Seoul: In an effort to capitalize on the world's most technologically savvy population, South Korea is planning to offer its citizens a digital identity protected by blockchain.

The digital economy has grown as more and more people work from home, use cashless transactions, and explore the metaverse. One of the most recent emerging technologies supporting this growth is smartphone-implanted ID.

Digital ID makes it easy to verify identity online, eliminating the need to photograph credentials or sign in using a text-based authentication code. Instead, a PIN or fingerprint can be used to perform tasks such as transferring money, voting or even applying for government benefits.

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According to Hwang Seongwon, an economist at Korea's Science and Technology Policy Institute, "Digital IDs can yield huge economic benefits in finance, healthcare, tax, transportation and other sectors and can quickly catch on among the Korean population."

However, he added, "There is technically a need for more risk assessment to ensure that the risks do not outweigh the benefits.
According to the World Bank and McKinsey & Company, digital IDs have the potential to increase a country's GDP by 13% and reduce business costs by trillions of dollars.

McKinsey's estimates are based on widespread adoption of digital IDs, time savings in administrative tasks, reduced payroll fraud, increased consumer credit, better business and the emergence of new markets.

Suh Bo Ram, director general of Korea's digital-government bureau leading the initiative, said that "not every service that has been able to transition completely online will now be able to do so."

Within a decade, he claimed, Korea could achieve at least 60 trillion won (US$42 billion) in economic value, or 3% of GDP.

The enthusiasm for early adoption among Koreans can also be helpful. They lead the world with enthusiasm and efficiency with their use of technology in daily life, industry and government, according to the Portulans Institute, a Washington-based think tank.

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Currently, Korean residents use registration cards – which resemble Social Security cards in the US – to prove their identity. The plan calls for an app to integrate those IDs into mobile devices.

In 2024, Korea will introduce digital IDs, aiming for 45 million people to use them within two years. The need for everyone to visit the city office and pay the fee to renew their registration card can hinder that goal.

Suh acknowledged the issues but expressed confidence that they would not be as important as the advantages. He referred to George Orwell's 1949 novel Nineteen Eighty-Four when he said that the government was also aware of the concerns of the "big brother".

Because the system would rely entirely on decentralized identity, an advanced branch of blockchain technology, he said, the government would not have access to any data stored on personal phones, including information about people using their digital IDs. How are they used, and where are they used.

Blockchain is a term used to describe a digital log of data that is constantly updated and is widely recognized as the powerhouse of bitcoin. Since there is no central server where the data is stored, hackers would need to break into each individual device to manipulate the data, while reducing the potential for theft.

According to Heather Vesant, president of the IDPro Association for Digital ID Professionals based in Oregon, "Korea is becoming a quiet force that reflects the future of global technology."
The benefits of digital ID have been acknowledged by other governments as well.

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According to its website, the government of Estonia allows the phone to be used for verification if a special SIM card is attached. Most of the country's 1.3 million eligible citizens in Estonia have digital IDs that can be used to vote, pay bills and sign documents. A similar chip-based program exists in Germany.