I have swapped all my altcoins into ICX & KNC. The previous article was about why KNC? This will be about why ICX. I will give a brief overview of what ICON and ICONLOOP is, the staking yield of ICX, what is BROOF and what is MyID Alliance. All these are buzz terms you would commonly see and hear when people talk about ICON. I am bullish on the future of ICON and you will see why by the end of this read.
1. Overview of ICONLOOP and ICON
Unlike other ICOs where people just come together, write a white paper and raise money through a token sale, ICON started off from a different angle.
ICON’s parent company is a Korean fintech consortium called the Dayli Financial Group. Dayli is one of the largest fintech company in Asia and they invest in emerging technologies like AI analytics and blockchain. Dayli also owns a minority interest in Dayli Blockchain, a publicly listed company in the Korean Stock Exchange.
1.1 What is ICONLOOP?
In 2016, Dayli started “theloop”, a start-up which aims to improve efficiencies and eliminate intermediaries through the use of blockchain. Back then the hype was picking up and many private companies were interested in it. Some of the use cases include digital identities, voting and payment in the blockchain.
Theloop started making huge waves in the industry making partnerships with LINE, Samsung Pass, top banks in Korea, Korea Customs Service, insurance companies, hospitals and public universities in Korea. It was subsequently renamed as ICONLOOP and they continued killing it.
ICONLOOP was selected to consult on South Korea’s election systems and is part of Seoul City blockchain-based modular establishment project. Their digital identity solution (MyID) got official regulatory approval from Korea FSC’s Fintech Sandbox and MyID Alliance was launched in 2019. More on this alliance later.
ICONLOOP has about 100 blockchain engineers and they are currently the largest private blockchain company in South Korea. The team has already built proof-of-concept solutions for corporations since 2016. So ICON is not just some random crypto project that sprung up from nowhere. It comes directly from the enterprise and they are a front runner in South Korea’s blockchain industry.
1.2 What is ICON?
It is important to take note of the distinction here. ICONLOOP is a private blockchain company and they develop blockchain solutions for enterprises. This is in contrast with ICON, which is a public blockchain that did their ICO in 2017.
It is quite similar to how ethereum and ConsenSys works. ConsenSys is a private company which is a for-profit organisation. Similarly, ICONLOOP is a for-profit private company and they generate revenue from blockchain consulting.
But ICON is a non-profit foundation in Switzerland. Back then, the Swiss foundation was the most popular way to structure an ICO legally. Investments are seen as donations to the foundations and investors can’t sue them if they lost all their money.
Anyways, ICON was launched because the founders of ICONLOOP realised that there are shortfalls of using a private blockchain. Some examples include immutability, transparency and decentralisation.
That is how ICON came about. ICON raised 150,000 ETH or about US$45 million at that point in time. A total of 400.2 million of ICX was issued and the ICO price of ICX is worth about US$0.11.
The ICON network is a general-purpose blockchain protocol. Think of it like the ethereum network. It is a platform which allows anyone to build smart contracts, DApps and issue tokens on the ICON network. That’s why ICON is popularly known as the “Korean Ethereum”. You also have NEO which is the “China Ethereum”. But all those narratives are long gone. They are just different platforms to build smart contracts.
1.3 What is the Utility of ICX Token?
ICX is the native token for the ICON blockchain network. In ethereum, you have to pay ETH for transactions when executing the smart contract codes. In the same manner, you have to pay ICX for transactions for running smart contract codes on the ICON network. So ICX is like a protocol token.
To put it simply, as long as there are any on-chain transactions happening on the ICON network, you have to pay ICX as a gas fee. Hence, the value of ICX token is dependent on the robustness of the ICON network. The higher the transaction volume and velocity in the network, the higher the demand for ICX.
