Home News Categories Korea Insider Cities are keen on blockchain, but to whose benefit?

Cities are keen on blockchain, but to whose benefit?

Robin J. Wolf

February 19, 2019

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Writing in the Korean-language Science Times, IT columnist Yu Seong-min looks at the development of so-called “blockchain cities,” i.e., cities that cultivate and use blockchain technology.

For instance, Korea’s island province of Jejudo has actively encouraged the development of the local blockchain industry under its crypto-friendly governor, Won Hee-ryong. Won has pledged to gradually loosen regulations on the blockchain industry in order to create jobs in the province. The province is adopting a blockchain-based paperless real estate system, cultivating blockchain startups and building a management system for used electric vehicle batteries.

Yu cites a January study by the Jeju Research Institute that predicts blockchain will boost productivity in the province by KRW 177.7 billion to KRW 281.6 billion per year, generate KRW 104.3 billion to KRW 172.9 billion a year in added value, and create 3,893 to 7,154 jobs a year.

The columnist notes that there are two kinds of blockchain cities, generally speaking. One kind adopts a “top-down” approach, applying blockchain broadly by creating a blockchain city platform. The Swiss city of Zug best exemplifies this approach. The other kind takes a more “bottom-up” approach, in which the city begins by applying blockchain to specific services and expands from there. Dubai is a good example, as are Singapore and Amsterdam.

Yu warns, however, that many would-be blockchain cities overlook an important question – who are we doing this for? The answer should be, “the residents,” but as a report by the Science and Technology Policy Institute would seem to indicate (in Korean, by the same columnist), many initiatives to create “smart cities” focus on the opinions of political and business leaders to the exclusion of broader public opinion. As a result, the projects fail to boost public satisfaction.

He does single out Seoul for praise, however, citing the Blockchain Governance Team (which we talked about here) as a good example of getting the public involved.

Recent headlines continue to demonstrate the interest Korean cities have in blockchain solutions. The Seoul suburb of Gimpo, for example, has tasked telecom giant KT with developing a local cryptocurrency for use at merchants within the municipality. Service is scheduled to begin in April. The city plans to issue KRW 11 billion worth of the currency a year in hopes of stabilizing economic conditions for ordinary people and invigorating neighborhood merchants. The program could provide decision makers with better data with which to craft more feasible policies, and if it works, KT could take it to other cities and jurisdictions, including Hadong, Namhae and Ulsan.

Korea’s second largest city and largest port, Busan, recently signed an MoU with the blockchain company Hyundai Pay to cooperate on promoting local blockchain startups. Hyundai Pay will also move its corporate headquarters to the city. Revealing Busan’s “think big,” top-down approach to blockchain city development, a city official said about the deal, “We are planning to expedite blockchain-based platforms and services and develop Busan into a Mecca for blockchain and Fintech through intimate integration with financial institutions in the future.”

Last year, the Presidential Committee on the Fourth Industrial Revolution and the Ministry of Land, Infrastructure and Transport unveiled a basic plan to turn a swath of the city of Sejong into a smart city where, among the many interesting things presented, residents could make payments using so-called “Sejong Coins,” a local cryptocurrency. Last week, committee and ministry released its plan to put this into action. The city would use blockchain to manage the data it needs to run services. Citizens would receive cryptocurrency as compensation for providing personal data. The city would use blockchain to incentivize public participation in governance, too.

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