By Yoon Ja-young
Samsung Group, which has been accelerating its moves for leadership in the fintech industry, is turning its eyes toward blockchain technology. Analysts say blockchains will be as revolutionary as the Internet.
CEOs of Samsung Group subsidiaries attended a lecture on blockchains, Wednesday, by Prof. Roh Sang-kyu of Seoul National University. The professor has been citing blockchains as an innovation in fintech that can change the world.
A blockchain, or distributed ledger technology, is a database system used with bitcoins. While financial institutions such as banks store transaction information in their main servers, blockchains store the information in a distributed database shared and stored by numerous users.
For instance, if one borrows money from a bank or pays back debt, all these transactions are recorded in the bank ledger. The ledger is kept by the bank. However, a hacker might get into the bank's system and change the transactions recorded in the ledger. To prevent this, banks invest heavily in countermeasures and security programs.
In blockchains, however, the ledgers are kept by numerous users, and these identical ledgers are updated regularly. It is almost impossible for a hacker to change the huge number of ledgers. They are thus less vulnerable to hacking and financial institutions can cut costs.
A local media reported Samsung Group is planning to set up a blockchain system among its financial subsidiaries as early as October, to expand it to diverse financial services next year.
A Samsung Group spokesman, however, denied the report, saying the lecture was aimed at informing group executives of the basic concepts of the technology.
Samsung SDS, meanwhile, made headlines last month by investing in a startup engaged in blockchain tech. The company announced that it decided to invest in Blocko, a local company providing a blockchain-based development platform for businesses.
"The startup has core technology in blockchains. We found it very promising and decided to invest in the company," said a Samsung SDS spokesperson.
He said the company plans to seek opportunities in diverse sectors using blockchain technology.
Analysts say that blockchain technology has enormous growth potential.
They expect Samsung to lead the introduction of the technology.
"A U.N. report picked blockchains as one of the 10 technologies that will change the future," said Han Su-yeon, a researcher at LG Economic Research Institute. She said that blockchains can be applied to finance as well as any kind of transaction including administrative services such as registration.
She also cited a report which estimated blockchain technology could cut transaction costs by 30 percent for investment banks.
Samsung has been bolstering its competitive edge in fintech, acquiring LoopPay to launch Samsung Pay and buying up Joyent to upgrade its cloud platform.