2. How is ICON Different?
The next natural question is who will use ICX? Ethereum already has the first-mover advantage in smart contracts and most DApps are being built there. They have the network effect advantage which ICON lacks. ICON 2020’s Q1 transaction volume of DApps was US$19.24 million. This is in pale contrast to Ethereum’s volume which is about US$5.64 billion. ICON only has 7 DApps on its platform while Ethereum has 2265. How does ICON even stand a chance to compete?
This is where ICON stands out from “just another” crypto coin. ICON’s primary focus is not so much on building DApps and driving up transaction volumes. They focus on developing meaningful enterprise use cases that are value-adding to society. Everything that they are doing is happening on the private corporate side of things. All these valuable data is not being captured since it is not on-chain.
After all, the volume of these DApps from ethereum and even ICON are mostly just gaming, gambling apps and DeFi for ethereum. It is just people using tokens to play games, gamble or lend money.
The same tweet that Vitalik posted during the ICO bubble still hold true today, have we “earned” it? How many of these DApps are actually solving problems in the traditional world?
So How is ICON different then? The short answer is they are directly working with institutions, government and private enterprises solving real business needs.
ICONLOOP has a suite of tools called decentralised identification (DID). They developed 4 digital identity blockchain projects that have a commercial use-case. Here is a drill-down of each of them.
- My-ID (MyID Alliance)
- Meeting Room
3. ICONLOOP’s MyID Alliance
MyID is ICONLOOP’s flagship product and this is where the biggest hype is.
Here is the problem. Whenever you want to do something (e.g. find a job, open bank account, apply brokerage account, check-in hotel) the company must verify your identity. So you have to submit photocopies of your IC, passport details, bank statements and etc, just to prove you are who you say you are. It is troublesome, repetitive and you are giving out personal information that will be stored across different databases
MyID is just a solution that stores your digital identity on the blockchain. ICONLOOP wants to create a world where your digital identity is recorded once in the blockchain but verifiable repeatedly at any point in time. The key difference is when you verify your identity, you don’t have to give away your digital identity and go through all these verification processes.
To do this, you need an alliance. You need everybody to be using the same blockchain so that there is a common standard. That is what MyID Alliance is about.
As of today, there are 62 partners in MyID Alliance. All of these partners would be trialling MyID and they are targeting the financial sector first. That is where KYC processes happen the most. Here are some of the big names that are participating in ICONLOOP’s MyID project.
3.1 MyID Alliance Partners
- Bithumb (South Korea’s largest cryptocurrency exchange)
- Binance Korea (Binance is largest cryptocurrency exchange by trading volume)
- Cafe 24 (Global e-commerce platform – 1.7m online shopping stores & 5.7m registered users)
- DB Insurance (Among South Korea’s largest non-life insurers)
- Hana Bank (5th largest bank in South Korea)
- Industrial Bank of Korea (Owned by Government of the Republic of Korea)
- KB Securities (Subsidiary of KB Financial Group, top 5 banks in South Korea)
- Koscom (IT solution provider launched by Ministry of Finance and the Korea Exchange)
- Kyobo Life Insurance (Big 3 insurance companies in South Korea)
- KT Corporation (South Korea’s largest telephone company)
- LG Uplus (South Korean telco controlled by LG Group)
- Mirae Asset Global Investments (AUM $146 billion as of Dec 2019)
- POSCO Korea (4th largest steelmaker in the world)
- Sejong Telecom (Korea no.4 Network Carrier)
- Shinhan (Top 5 banks in South Korea)
- Saramin (Largest HR recruiting company in South Korea)
- Samsung Fire & Marine Insurance
- Samsung Electronics
- SK Telecom (South Korea’s largest cellphone service provider)
- Samsung Securities
- Yanolja (Company valuation @ US$1 billion, GIC-backed)
- Woori Bank (4th largest bank in South Korea)
This list continues to grow every month and all sorts of industrial giants are inside this partnership. If you are in Singapore, it would be the equivalent of working with DBS, OCBC, UOB, Prudential, Singtel and etc. ICONLOOP has a very strong network of enterprise connections and here is why.
