The Bank of Korea has selected the blockchain subsidiary of internet company Kakao to spearhead the country’s digital currency initiative.

South Korea’s central bank, the Bank of Korea, has announced Ground X as its candidate for developing the nation’s centralised bank digital currency (CBDC).

Conceived as the blockchain subsidiary of the leading South Korean mobile platform, Kakao, Ground X had launched its own blockchain system, the Klaytn Network, in 2019.

In response to the open bidding process by the bank in May this year, Ground X edged out other bidders such as Naver’s affiliate LINE Plus and SK Group’s SK C&C to clinch the 4.9 billion won (SGD 5.8 million) pilot project. Both parties plan to close the deal by the end of July before starting the programme in August, with the CBDC to be built as a private blockchain atop the Klaytn Network.

The first phase of the project will focus on simulating the digital currency’s role and is slated to be completed in December this year, while the second phase aims to test the currency’s functions and privacy issue and aims to wrap up by June 2022.

As the race to create a working CBDC heats up, countries in Asia are also jumping on the bandwagon in a bid to create a national digital currency. China currently leads the forefront with the latest release of its digital yuan white paper, while ASEAN countries like Singapore and Thailand are also in the midst of working on a functional CBDC.

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