[New Wave] The Essence of Blockchain 'Eop (業)'

There was a time when the 'essence of business' that the late Samsung Chairman Lee Kun-hee always emphasized to his executives became a hot topic. It means to accurately understand the essence and characteristics of the current work and establish the direction and strategy of the business accordingly. The insurance industry is about recruiting people, the securities industry centers on consultation, watches belong to the fashion industry, department stores are real estate businesses, hotels are equipment industries, home appliances are assembly mass production industries, and semiconductors are conscientious industries as well as time industries. When the concept of business is understood in this way and used as the foundation of management to be practiced, the business can finally succeed.

Then, what is the essence of the blockchain business? It is probably the decentralization of management and control authority concentrated in a few institutions or individuals. In fact, blockchain was not the first to propose the concept of decentralization; since the 1970s, many scholars have presented various decentralization technologies based on consensus among members.

However, in existing decentralization technologies, the participants in consensus had to be predetermined like a voter registry, whereas blockchain has no limit on the number of participants in consensus, and anyone can freely join or leave the consensus process at any time according to their will. We call this 'permissionless consensus' or 'Nakamoto consensus,' and despite this free participation and withdrawal, the foundation that enables stable decentralization is the incentive system through Bitcoin.

From this perspective, a more accurate essence of the blockchain business should be seen as 'decentralization based on permissionless consensus,' and since anyone can freely participate, it must always keep 'global business' in mind. Then, is the current domestic blockchain industry well maintaining this essence of the business? Unfortunately, the reality is that it is not.

Almost all projects in the domestic blockchain industry, including the distributed identity verification (DID) service expected to be the killer app of blockchain, the seven blockchain sectors promoted in relation to the Digital New Deal (online voting, donations, social welfare, renewable energy, finance, real estate transactions, postal administration), and nearly all projects in the Busan Blockchain Regulatory Free Zone, are based on 'permissioned blockchains.' The fact that there is an entity granting permission means that the network itself is centralized to some extent, so it is difficult to say that it aims for true decentralization. Moreover, since these can be sufficiently implemented using existing technologies without necessarily using blockchain, it is hard to find justification for urgently pushing these projects with massive tax expenditures.

Of course, the use cases of blockchains may vary, and the level of decentralization may need to be set differently depending on the application. Also, developing decentralization technology based on permissionless consensus is very difficult, and there are indeed problems to be solved regarding scalability and privacy protection. However, if we forget the essence of the business and only have superficial, imitation-style projects that are nominally decentralized or projects of moderate difficulty whose goals are not so hard to achieve, we will remain on the periphery of blockchain. It is time for our government and related industries to genuinely contemplate the essence of the blockchain business.

Seungjoo Kim, Professor, Graduate School of Information Security, Korea University