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CTO Moon-Ok Cho, “Hdac Will Boost the Korean Industry in the Era of Fourth Industrial Revolution with the Blockchain Technology”

The blockchain has been regarded as the core technology that will lead the fourth industrial revolution, but there is a sharp contrast between the conflicting views on the blockchain technology in Korea. Large companies such as Samsung, Kakao, and SKT have already made dedicated blockchain teams/departments and announced their own business models. However, there is still no government policy to encourage them. In the face of these domestic situations, there is an indigenous company that has entered the blockchain industry as a global player. Dae-Sun Chung, CEO of Hyundai BS&C, a third generation of Hyundai Group, founded Hyundai Pay, a Fintech company in December 2016, and established Hdac Technology, a blockchain technology company in Crypto Valley, Switzerland, in October of the following year to respond quickly to IT trends. Hdac, which unveiled its MainNet in May 2018, pursues a blockchain technology company that can pervade every aspect of markets and industries based on the technology development strategies prioritizing commercialization. For this, Hdac will provide services from blockchain-based B2C services, including a simple payment service or a smart home, which can be easily used by ordinary users to enterprise blockchain solutions that will bring innovation to the industrial field through convergence with innovative technologies such as IoT, AI, FinTech, and Big Data. Hdac said in the press conference in March that it plans to launch a blockchain-based simple payment service and P2P asset-trading service. In addition, the Hdac Enterprise Blockchain Solution can be applied to a wide range of industries including construction and real estate sectors such as smart home, manufacturing sectors such as electronic contracts, purchasing, and production history management, and financial and distribution sectors such as membership points and remittances. Moon-Ok Cho, CTO & CSO of Hdac, in charge of a helmsman as a strategic and technical supervisor in Hdac, which has begun to blow the blockchain innovation in various fields, emphasized the visions for blockchain ecosystem through the interview with ACROFAN. Q1. What do you think about the current status of the domestic blockchain industry? It is true that the domestic cryptocurrency market had been so hot that the so-called ‘Kim-P (abbreviation for ‘Kimchi Premium’, which means that the market price of the domestic cryptocurrency is higher than that of the foreign cryptocurrency) was coined. The abstruseness of the blockchain technology and coin economy brought scammers and speculative forces, and also various negative effects. Due to the speculative frenzy started before the blockchain proved its usefulness, the misunderstandings to view blockchain and cryptocurrency as the same concept, as well as negative publicity about cryptocurrency, have stiffened. Fortunately, domestic companies are doing well. The reason why the blockchain industry in the whole world is paying attention to the Korean market is not just about 'Kimchi Premium'. There have been companies that challenge entrepreneurship in an environment that is not friendly, and I believe that the efforts and intentions of these companies are the driving force for putting Korea in the position of a blockchain powerhouse. In recent years, large corporations in Korea have been making efforts to foster relevant businesses such as building a dedicated blockchain organization, which is a very encouraging phenomenon. Q2. What do you think about a lot of skepticism about the impact of blockchain? A blockchain is a technology that makes transaction information into data blocks and links them, and it prevents data from being forged or falsified through distributed computing method. Therefore, it is the best way to apply to finance or payment services for enjoying the technical characteristics of blockchain. However, these areas are closely related to the national economy and governance of governments, and as such, they are strictly controlled at the national level. That's also why the government takes time to prepare related laws and regulations. However, companies are limited to the development of related business until the institutional framework is established. In addition to financial and payment services, there are areas which can take advantage of the technical characteristics of the blockchain such as services managing important documents including copyrights, legal documents, and contracts, and industrial areas including logistics and trade. Especially, when blockchain is applied to supply chain management (SCM) area, it is expected that the effective value for all the supply chain participants will be very great. In the process of supply, from raw materials to manufacturers, wholesalers and finally end consumers, many processes exist and participants with various roles are involved. The only technology that guarantees the reliability, security, transparency, and scalability of the data generated here is blockchain. The cost reduction by simplifying unnecessary verification procedures and manual work is the main aspect, and the power of the blockchain, combined with technologies such as IoT, cloud, and AI, will be enormous. Q3. It has been quite a while since Hdac had collected substantial funds through ICO in 2017. Isn’t there any materialized business yet? The story of collecting 300 billion won in ICO follows us, but the price was based on the time when the Bitcoin price was over 20 million won. Now, since the bubble has burst, it is time