3.2 MyID Regulatory Approval
The chairman of the advisory committee of MyID Alliance, Hun-Jai Lee, is the former Deputy Prime Minister of South Korea and also the former Chairman of Financial Services Commission.
Je-Yoon Shin is the former Chairman of the Financial Services Commission.
Jong-Goo Lee is the former Commissioner of the Financial Services Commission and the President of Self-Regulation Council, Korea blockchain association.
And lastly, Lee Gun Hee is the former technical advisor of the Financial Services Commission and Council Member of the Financial Supervisory Service.
Many influential people who have held governmental positions are inside the MyID Alliance Advisory. This is also the reason why MyID is officially approved and regulated under South Korea Financial Services Commission’s “Innovative Financial Services and Regulations Sandbox”.
In fact, ICONLOOP is the only one in Korea that is given the green light to test out all these identity projects in the financial sector. You can say that they have monopolised South Korea’s crypto digital identity space.
In Oct 2019, ICONLOOP raised KRW 10 billion in a Series A funding to prepare for full-fledged market penetration of MyID. They are planning to commercialise it in the first half of 2020. Yes, that means it is coming in 1 or 2 months time from now. The target is to reach 1 million users. Get ready!
4. ICONLOOP’s BROOF
ICONLOOP’s 2nd DID suite of tools is Broof which runs on the ICON public network. What broof does simply is it issues certificates and stores them on the public blockchain. It is tamper-proof and anyone can verify the authenticity of the certificates on ICON network.
The problem they are trying to solve is the falsification of certificates. With so many fake certificates going around, it is hard to verify the authenticity of one. Additionally, the issuer of these certificates also has to maintain a central database for storing all information making it vulnerable to hacks.
Broof helps to reduce the cost and hassle of issuing certificates on paper. Storing all these data on the public blockchain would be more secure and efficient.
Singapore also has a similar blockchain-based certificate platform called OpenCerts. It runs on the ethereum network and all the tertiary institutions in Singapore are using OpenCert now.
Here is a short video of how broof works.
So who is using broof? Korea’s top universities such as POSTECH (“Pohang University of Science and Technology”) will be using Broof to issue graduate diplomas. It is already live as POSTECH recently issued blockchain-based diplomas to 828 students in Feb 2020. Saramin, Korea’s largest HR recruiting company is also using Broof to verify a candidate’s certificate.
When POSTECH and Saramin becomes successful, it would bring about a new wave of mass adoption. More companies, universities, training providers and HR companies would start using BROOF and this in turns translate to higher transaction volume on ICON network.
5. ICONLOOP VisitMe & Meeting Room
The other 2 of ICONLOOP’s DID tools are VisitMe and Meeting Room. It is all related to identity and there is a lot of synergy between all the products and use-case.
VisitMe is a visitor management solution. The idea is simple. Every time when you enter or exit a client’s office, you have to go to the front desk, fill up some form, then exchange your ID for a pass. It is a hassle and you have to do it every time you make a visit.
VisitMe simplifies this process by creating a digital card for you. Whenever you want to visit the client, they would just send you an invitation to book your appointment. Upon reaching the office, just scan the QR code to register yourself. That’s it, simple and convenient.
Businesses can also save administrative costs from hiring a front-desk receptionist. This is because VisitME can now automate the visitor access management process. The ICON blockchain stores this information and you can now track who came here at what date and time easily.
Here is a quick look at how VisitMe works. The product has just entered the beta stage and it has already begun live-testing at ICON’s HQ in Seoul.
VisitMe currently operates on the ICON public blockchain. So when it becomes officially commercialised and more businesses adopt VisitMe, that would drive up demand and value for ICX.
ICONLOOP’s last product is the Meeting Room. ICONLOOP is using the Meeting Room internally right now, so there is not much news on this. I guess it is still in the development phase.
