The South Korean government intends to provide its citizens with a digital identity based on the blockchain. This digitization appears to be a catalyst for economic development, a vision driven by the McKinsey Global Institute and shared by many countries.
Digital identity to boost GDP?
Without official personal identification, citizens cannot fully exercise their rights. In other words, they cannot access the various public services (health, justice, etc.) and are not entitled to votes. They are also not eligible for financial services. As a result, these citizens are socially and economically isolated. Ultimately, this deficiency in terms of identity documents becomes a major obstacle to national growth. Digital ID, combined with today’s extensive use of mobile devices, offers a solution to the problem.
In research on digital identity, McKinsey Global Institute discussed the potential of this approach. Carefully crafted, digital ID unlocks value for citizens as they interact with business and government. This, as consumers, workers, micro-enterprises, taxpayers and beneficiaries. In its report, McKinsey Global Institute mentions a significant increase in economic value of around 3 to 13% of GDP by 2030 with the implementation of this digital identity.
A blockchain-based digital identity for security
South Korea and many other countries share this vision of McKinsey Global Institute. The Korean government plans to implement blockchain-based digital identity in 2024. The country is talking about a plan to roll it out to 45 million citizens within two years. South Korea also explains in this digitization plan the choice of blockchain technology. You should know that digitization goes hand in hand with concerns about data security. With this digital identity, will the government have access to information stored on citizens’ phones?
No data is accessible as the system will be blockchain-based. The advantages of this technology are closely related to its decentralized nature. The immutability and traceability of the blockchain make any modification almost impossible. This ensures the integrity and efficiency of stored data. Furthermore, the security offered by the technology makes it possible to efficiently store large amounts of data. This reduces storage costs while maintaining a high level of security.
Measure risks before deployment
Blockchain-based digital identity has many advantages. This will give citizens one-click access to financial, administrative and social services. For small and medium-sized businesses, digital credentials will make access to finance much easier. South Korea is convinced by the idea, especially that the blockchain comes to guarantee security. Nevertheless, this remains insufficient to obtain tangible results from this digitalization.
On this point, Hwang Seogwon, an economist at the Korea Institute of Science and Technology Policy, explains: “Digital ID cards can generate huge economic benefits in finance, health, tax, transportation and other areas. […] But there needs to be more risk assessment on a technological level to make sure the harm doesn’t outweigh the benefits.”. But the fact that Koreans are accustomed to implementing the technology in their daily lives could facilitate the deployment.
A few years ago, the Korean government began to gently introduce electronic signatures in the public sector. In 2021, the country was already talking about the possibility of a mobile identity card or even a mobile driving license (a digitized version of the official document). Blockchain-based digital identity was also part of his project. The transformation is underway. Deployment will be soon.
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