to pay more attention to every step. As we avoid ‘showing off’ marketing activities that deceive people’s eyes and ears like some other blockchain projects, it might have seemed that there is no materialized content, but it is not true at all. Hdac is working diligently and steadfastly to be worthy of the title 'Hyundai Group' and is carefully executing budgets to avoid waste of the funds. As stated at the press conference held in March, Hdac has completed or is carrying out multiple POC projects for Hyundai group companies in various industries. In the public sector, discussions on the actualization of business are underway since the signing of MOU between Busan City and Hyundai Pay in February, and there are still many other things that have not been disclosed yet. I would like to take this opportunity to say that Hdac has worked with Hyundai Heavy Industries to complete the POC for applying the blockchain to the existing electronic contract system, and is currently negotiating the contract of the further project. Q4. It seems that the government still has not decided responses to blockchain. What do you think about it? As long as the blockchain provides the ability to issue a cryptocurrency, it is, in fact, desirable for the government to be cautious about this. It is true that the negative effect of the speculative frenzy of cryptocurrency was considerably big, but the time given to a player in the IT competition is very short. Because the whole world is competing in real time without the border and day and night, it is likely to miss the 'Golden Time'. I think a cautious decision does not necessarily to be long. The operating system installed in most smartphones around the world is Android which was developed by Google and first launched in 2008, or Apple's iOS first announced with iPhone in 2007. Now, even if an outstanding operating system is developed by a Korean company, I think it is almost impossible to go through between them. No one will want to use an operating system that does not have an available app, and no developer will develop an app for an operating system without a user. The similar situation can occur in the blockchain. A major global IT company, Oracle's vice president of the blockchain development group, said in a recent media interview that more than half of the world's enterprises will use blockchain technology in three years. If we cannot avoid blockchain as it is the current of time that cannot be defeated, it may be better to prevent the side effects by putting it in the system. Furthermore, I believe that 'post-Android' could be a blockchain platform developed by a Korean company if the government provides a promotional policy for Korean companies to lead the global market in the long period. Q5. How do you foresee the trends of blockchain market for the next five years? While international standards are important, 'De Facto standards' are more important in the IT field. There are a number of international standards organizations such as IEEE, W3C, GSMA, and ISO, but now, the technologies and services created by open-source projects and companies based on them, Google or Amazon for example, becomes the standards. In other words, when people use it a lot in the real market, it becomes the standard, and we must be able to lead this de facto standard. At present, I think that Etherium is the closest to the de facto standard. Various technology standards starting with ERC become projects, and many developers voluntarily gather here to create a strong ecosystem based on spontaneity. It may be due to the technical superiority of Etherium, but the advantages of 'what people use most' are great. The more users there are, the easier it is to get relevant information. Also, a lot of information will make it easier for new users to come in. It is difficult for such an ecosystem to form in a short time. From this point of view, the future of the blockchain market is likely to become a battle for hegemony. However, it is not easy for followers to take the lead in platform competition, because it depends on how many people use it, rather than how well a particular blockchain is technologically superior. As such, long-term and aggressive promotion policy of the government is urgent. I went to MWC held in Barcelona this year. Although IoT, AI, 5G were the mains, it was not difficult to find companies preparing blockchain technology everywhere. I thought that the blockchain would be in the overall IT industry with IoT and AI at a point in the near future. Blockchain somehow got the spotlight a little early, but it is starting now. Ju-yung Chung, the founder of the Hyundai Group, always said, "Hey, have you ever tried to do it?" I think it is a spirit of the times that we all have to remind ourselves of. ### Moon-Ok Cho, CTO & CSO of Hdac, in charge of a strategic and technical supervisor in Hdac Technology and Hyundai Pay, is a representative FinTech specialist in Korea, who was responsible for ‘T Pay,' the mobile payment service of SK Telecom. In early 2010, he was attracted to the potential of a service model that combines blockchain and FinTech by encountering the blockchain technology for the first time through Hoh Peter In, a professor at Korea University’s Blockchain Research Institute. Moon-Ok Cho is the first-generation architect who introduced SOA(Service Oriented Architecture) to Korea at the time of working at Samsung SDS. Taking the first step into the IT industry as a developer, he has a higher level of understanding and experience than anyone else in both IT and finance, the core attributes of blockchain technology. Recently, he has written a book on Hyperledger development which is to be published.

