Bank of Korea, the Central Bank of South Korea, seems to be ready to embrace cryptocurrency at least partially in the form of currency. It is looking at cryptocurrencies as a way to eliminate the use of coins from the economy.
The South Korean government is acutely aware of the limitations and misuse of heavy coins manufactured from bronze which becomes an expensive affair with the value of the input material being more than the value of the coin. Taking advantage of this, many hustlers, melt the coins and sell it at a profit, thus defeating the purpose of coin issuance.
The government, the central bank and the Financial Services Commission (FSC) have been looking at ways to replace the coins with a more cost-efficient and streamlined method of transferring loose change.
The government had also tried to implement the transaction of smaller denominations through bank transfers by requesting banks and merchants to use account details of customers and make deposits. This was an era when everyone in South Korea could open bank accounts. However, the increase of illicit fund transfers and money laundering through bank accounts forced the government to introduce stringent rules for opening accounts. Bank accounts came to be used and abused as means of criminal activity payoffs without any interventions.
Also, another issue that came to the fore was college and school students could not have bank accounts due to age restrictions which limited this method of money transactions.
Exploring Blockchain as a Solution
Bank of Korea started exploring the possibility of using blockchain as a means of reducing dependence on coins possibly by 2020. On April 30, after investing a year in research, the Bank of Korea announced the extensive feasibility study of using cryptocurrencies and blockchain. It also did so in cooperation with Asian and European Central Banks to understand the applicability of the blockchain. A task force was created by the Bank of Korea to research on the technologies in Bitcoin and Ethereum and the blocking technology.
Mayor of South Korea, Park Won-soon, has been looking at ways to make use of the blockchain for improving infrastructure in public transport and pay our systems for youngsters.
Analysts expect South Korea to become a major adopter of the blockchain technology for public infrastructure and financial systems.
The most historic use of the blockchain has been storing of the North and South Korean peace treaty on an Ethereum blockchain. The Panmunjom Declaration was signed between North and South Korea which have been at war for decades and finally called for a truce as North Korean leader Kim Jong-Un visited South Korea and signed this agreement of peace. It was stored by a South Korean game developer on the Ethereum blockchain network in both, Korean as well as English.
The South Korean Congress is expected to lift the current ban on the initial coin offering (ICO) market and with government's efforts to legalize and find practical solutions to cryptocurrencies, the cryptocurrencies scene in South Korean remains highly optimistic.