6. ICON Partnership with Korean Government
Adding on to the hopium, ICON is working very closely with the Korean government. There are no other crypto projects that come as close as ICON in terms of government ties.
6.1 Government Stance on Crypto
South Korea is planning to go BIG. The Ministry of Science and Technology has plans to invest US$400 million in South Korea’s blockchain R&D developments over a period of 5 years. They want to stay ahead of the digital curve and blockchain is the underlying foundation of a digital economy.
Here is a quick look at South Korea’s plans with blockchain. ICON is working on a couple of these government projects.
The mayor of Seoul, Park Won-soon, intends to develop South Korea capital into a smart city powered by blockchain. He announced a Blockchain Urban Plan from 2018 -2022 that will cover 14 public services in five areas. Those are labour welfare, vehicle history management, certification issuance, donation management and elections voting.
By 2021, Park wants to turn Mapo, a major district in Seoul, into a blockchain park with more than 200 companies working on the development of distributed ledger technology.
Recently in April 2020, the Vice Minister of Strategy and Finance, Koo Yun-Cheol, held a meeting on blockchain technology with industry experts calling it a “golden opportunity” for the country. He wants private sector companies throughout South Korea to exploit this opportunity.
So you have a scenario that the government wants blockchain to work and needs blockchain companies to implement these solutions. This puts ICON in an extremely favourable position as the government is crypto-friendly and it is in both mutual’s interest to develop South Korea into a blockchain city.
6.2 Seoul Metropolitan Government & ICONLOOP
In 2018, the Seoul Metropolitan Government selects ICONLOOP to be the sole operator of the ‘Seoul blockchain-based ISP Project’. Some of these use cases include car trading system, mobile-voting, contract payments and etc.
ICONLOOP is also helping the Korea National Information Society Agency (NIA) and the Korea National Election Commission (NEC) to build the next generation election system in voting.
The Seoul Metropolitan Government hosted a blockchain international digital festival and ICON showcased the world how the future of Seoul could be like. Here is a video of their prototype on identification, voting and payment. All done on ICON test net blockchain.
At the end of the video, you see a demonstration of a payment system called S-Coin, a digital currency pegged to the Korean Won.
This S-Coin is an initiative launched by the Mayor of Seoul and ICONLOOP. He foresees S-Coins to be used for administrative services such as public polls, paying taxes, welfare programs and etc. The 14 public services under Seoul’s blockchain urban plan would be the first to test out these S-Coins. It is still an ongoing development.
Because of their contributions to the development of the blockchain industry in Korea, ICONLOOP won the ‘Minister of Science and ICT Award’ in 2018. It is an award that recognises ICON as a blockchain industry leader in Korea and they are the first company to receive this honour.
6.3 Seoul Blockchain Governance on ICON
Image Credit: ICON Foundation Medium Blog post
In 2019, the Seoul Metropolitan Government issued mobile letters of appointment to its blockchain governance team using ICON’s public blockchain. ICON network stores these issuance records with each member’s identification number and membership terms. Seoul Metropolitan Government chose the ICON public blockchain because they already have a solid footing on identity verification.
Yes, the government is using ICON. Even though it is just the issuance of letters, it shows the level of trust and relationship ICON has with the government. The CEO of ICONLOOP expects there would be an increase in public blockchain use-cases led by the government. This is just a starting point to show the use-case of ICON. Like all other projects, it always starts small before moving on to bigger things.
7. ICON Blockchain Transmission Protocol (BTP)
It all looks good so far, ICONLOOP is working on multiple projects with the government and major enterprises in South Korea. The next question is “Okay, so how does this benefit the token value of ICX?” How are all these private projects linked to the ICON public blockchain?
The thing that drives the long-term value of ICX is volume and velocity. The more transactions happening on ICON public blockchain, the higher the demand for ICX. That means the private clients from ICONLOOP have to use the ICON public blockchain and ICX for us to see that volume.
let’s have a look at what ICON Foundation and ICONLOOP says.