Hdac Technology Develops New Protocol, Strengthens Enterprise Solution, and “EXPANDS” into FinTech Business

Hdac Technology, a technology company of hybrid blockchain project 'Hdac', announced its business strategy and technology development roadmap at Grand Intercontinental Seoul Parnas Hotel in Seoul, Korea, on March 13. It was announced that Hdac Technology is designed as an enterprise architecture where a hybrid blockchain project 'Hdac' can reflect the needs of diverse industries. It will also revitalize DApp ecosystem with enterprise blockchain service and develop the FinTech business led by HyundaiPay. In the first quarter of 2019, Hdac Technology plans to complete the SDK(Software Development Kit) and API (Application Program Interface) development to establish an enterprise solution development environment and secure a framework. Particularly, by aiming at DevOps, the firm will support rapid and easy development, deployment, testing, and distribution of Hdac-based blockchain infrastructure. In addition, it will actively explore DApp with growth value and act as an accelerator, thereby realizing the increasing value of Hdac and building a platform that can fully cover the ecosystem. The goal is to provide a Blockchain-as-a-Service (BasS) solution that can easily and conveniently build and operate infrastructure and services based on blockchain, even if the company is not a blockchain specialist. Hdac Enterprise Blockchain Solution can be used in a variety of fields ranging from construction and real estate areas, such as smart home and P2P transactions, manufacturing areas including electronic contracts, purchases, process emergency detection, and production history management to finance and distribution areas using membership points or prepaid cards. ▲ Michael Yoon, CEO of Hdac Technology and HyundaiPay (Photo by Hdac Technology) ▲ Moon-Ok Cho, CTO of Hdac Technology (Photo by Hdac Technology) Moon-Ok Cho, CTO of Hdac Technology introduced the plans of Enterprise Blockchain Solution. “In about March or April, Bridge Node, which connects mainnet and a DApp partner’s mainnet, will be released so that DApp partners can develop smart contracts. In the mid to long term, we will evolve mainnet itself to a scalable platform for attracting more DApp partners. What’s more, we are looking into cooperation with global cloud providers to provide the best enterprise blockchain for enterprise customers and to secure global market competitiveness.” In addition, he added, “With the aim of properly packaging blockchain solutions on a framework unit to combine legacy systems that have been maintained and blockchain, we are at the stage of conducting private block chain testing and POC(Proof of Concept) in the industry domain of Hyundai. We are preparing a BasS(Blockchain-as-a-Service) solution that combines blockchain technology with global cloud providers such as Amazon and Microsoft. We expect 2019 to be the first year to lay the foundations for advancing both domestic and global business.” Smart Factory enables application and implementation of various new IT technologies such as AI, IoT, cloud, and blockchain by converting data generated at the manufacturing site into big data. Currently, the firm is in the stage of executing POC with Hyundai-affiliated manufacturing-based companies and considering Smart Factory business that controls various factory facilities and machines and collects data through combination with AI and IoT technology based on blockchain. ▲ Hdac Enterprise Blockchain Solution can be applied across a wide range of industries. ▲ Wallet Service provides a two-sided (user and biz partner) integrated service as a platform for various FinTech services. FinTech business, which is headed by HyundaiPay, is based on offering a payment service that can use cryptocurrency conveniently in daily life. Unlike Switzerland-based Hdac Technology, HyundaiPay is operated as a domestic corporation, so Michael Yoon and Moon-Ok Cho, CEO and CTO of Hdac Technology, are also CEO and CSO and HyundaiPay at the same time, respectively. As for FinTech business based on blockchain, the firm will first expand its business centered on the killer services including Prepaid Point Payment Service and Real Estate P2P Service and secure customers at the same time. After that, it will create a user-friendly Wallet Service platform for actively targeting FinTech market. Prepaid Point Payment Service, which is the core, can be used for simple remittance, on/offline merchant payment, smart home service, and simple payment after issuing a prepaid point, “H point (tentative name)”, with Hdac Coin. The “H point” will be evolved as a stable coin in the future. The charging means includes not only Hdac Coin but also various cryptocurrencies, affiliate points, and account cash transfer. By the fourth quarter of this year, the firm plans to provide gift card purchase services such as department store gift cards and Gifticon, and QR code payment service in retail stores. Moreover, by the first quarter of next year, it plans to expand its use by providing simple payment service at mobile/online shopping malls and payment service of electricity and gas bills at the luxury apartment brand, 'HERIOT', of Hyundai BS&C. Real Estate P2P (Peer-To-Peer) Service will provide profits to investors by selecting real asset products such as real estate. It is composed of investment product guide, product evaluation, credit evaluation of business operator, education, consulting, etc. It prepares FinTech product based on real assets to guarantee stable profit rate to users. In particular, it is planned to provide a blockchain-based P2P platform that enables easy management of real assets and reinvestment into various types of