IT firm Kakao has won the keenly contested bid event for South Korea’s CBDC pilot program. Tokenhell had earlier reported that the Bank of Korea (BoK) called for bids back in May. Bank of Korea also announced the progress of the bid event last week, with a conclusion that it would declare the winner of the bid the following week. With Kakao announced as the winner, its blockchain subsidiary, Ground X, would oversee the CBDC trial program for South Korea’s Apex bank.
As of last week, Kakao was among the top three firms on the bid list, alongside Naver and its Line blockchain platform, and SK Group with its SK C&C blockchain technology. Following the latest announcement, Kakoa would work with the Bank of Korea to test-run its CBDC on many instances. A budget of $4.4 million has been allocated for the project.
China’s PBoC Makes Giant Strides on Digital Yuan
Central Bank Digital Currencies (CBDCs) have garnered recognition such that a number of apex banks and governments around the globe are embracing the idea of digital currencies controlled by them through the banks, unlike cryptocurrencies. In line with the recognition it has gained, the People’s Bank of China is setting the pace on the idea with its Digital Yuan in terms of research and experimentation. In fact, in a whitepaper detailing its progress on the Digital Yuan so far, the PBoC claimed that about 73 million transactions amounting to $5.3 billion were carried out during the trial program.
Moreover, the PBoC conducted the CBDC experimentation on over a million instances ranging from individual transactions, public services, utilities to government transactions. Although it is yet to conclude the trial program, in comparison to the efforts by other apex banks, China is far ahead on the path to a CBDC issuance and distribution. An adoption of the Digital Yuan during the Beijing Olympics games is also in the works by the PBoC.
BoK’s CBDC Experiment to Last Until 2022
Becoming the preferred bidder for BoK’s CBDC trial, Kakoa’s Ground X may likely begin the first phase of the trial process this month, according to reports. The first phase comprising research and testing would be completed by the end of the year. Then the second stage would commence by next year, when the BoK alongside Kakao’s Ground X would address privacy concerns.
Ground X’s wealth of experience in the blockchain industry may have informed the BoK’s appointment. It recently partnered with ConsenSys, an Ethereum developer. The blockchain firm has been in the industry since 2018 and has its own programmable blockchain ecosystem, referred to as Klaytn.
With CBDCs spreading far and wide, the fate of cryptocurrencies is unknown. While pro-crypto folks may argue that they are here to stay, how government-controlled CBDCs can co-exist with cryptocurrencies would be a challenge that industry stakeholders would have to address. Besides, China has already shown its hostility for crypto assets through its mining ban in May.