Yesterday, Korean telco KT Corp announced it was selected as the operating agency for Busan city’s blockchain-based local currency Dongbaekjeon. The digital currency will be officially launched at the end of this month with an annual issue amount of 300 billion won ($258 million).
Dongbaekjeon is being issued by the Busan Metropolitan City to boost the region’s local economy and increases sales of small businesses. The word Dongbaekjeon comes from the combination of ‘Dongbaek’ which means ‘Camellia Flower’ and ‘Jeon’ which means money.
Users can recharge the Dongbaekjeon card with the Dongbaekjeon mobile app, and at service counters at Hana Bank or Busan Bank. The use of the currency card is restricted to department stores, large markets, supermarkets, and some franchise-owned stores.
To incentivize its usage, Busan is offering citizens 6% cashback on every transaction. The local government plans to launch a 10% cashback promotion next year.
“To strengthen the function as a local currency-only card, we restricted the region and industry so that this card can be used only in Busan,” Yun Yoon-il, head of the department for jobs and the economy told news outlet Kookje.
Previously, Busan had planned for an issuance amount of 1 trillion won ($861 million) but later reduced it citing budget constraints. Several other city governments are also issuing digital currencies to boost small and medium business sales. KT, using its “Good Pay” platform, is the operator for several such as Gimpo Pay, Gongju Pay, and Ulsan Pay. So far Gimpo Pay which has been in operation since April has processed $26 million in payments.
The telecoms firm is leveraging blockchain to mitigate risks such as money laundering and to help local governments to manage the currencies effectively.
“The stability of the platform is the most important for the stable operation of the local currency business, which generates hundreds of billions of dollars of financial transactions,” said Yoo Kyu, Managing Director of KT’s Blockchain Biz Center.
KT has several other blockchain initiatives. Most recently, the telco partnered with China Mobile for a blockchain inter-carrier settlement system.
In June, the KT announced a blockchain service to secure IoT devices such as vessel cameras using a satellite link. Additionally, the company is working with SK Telecom, LG U+, Samsung and a few others on a blockchain-based identity service.