assets in connection with the Prepaid Point Payment Service. In the future, it will be expanded to P2P financial services based on various assets. Furthermore, Hdac Technology will showcase Wallet Service, which will be an upgraded version of the existing Hdac Wallet as a FinTech service platform for end-users and business partners. As any complicated authentication procedure has removed, it is to provide an easy and convenient blockchain-based integration service that allows the general users who do not know the blockchain to quickly register by using only their phone numbers. Wallet Service will provide multi-chain wallet, simple remittance, simple payment, point charging function including two-sided (user and biz partner) integrated service as a platform of various FinTech service as well as user's simple and friendly user experience. It will be conducted in a form of portal service that supports Prepaid Point Payment Service and Real Estate P2P Service. When the environment is created, personalization services will be prepared through AI or data analysis. On the other hand, it was announced that Prepaid Point Payment Service, Real Estate P2P Service, and Wallet Service are all in the process of launching businesses within the year. ▲ Hdac is a hybrid blockchain platform that integrates public and private blockchains. Hdac is a hybrid blockchain platform that integrates public and private blockchain and is designed as an enterprise architecture that combines blockchain and IoT to reflect the needs of various industries. Hdac blockchain core framework includes elements such as consensus algorithm, blockchain, cryptocurrency, P2P transaction, security, VM, and smart contract. Based on this, the functions for B2C business service including Wallet, Explorer, node, mining, ePOW in the mainnet, which is a public blockchain service area. In a private blockchain area, the functions for B2B business such as access and management of channels, DevOps environment for development and operation at the same time, off-chain environment linking the existing legacy data or heterogeneous systems, user membership function with access to blockchain, and operational governance function. Hdac Technology also announced that the Bridge Node, which can compose a separate side chain for the enhancement of DApp ecosystem, will be released by the end of March after finishing its development, inner integrated testing, and verification work. Bridge Node provides off-chain scaling by connecting the mainnet’s core and the side chain core of DApp partner’s mainnet and adding a layer that deals with the contract. It also includes a private key that identifies the individual, allowing the owner of the contract, which occurs on Hdac blockchain, to be clearly seen on the mainnet. This enables audit trail of contracts to ensure reliability and scalability. With the application of Bridge Node, Hdac mainnet will be able to provide three services: Token Service, Contract Service, and Scalability. Token Service can issue tokens through Bridge Node or interchange with Hdac, and record the result of the operation through the contract to Hdac mainnet while maintaining the consensus algorithm defined in each blockchain. Contract Service enables issuance and management of new tokens and provides contract functions as well as Scalability that can design various multi-chains based on Hdac mainnet into an independent governance and chain economy by using bridge node. ▲ An architecture diagram of Bridge Node-based DApp Ecosystem ▲ The private blockchain sector is also negotiating a partnership for BaaS business. Hdac Technology stated that it started the R&D of a new protocol ‘HPOS (tentative name)’ to upgrade existing ePoW, Hdac’s consensus algorithm, to PoS(Proof of Stake)-based consensus algorithm for effective network operation of Hdac mainnet. PoS is a category of consensus algorithm of public blockchain based on the economic stake of the inspectors in the network. It has an advantage of improving energy efficiency compared to a consensus algorithm with mining method, which is a consumptive competition method. In addition, because a certain punishment is possible for actions against the utility and accuracy of the network and disturbances of networks, it becomes possible to freely design about network attacks and to maintain the economically safe-network security. In order to develop this new protocol, the development team of Hdac Technology is communicating globally through the meeting with Joseph Lubin, the Co-Founder of Ethereum, as well as development team of Ethereum POS protocol. The team will pursue a comprehensive partnership such as joint R&D and business collaboration. Hdac also initiated research into issuance technology of security token according to the token specification based on the ERC-1404 standard, and announced that it is studying smart contract on token issuance, transaction, and white labeling processing under legal restrictions . “We will provide a Blockchain-as-a-Service (BaaS) solution that can easily and conveniently build and operate infrastructure and services based on blockchain, even if it is not a blockchain specialist. What’s more, we are looking into cooperation with global cloud providers to provide the best enterprise blockchain for enterprise customers and to secure global market competitiveness” said, Moon-Ok Cho, CTO of Hdac. He added, “We are currently developing a private blockchain framework based on the Enterprise Ethereal Alliance (EEA). In addition to the round-robin method, we will review and develop various consensus algorithms such as PBFT (Practical Byzantine Fault Tolerance), expand DevOps tools, and release a private framework including SDK in the first half of this year.”

