New digital certificates

After many twists and turns, the government’s official certificate authentication system will be phased out, 21 years after its introduction. Lawmakers approved a bill to amend the Digital Signature Act, Wednesday, at the final plenary session of the 20th National Assembly. This will end the use of online authorization certificates and allow various digital signatures to compete freely with one another. The official certificates will be crowded out of the market by more up-to-date alternatives based on new technology.

One can hardly deny that the authentication system, since its launch in 1999, has contributed to the use of electronic administrative services, such as in issuing civil affairs documents and internet banking. However, its issuance procedure was cumbersome while the related plug-in service, ActiveX, could only be accessed using Microsoft Explorer, causing major inconveniences for users. Former President Park Geunhye instructed her Cabinet to resolve the ActiveX problem, and President Moon Jae-in also vowed to abolish it during campaigns.

ActiveX has often been the target of hackers. As the official certificate authentication system enjoyed monopoly status, however, related industries had little motivation to invest in strengthening cyber security. Nor could consumers expect free competition in the certification market.

The fact that it took the industry more than two decades to discontinue the system shows how difficult it is to break the vested interest built on a monopoly status and firmly fixed “path dependency.”

Competition in the accreditation market, which began with the controversy over abolishing the official certificate authentication system, demonstrates the power of the market. Alternative methods to replace the old system include fingerprint and iris-reading services that are installed on smartphones.

Free competition gives rise to new markets and businesses. The biggest lesson of the official certificate authentication system for the government is it should know when to intervene in the market and when not to. Competition devoid of discrimination is a precondition for an ecosystem for innovation.