The world of ESG led by Blockchain technology

Lee Sirgoo addressing the AsiaN forum

By Lee Sirgoo
CEO of Dunamu

SEOUL: Hello. This is Lee Sirgoo, the CEO of Dunamoo Co., Ltd. Dunamu is running Upbit, a coin exchange with a lot of talk.

When it comes to blockchain, many people think of it as the main culprit of environmental destruction. Actually, there is no such aspect. Even if you look at just one bitcoin, it takes a lot of energy to mine, so it consumes a lot of power. We perceive it to be the kind of technology that is a bit at odds with the environment. Nowadays, there are eco-friendly technologies that come out through a method called a consensus algorithm, leaving the mining method. Nevertheless, awareness itself is a very anti-environmental industry.

When you think of blockchain, words like ‘coin jackpot’’ come to mind. We once conducted a survey on ‘What do you think about the cryptocurrency exchange Upbit?’. The most interesting answer was ‘Kangwon Land in my hand’.

Focus on price, not technology utilization

There are so many types of coins, and even if you don’t understand them all, you may buy them because of their pretty names. It is a speculative market. Today, CEO Park Young-ok pointed out various problems in the capital market, but the coin market does not even have such protection.

Smart contracts that expand the blockchain world

Blockchain uses encryption technology to accurately fill in the ledger, and has the advantage of preventing hacking or forgery by tying encrypted blocks like a chain. Despite these advantages, a smart contract function that can insert specific conditions was introduced as a platform coin called Ethereum came out at a time when I had a question about ‘where the hell am I going to use this? A smart contract is a function when a programming engineer inputs a certain condition and is executed only when the condition is met.

Even the organization itself can program and run it. In the future, it may be possible for corporations to do the same. Dao (Decentralized Autonomous Organization), which is popular these days, can also be configured as a program. There are many good examples related to ESG in this area as well.

Representative examples from each field of ESG will be introduced. The first ‘E’ is a case related to carbon credits. It is a project that IBM is carrying out in China, and it is a technology to measure the carbon emissions of each company in real time by combining block chain and IOT technology.

‘What is your goal and how much you are emitting, so reduce or increase how much more. If there is no way to reduce it, tokenize (coinize) that much. If you buy the same amount of coins from another place that has reduced emissions, I will recognize it as a reduction.” It is a technical solution to reduce carbon emissions with a system that trades carbon emission credits in coins.

This time it is a case related to ‘S’. The Food Organization of the United Nations was awarded the Nobel Peace Prize in 2020. Among the projects they have done, there is a ‘Jordan Project’ that uses blockchain technology. Usually, when food is delivered directly to relief workers, a lot of leakage occurs in the middle.

When money is passed on to the local government, labor costs are incurred there and sometimes it is used incorrectly. Even if the money goes directly to people, there are cases where the money is used to buy alcohol and cigarettes. We need to check whether relief supplies are going to those who really need them, and this is where blockchain technology is used.

I see a lot of negative perceptions. The main reason is that everyone has an eye for price. They just look at the price and say, “It went up” or “It went down”. Bitcoin is only discussing the price of ‘10 million won or 80 million won’, but there is not much interest in ‘how can it be used by using blockchain technology’.

Let’s go back to 20 years ago for a moment. At that time, the dot-com boom was just blowing. It was a time when the FSS warned ‘beware of investors’ and ‘beware of fraud’ because they made a website and invested 5 billion won and 10 billion won each. At that time, the Kim Dae-jung government created the Venture Support Act and nurtured ventures despite many such accidents.

As a result, Naver, Kakao, and good IT companies such as NCsoft were able to emerge. If I said, ‘There is a possibility that really good companies will come out. In the future, AI or IOT will come out of this place’, you would have heard scammers.

I think the same goes for blockchain. There are many scams and many accidents, but there are many possibilities.

Jordan Project (Photo: Courtesy of Dunamu)

If you look at the picture, the one on the right is a clerk and the one on the left is a refugee. When refugees receive cryptocurrency in their personal e-wallet and go to a specific market, they first identify who they are by iris recognition. When your identity is verified, you pay for the things you want to buy with coins. When I try to buy alcohol, I can’t pay. When you buy daily necessities, you pay with coins, so the unit is not large, but you can deliver essential relief supplies to refugees.

Tokenization of financial products, transaction efficiency

As for ‘G’, CEO Park Young-ok also talked a lot about the stock market, but I think all financial products will eventually be tokenized. In this way, transaction efficiency can be achieved. In the current system, if you buy or sell stock, it will be converted into cash within 3 business days. In order to hold a general meeting of shareholders, a notice of convocation must be sent one month in advance. There are some inefficiencies that have room for improvement.

‘Samsung Electronics stocks are made and sold as tokens’ What will happen then? You can buy and sell 24 hours a day. Payment is made immediately upon sale. In addition, shareholders’ voting rights can be exercised in real time, and real-time notifications can be sent. Blockchain can be used to achieve these efficiencies. In this way, the voices of minority shareholders will be able to grow louder.

Here, by borrowing some of the smart contract technology mentioned earlier and creating a program with ESG-related conditions, the program can be designed so that a certain amount of money is used for ESG during the actual operation of a corporation.

Because blockchain is developed based on open source, you can see all of these processes. In the end, transparency is what ESG pursues, so I think the goals are the same. In other words, if you make good use of the technology of blockchain, it can be of great help in expanding ESG.

Lee Sirgoo, CEO of Dunamu, started his career as a reporter for the

Joong-Ang Il-Bo (Central Daily News), and has been at the forefront of the Korean IT industry, serving as the co-CEO of Kakao Corporation, the co-CEO of Daum Kakao, the digital general manager of the Joong-Ang Il-bo, and the CEO of Dunamu.  

Upbit, a cryptocurrency exchange operated by Dunamu, is maintaining its position in the global TOP 5 based on trading volume. As a representative of Upbit, a global cryptocurrency exchange, he is emphasizing the importance of building a correct blockchain ecosystem.

NOTE: 

This lecture was delivered by Lee Sirgoo  at the AsiaN Forum marking its tenth anniversary.

The forum, ‘Next Leadership Toward Active ESG’, feature prominent figures and experts, led by former United Nations Secretary-General Ban-Ki moon who delivered the keynote speech.

AsiaN is the media arm of the Asia Journalist Association (AJA).