7.1 Relationship Between ICON & ICONLOOP
“Our team is and has been fully committed to contributing to the ICON project and servicing the ICON Foundation. We view every private network as a potential use case for the public ICON network and consider public chain integration in every private blockchain implementation of ICONLOOP. This is reflected in our consultation and interest from enterprise clients. Since the launch and increased global recognition of ICON, many enterprise clients have shown significant interest in public blockchains and how it can help expand the scope of their network. Currently, most, if not all of ICON’s development resources are dedicated to building out the ICON’s public chain.”
CEO of ICONLOOP and ICON Council Member, Jonghyup Kim
“Our primary focus is on research and development of ICON technology for interoperability between private ICONLOOP networks, and the general public chain. Due to our heavy focus on the public chain, we’ve had to be very selective with our ICONLOOP clients, and decided to work with just a select few.”
ICON Foundation Council Member, Junghoon Lee
What they are saying is all projects are developed with the end goal to connect them to the ICON public blockchain. Hence, ICONLOOP is very selective with its clients. There is no point taking on the business of a client whose end goal is just to stay on the private chain. It defeats the purpose of using a blockchain.
That is where BTP comes in. BTP is a protocol that connects the private blockchain to the public blockchain. So ICON is trying to connect ICONLOOP’s business to the public blockchain. They are planning to release the first draft of BTP 1.0 by Q2 2020. So Yes, it is coming in 1-2 months time from now also. Transaction volume from these private clients would eventually come on-chain to ICON’s public blockchain.
8. ICX Staking and P-Reps Voting
Lastly, ICON’s consensus mechanism is delegated proof of staking. That means you earn rewards in ICX every day for staking your tokens. It is one of the main reasons why I got into ICON.
I usually go for those staking tokens that generate an income. You don’t have to look at REITs and Dividend stocks all the time, there are a ton of them in Crypto, but high risk though. ICON has one of the highest staking yields out there with a nominal yield of between (6% to 36%). If we take into account inflation it is between 6% to 10%.
This is how much ICX I have collected over the past few months of staking. I started out with about 1600 ICX. Every month I would just re-invest all the ICX to compound the returns. At the current price of US$0.27, I would say on average I am earning about US$10 thereabouts each month. Pretty decent.
How it works is that there is a group of communities called P-Reps or Public representatives governing the ICON network. Just like how you have miners around the world mining bitcoin blocks. They make sure each transaction on the ICON network goes through smoothly.
On top of that, they are also responsible for growing the ICON network by building stuff on it. Some of them are doing marketing, some are building DApps, some are building tools, some are doing business development and etc. It depends on their technical expertise and background.
As an ICX holder, you earn rewards by voting for P-Reps whom you think best serves the ICON network. That is how you earn ICX simply.
9. Summary of ICON
In conclusion, you have seen that ICON is very different from its counterparts in the crypto community. While most crypto projects try to bring mass adoption by getting users to use their services or product, ICON does it the opposite way.
ICON starts top-down by working directly with the government and major enterprises to build commercial solutions that will transform the digital economy of South Korea. ICONLOOP has the regulatory approval and they have the network of enterprise connections.
Think about how big the user base is in each of these partners that they are working with. How many people are using the banks, the telecom operators, applying for jobs and etc? It is basically entire South Korea. Mass adoption is going to happen much faster as compared to other crypto projects which are doing it bottom-up. Not to mention the regulatory uncertainties and hurdles they have to overcome.
South Korea is charging forward to becoming a blockchain hub. In March 2020, the National Assembly just passed a bill that provides a framework for the regulation of cryptocurrencies and exchanges. This is very bullish for ICON as crypto won’t go anywhere if the government is against you.
But if the government needs you, it would be like strapping on boosters on a rocket. I believe that is the positioning of ICON in South Korea. It is exciting to see the future of South Korea and ICON’s fruition coming to live in 2020. Meanwhile, keep calm and stake ICX!