Seoul National University's ESG Social Innovation Center is participating in the construction of a blockchain platform to support extremely impoverished areas in developing Southeast Asian countries, in collaboration with the fintech social venture 'Block ESG'. Block ESG aims to solve the problems of numerous impoverished villages in Southeast Asia, where financial payment networks and personal identity verification are absent, through blockchain.
Kim Kyung-min, a professor at the Graduate School of Environmental Studies at Seoul National University and the head of the ESG Social Innovation Center, has not wavered in the belief that blockchain can serve public purposes and be utilized for nonprofit objectives to become a beacon of hope for impoverished villages. He noted, "People living in impoverished areas face difficulty in verifying their identity due to the lack of administrative services, which not only excludes them from medical services and various welfare policies but also makes it hard for them to receive donations from abroad. However, if we can create personal identities using NFTs (Non-fungible tokens) and generate individual blockchain wallets for them to directly receive donations and scholarships, it could bring greater benefits to these individuals."
Kim, who obtained his master's degree in information systems from UC Berkeley and is proficient in the use of big data and artificial intelligence (AI), became interested in blockchain several years ago. Instead of just a means of investment, he believed that it could spark innovation in real life. Kim began brainstorming practical applications of blockchain with Go Jin-seok, the CEO of Tenspace and an alumnus who is currently working on the project with him. Kim laughed while remembering how Go discouraged him initially, adding, "I was worried that a professor at Seoul National University would get caught up in the controversy surrounding Bitcoin and face a scandal."
Professor Kim Kyung-min is a well-known figure in the real estate sector. He has accurately predicted various trends, from the revival of the commercial district in Seongsu-dong, Seoul, in 2022 to the supply shortage caused by rising raw material prices in 2023 and the rise in jeonse prices and rebound in Seoul's housing market last year. Last month on the 29th, I met with Professor Kim in his office at Seoul National University to discuss why he has focused on blockchain instead of real estate and the growth potential of Block ESG. Below is a Q&A with him.
─What sparked your initial interest in blockchain?
"I try to keep up with new technology trends. When I first encountered the technology called blockchain, I found it technically fascinating and questioned whether it was truly possible. I thought that features of blockchain, such as transparency and the elimination of intermediaries, would bring tremendous benefits if applied to reality."
I particularly saw that it could have a significant impact on the culture of giving. There are many people in Korea who donate amounts ranging from large to small, and they are curious about whether their donations have truly been delivered and how they are being used. It is not uncommon to see cases of intermediaries taking a cut or corruption occurring. I thought that blockchain could solve such problems.
─I'm curious about how blockchain is utilized in impoverished villages in Southeast Asia and what kind of help it can provide.
"The reality of the impoverished villages I visited was worse than we could imagine. The biggest issue is that they cannot even verify their identity as members of the nation. Because of the lack of administrative services, some people are not registered, and others fall through the cracks due to the need to move around for survival. Naturally, they are also marginalized in medical services and welfare programs. We can create certified identities for them using tamper-proof NFTs."
─How can we prove the identities of individuals who, according to the system, have never existed until now?
"To authenticate identity and assess credit, there should at least be existing financial history, but people living in impoverished areas who earn just enough to survive understandably lack such history. However, I found the answer in the service they use the most: social media (SNS). Countries in Southeast Asia, including Vietnam, have very high social media usage rates. We can create an alternative credit evaluation using individuals' SNS networks."
Each line of text on SNS and the network it forms can become a credit history, and AI can meticulously analyze it to verify the individual's identity and assess their creditworthiness. For instance, there is information about who this person's friends and family are. If we check out those friends, we can find out where they belong and which institutions they work for. If such details can be confirmed, it indirectly verifies that the individual's identity is reliable.
─Isn't it possible to manipulate one's SNS data?
"One might think that data can be manipulated or lied about, but past histories cannot be changed. Moreover, big data surpasses petty manipulation by individuals. Research on alternative evaluation models through such SNS networks has been very extensively conducted abroad, including in the United States, and has been beneficial in various fields such as corporate marketing strategies, political opinion analysis, and consumer behavior prediction."
Because such modeling can quantify and analyze the complex social interactions of people, simple data manipulation is unlikely to have a large impact. Furthermore, CEO Go has been researching this field for a long time and has about 100,000 case studies, so we are now close to actual implementation.
─Is a financial infrastructure more urgently needed than immediate cash donations?
"Donations are not the issue. These people should not be viewed as objects of sympathy; instead, we need to help them live autonomous lives in society. Even if they earn money, without financial infrastructure, they cannot save or sustain themselves. The impoverished villages in Southeast Asia resemble South Korea in the 1970s. People are very innocent and kind, but their culture has its formalities. For example, when trying to get married, they spend days on elaborate ceremonies, which leads to a lack of funds."
However, without identities, they cannot borrow money from legal lending institutions. As a result, they fall into the trap of illegal loans with exorbitant interest rates exceeding 500%. Even if they earn money, repaying is virtually impossible. The agony of life drives them easily into drugs. Identity verification and financial infrastructure could be the first step for these individuals to live as normal members of society.
─There are several issues regarding alternative credit evaluation. Even so, do you believe this system can help the extremely impoverished in Southeast Asia?
"Such criticisms may arise. The alternative credit evaluation itself is not perfect, and there may be issues related to the use of individual data. However, they need a financial ladder to enter the financial system in any case. Discovering that an identity exists and slowly building credit is a sign of hope for these individuals."
─What is the current status of the project and future business plans? I have heard that exchanges like Binance are also interested in the business.
"The infrastructure has been fully established, and we are currently testing the stage of opening wallets and providing NFTs to individuals. The design of the token economy for Block ESG and the issuance of tokens are complete, and it is already listed on one overseas exchange. In the future, we are also envisioning a way to allow donations to be made with our tokens."
We might also be able to collaborate with foreign governments. In the case of Southeast Asian governments, since we are effectively doing what the government should do (identity verification and financial infrastructure), there is no reason for them to dislike it. I have heard that Binance Charity, the nonprofit foundation of Binance, is also watching this project with interest, and if there is a way to collaborate later on, we have plans to do so.