Korea’s central bank is piloting a digital currency through the Galaxy smartphones of South Korean multinational tech giant Samsung Electronics, according to a report by The Korea Times on August 8.
The Bank of Korea announced it would hold a bid to select its technology supplier for the CBDC back in May. After facing stiff competition, the contract was given to Ground X, whose Klaytn platform will host the CBDC. Ground X is a blockchain subsidiary of Korean communications giant Kakao.
CBDCs are central bank-backed digital currencies. The aim of a CBDC is to provide a digital alternative to a country’s traditional fiat currency. Some are based on blockchains, many are simply “inspired” by them. Most countries are researching CBDCs right now, most notably South Korea’s rival China, which has been piloting its digital yuan since last April.
The Bank of Korea’s pilot, which launched on June 28 this year, is looking specifically to test the practicalities of digital payments using Galaxy phones.
The pilot program aims to ascertain whether it’s “possible to conduct payments via mobile phones using the digital currency with no internet availability, or to send CBDC remittances to other mobile phones or to other connected bank accounts,” an unnamed bank executive told The Korea Times.
The first phase of the pilot will run until December and will assess the suitability of the technology. Phase two, which is expected to run from January through to next June, will assess the practicalities of the Bank of Korea expanding its banking practices to incorporate the CBDC.
Samsung has been integrating cryptocurrency into its smartphone hardware since 2019. The launch of the S10, with its built-in cryptocurrency wallet, was followed in 2020 by the S20 range, which expanded on the integrated blockchain functionality with the Blockchain Keystore—a feature that enables users to store the private keys to their crypto wallets safely on their devices.
If the pilot is successful, South Korea will be one of the first countries to offer a CBDC alternative to services like Apple Pay and Google Pay, which enable contactless phone payments without the need for an internet connection.