Why do the 3 tech giants want to pilot Korea’s CBDC?

South Korean tech giants have submitted three bids to be the first private company to test a prototype of the Central Bank of Korea’s (CBDC) Central Bank Digital Currency (CBDC).

Although the budget provided by BOK for the project is relatively small – 4.8 million, why do the 3 technology giants want to pilot the Korean CBDC?

Why do the 3 tech giants want to pilot Korea’s CBDC?

As previously reported, BOK will select the winners from three consortia and individual bids submitted earlier this month by subsidiaries of the chat app giant Kakao, the high-performance search engine-strong naver and telecommunications provider and the SK Group.

All three have significant crypto and / or blockchain interests: Kakao, the Ground X blockchain subsidiary that submitted the offer, was an early investor in the Upbit crypto exchange and operates the Klaytn blockchain protocol as well as the native Klay (KLAY) Token.

SK, meanwhile, is engaged in blockchain technology and local stablecoins, issuing its own high-speed private network and a range of tokens used by merchants, government agencies, and the public in some of Korea’s major cities. Its offer was officially submitted by subsidiary SK C&C.

And Naver, the company that founded Line – a chat app with crypto exchanges in Japan and elsewhere in Asia – is also building its own blockchain operations. The company submitted the offer through its subsidiary Line Plus. LG CNS, the IT service arm of electronics giant LG, is to work with the consortium led by Line Plus.

The successful bidder must start work on the project in August and finish in June 2022. Like most central banks, BOK still has to commit to issuing.

However, media company DDaily tried to answer the question of why these high-end tech giants want to win the tender (which will be announced in late July) even though the budget BOK allocated for the project is relatively small – 4.8m .

Baek Hoon-Jong, CEO of Sandbank, a financial services company related to digital assets, explains that CBDCs have the potential to enable businesses beyond the electronic payments platform to overcome their current deaths and expand into the financial world.

The move will likely allow all three to “strengthen their technological capabilities” and link their blockchain operations to emerging financial forks.

In addition to the Kakao Pay service, Kakao has introduced the neo banking service. Naver Pay has been an ongoing project for both Naver and Line since its launch in 2014.

Ground X’s offering, the media company added, suggests a partnership with blockchain scalability service provider Onther – an element that could be beneficial when processing a “large number” of transactions on the network.

In addition to numerous domestic blockchain partners, Ground X can also use its existing partnership with the American blockchain heavyweight ConsenSys. Last year ConsenSys unveiled a CBDC product allegedly based on the ConsenSys quorum acquired from JPMorgan.

Meanwhile, Line Plus’ offering suggests a partnership with Naver Financial, the operator of Naver Pay, as well as a potential relationship with Line Financial Blockchain. The latter company works on CBDC solutions and has a platform with a transaction speed of up to 2000 transactions per second. The speed is “comparable to traditional financial services,” added the media. Line Pay – which was a huge success in Japan – is also developing CBDC tools.

LG CNS is also investigating its own CBDC solutions.

And finally, SK has a relationship with ConsenSy. It also has a strong partner in the form of Korea Simple Payments Promotion Agency (literal translation), operator of the zero pay contactless payment solution used by Seoul City Council. While not a fully blockchain-based solution, Zero Pay takes advantage of several blockchain innovations and plans to improve the system’s blockchain capabilities were announced last year.

The media company added that SK is also playing its cards and not elaborating on other companies that may be involved in their own offerings.

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