‘Ransomware’ and ‘Cryptojacking’ Mining Cryptocurrency Declined, While ‘Formjacking’ Stealing Credit Card Information Increased

Cybercriminals are always wondering about get-rich-quick schemes, that is, how much money they can earn quickly. Cybercriminals have been using cryptojacking to mine cryptocurrency and ransomware to demand money. Recently, however, they are turning their attention to formjacking, a method of stealing credit card information. Cryptojacking, which is the most common way for cybercriminals, is the process of mining cryptocurrency using the processing power of the target computer and cloud CPU usage. With the attention of bitcoin, the notion of cryptocurrency has attracted great popularity. In addition, cybercriminals favored the cryptojacking technique of extracting cryptocurrency by planting malicious codes. However, according to a recent ISTR report released by Symantec, the value of the cryptocurrency ‘Monero(XMR)’ has fallen to 90%, and the cryptojacking peaked at the beginning of 2018, but showed a 52% decline throughout the year. As the adoption of cloud and mobile computing has increased, both the effectiveness of attacks and the profit have fallen. However, cryptojacking should not be ignored as it is still attracting attackers with low entry barriers, minimal overhead and guaranteed anonymity. At the same time, ransomware also shows a decline in overall attack activity and in profit. The number of infections by ransomware fell 20% last year, down for the first time since 2013. However, in 2018, the number of ransomware attacks against enterprises has risen by 12%, showing a contradiction to the overall downturn, which is a constant threat to them. In fact, more than eight out of ten ransomware infections are affecting the enterprises. Furthermore, the ransomware is evolving. Ransomware is mainly targeting enterprises through e-mail with office files. The reason why enterprises are targeted is that they typically use Windows, do not back up important files well, and there will be a lot of profit when the attack succeeds. The certain ransomware families, such as a wanted SamSam, usually attack with a lot of ‘PowerShell’ scripts and mainly target medical institutions and local governments. In 2018, they already attacked at least 67 agencies, and the amount of extortion is estimated to reach $6 million. According to the latest annual report of the IBM X-Force security research, the number of cryptojacking is more than double that of ransomware, as the ransomware attacks were greatly reduced last year. While the attempts to install ransomware on devices in the fourth quarter of last year were declined 45% from the first quarter, the increasing rate of cryptojacking attacks grew to 450%. The industries that received the most cyber-attacks include finance (19%), transportation (13%), service (12%), distribution (11%), and manufacturing (10%). ▲ Cryptojacking is on the decline, but it cannot be ignored. As cryptojacking and ransomware are slowing down, a new form of crime has emerged among cybercriminals, which is ‘Formjacking’. Formjacking is a virtual ATM skimming that steals financial and personal information of individual users through card information and credit card fraud on online purchasing sites. According to Symantec’s reports, on average, over 4,800 websites appear to be infected with formjacking codes every month. It is estimated that cybercriminals will make at least tens of millions of dollars in revenue in 2018 in underground markets such as ‘Dark Web’. Information that was hijacked by formjacking is sold for up to $45 for one credit card. In the case of British Air, where more than 380,000 pieces of credit card information were leaked, the offenders are expected to earn more than $17 million. Individual users cannot know whether visited online sites are infected without using a security solution, so their risk of identity theft and personal and financial information are likely to be exposed. For companies, the risk of attacking the supply chain as well as the risk of reputation or legal liability experienced during infection is increasing. Formjacking, which is continuously on the rise, is expected to continue in 2019 and beyond. Cybercriminals are constantly intellectualizing and diversifying their methods of attack. Cryptojacking, which has been crammed with cryptocurrency, but the attack rate has fallen by 52% when the value and attack effect have fallen, and also ransomware has an attack pattern concentrated on enterprises that suffer greater than individuals. Though the attack has diminished, cybercriminals have evolved to develop more intelligent techniques and to use various other methods, such as formjacking, to launch various attacks. In addition, the number of formjacking has increased, making cybercrimes more likely to occur to ordinary users who are not related to cryptocurrency or enterprise computers. Even ordinary users who have been excluded from the target cannot easily know whether they have been infected after making a payment on their website. In the United States, the structure of online shopping is easy and fast based on JavaScript, making it easy for cybercriminals to do formjacking. Korea seems to be relatively safe because it has a different payment method and does not use JavaScript, but it has to be noted that recently cases of overseas direct purchase have increased and damage cases are increasing rapidly as well. As the attacking method is becoming more intelligent and diverse, users are advised to recognize and prevent the danger. In addition to the aforementioned cryptojacking, ransomware and formjacking, in 2019, security will be important in various aspects such as clouds, 5G and IoT devices. Users need to avoid crybercrimes as intelligent as the cyberciminals through improving their security awareness and getting more comprehensive training on threat limitations and corrective actions. ▲ Formjacking is emerging as a new information extortion method.

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