LG CNS developed Korea’s first blockchain based platform which is the highest level of technology in the field of virtual money. It also issued electronic stocks of unlisted companies unregistered at Korea Securities Depository through this platform.
Blockchain is used as a generic technology for bitcoin, a globally rising form of virtual money in the age of fintech. Unlike existing financial exchange methods which keep and manage records on central servers such as a central bank or the stock exchange, blockchain opens pseudo-anonymous exchange information to all participating users in order for them to compare it and the data is then kept from being falsified.
Hacking is basically impossible with blockchain, which is why it is considered the most secure technology available today.
It also doesn’t require any central server or large investments into IT infrastructure such as in the building of massive servers, because the exchange data is distributed to the exchange participants PC and mobile devices when being saved. Blockchain is a much better way to reduce the cost of system management compared to other existing financial systems.
Blockchain gathers multiple exchange records on a large network for about ten minutes to create a block and the exchange records for the next ten minutes are gathered as another block.
Because the process of two blocks connecting to each other to form a blockchain is repeated endlessly, the blockchain data is dispersed on multiple computers within the network, making hacking impossible. Falsifying the exchange data for ten minutes as well as the block created earlier requires a geometrically increasing computing capacity and substituting a block in the middle, yet these are impossible with current computing power.
The issuance of blockchain based electronic stocks was a first in Korea. Globally, NASDAQ introduced their electronic security issuance service for six unlisted corporations including Chain.com at Money 20/20 Conference held in Las Vegas in October.
LG CNS issued the electronic stocks through an ‘unlisted stocks distribution platform’, which is the key service of the ‘open platform for blockchain based financial products’ LG CNS is currently developing. Five Korean fintech startups (Blocko, Biter Group, Super String, Omecca, and Smart Forecast) issued their electronic stocks.
LG CNS ‘unlisted stocks distribution platform’ issues electronic stocks instead of unissued share certificates which small startups and unlisted corporations issue in the form of paper to their investors and shareholders. Information of the issued electronic stocks is then recorded on the open blockchain book to lower costs and maintain transparency.
It’s also possible to expand the service for professional investors’ exchanges through this platform, such as major shareholder’s sales and M&A, participation from an outside investment firm, and staff stock option events.
The service is also planning to provide information on Korean and overseas corporations and big data based advanced investment information to small investors having difficulties due to lack of information.
Written by LG CNS New Media Team