South Korean internet giants are launching a pilot project on the central bank’s digital currency

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Subsidiaries of South Korean internet giants Naver and Kakao are among the top contenders for work on the country’s first pilots for the central bank for digital currencies (CBDC).

On Monday, the Bank of Korea (BoK) announced the preliminary tender results for participating digitally won pilots, the local news agency Yonhap reported. Kakao’s blockchain subsidiary Ground X, Naver-affiliated Line Plus, and conglomerate SK Group were the top three companies to submit applications for a 10-month CBDC pilot contract.

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The BoK is now planning to select an operator who will carry out a blockchain-based simulation project for the digital won. The bank expects a decision next month. The pilot runs through June 2022 with a research budget of 4.96 billion won ($ 4.3 million).

According to the report, the pilot project will test the CBDC in a virtual simulation environment based on distributed ledger technology. The BoK intends to investigate potential use cases related to the issuance of CBDC, redemption, electronic payments and billing, and the purchase of digital works of art and copyrights.

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The BoK started the bidding process to select a technology partner in order to examine the advantages and effects of the introduction of a CBDC in May. The central bank had previously published a book on CBDCs in February, officially announcing the country’s plans to test the distribution of a digital won.

The news comes shortly after Line Plus released its own blockchain platform optimized for issuing and maintaining a CBDC. The new open source project is based on Line’s own blockchain technology and is intended to support confidentiality-oriented payments and high-speed transactions.