely throughout the network without any additional authentication. The smart contracts will guarantee the integrity of the data, ensuring that the certificate is trustworthy and without the risk of being altered.
The information and status of the certificate is shared among the nodes in real-time so that all the participants will have the same information. By all the nodes having the same data, CHAIN ID can prevent single points of failure, such as hacking attempts that may happen in centralized network environments.”
As you’re likely aware by now, in May 2018, it was ICON let it be known that KOFIA had signed an MOU with Samsung to utilize ChainID:
“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.”
Here is a bit more detail:
“After the government announced in March to enact a revised electronics signature law, including the abolition of authorization certificate, a discussion about setting up a platform that can replace the electronic signature for financial transactions has been in progress. With the latest MOU, Samsung Pass users can authenticate their identity through smartphones using biometrics, such as fingerprint and iris, without installing a separate certificate system. The investment banking (IB) industry expects that the MOU will significantly increase the stock trading accessibility of investors via smartphones, keeping pace with the current trend of growing stock trading through smartphones.”
Here is Min Kim on the Samsung announcement:
Samsung, of course, was one of the entities listed in today’s release. Additionally, KOSCOM — one of the other entities listed — will apply the blockchain service to “their unlisted stock market platform for start-ups,” according to the release. (A similar concept to what was described at the end of the quote just above mentioning “the stock trading accessibility of investors via smartphones”).
Additionally, ICON signed an agreement with SK Planet, a subsidiary of SK Telecom (another company named today):
“SK Planet, one of Korea’s largest telecommunications firms, is looking to step up its blockchain game with a nationwide collaboration.
The telecom giant has signed a memorandum of understanding with the ICON Foundation. The cooperation will see SK planet integrate blockchain into a number of existing products, such as OK Cashbag. The collaboration aims to make “a real-life blockchain use case.”
Of course, there were other entities listed beyond Samsung and SK Planet today’s announcement; however, connections exist with KOFIA among these.
KOSCOM, for instance, has worked with KOFIA to develop OTC trading solutions.
What about KEB Hana, one of the banks listed in the press release? Not only is KEB Hana listed on the KOFIA website, but their associated company, Hana Financial Investment, was one of the 11 initial companies to participate in the initial pilot project of ChainID.
Additionally, Woori bank — another named entity — is listed as a member of KOFIA, along with Woori Investment Bank, Inc. and Woori Fund Services.
So what do we have at this point? First, we have KOFIA, which was encouraged by the government of Korea to begin exploring blockchain solutions for their industry. We then have ICONLOOP working directly with KOFIA to implement ChainID in a manner consistent with that mission. Finally, we have multiple entities listed in the today’s announcement that have direct ties with KOFIA, or ICONLOOP, including one, Hana, that participated directly in the pilot program.
We also have publicly declared partnerships between ICONLOOP and Samsung, as well as SK Planet (an SK Telecom subsidiary) to develop blockchain technology. In the case of Samsung, it’s specifically related to digital identification via ChainID.
There were two other entities listed: LG Uplus and KT. While I could not identify any direct links with either ICON or KOFIA, I find it more likely than not that these entities would utilize the solution of the other entities, which — in this case — I believe to be ChainID. (If we can accept that Samsung, for instance, will be using ChainID, it’s safe to assume the others likely are as well, otherwise such an agreement makes little sense).
I point this out through the consideration of another piece of information. In late 2018, Dayli Intelligence — the company that owns ICONLOOP and is ultimately responsible for the ICON project — was granted approval for their patent application of a “system and method for authenticating users and synchronizing blocks using a block-chain network,” giving them legal protection over ChainID.
Now, according to the original release, “SK Telecom, LG Yuplus, KT, Samsung Electronics, KEB Hana Bank, Woori Bank, and Koscom have signed a joint venture agreement on block-based mobile electronic certification service.” Note the phrase “joint venture agreement.”
I believe this can be read as an agreement to establish a new business entity around this technology. As far as I can tell, the original press release — put out by SK Telecom, does not indicate the agreement means they are establishing an entire new blockchain enterprise (as was implied by secondary news coverage). If they aren’t building an entirely new blockchain, then what does the agreement mean?
As you may know, ICON announced recently that their digital ID service — my-ID — had received approval from Korean regulators:
“ICONLOOP has introduced its digital ID service that can be utilized for untact (non-face-to-face verification) openings of banking accounts. The Financial Services Commission (FSC), South Korean government’s top financial regulator, has announced the inclusion of ICONLOOP’s ‘my-ID’ service into the ‘Innovative Financial Services and Regulations Sandbox’ created under the Financial Innovation Support Special Law.
“As 18 different companies, including manufacturers, banks, stock/securities firms, insurance companies, and e-commerce companies, have expressed their participation in the Innovative Financial Service project, the sandbox inclusion is expected to act as a stimulus towards mass adoption.”
I just injected the phrase ‘my-ID’ into this article for the first time. At first, there was some confusion if this was just a different name for ChainID. According to Min Kim, the answer was — essentially — yes:
Here is what may have happened: with the regulatory approval that came with the addition of ‘my-ID’ into the ‘Innovative Financial Services and Regulations Sandbox,’ these companies — most (if not all) of which had been working with ChainID / my-ID for a long time — felt comfortable to move forward with a business agreement utilizing the technology.
In fact, according to an article describing the news, “The company said that participation in the sandbox is ‘expected to act as a stimulus towards mass adoption’,” — perhaps a hint at what was potentially to come.
Take a moment to evaluate two choices from the perspective of the companies who announced their partnership today:
On the one hand, you can choose to utilize a technology that has a) been implemented and tested with other similar companies for at least two years (through the KOFIA partnership) b) has regulatory approval from the Korean government (which is critical for the banks), and c) has patent protection.
Or, you could roll the dice at building your own technology from the ground up, without assured regulatory approval, in possible violation of patents and the associated legal risks that would bring.
Easy choice, right?
This is speculation — but educated speculation, based on the information above — that the entities may be planning to work together to ensure that their potential implementation of ChainID / my-ID technology (developed by ICONLOOP) will be compatible with one another, and other blockchain solutions they have in development.
How, technically speaking, would that happen?
If only there was some mechanism to hyperconnect private blockchains…