Bitcoin made the news recently due to a dramatic fall in value in September.
Caused, at least in part, by the closure of some of the world’s most popular Bitcoin markets in China, to many, the fall in value showed how risky investing in the currency is.
However, what you may not know is that Bitcoin has since seen a remarkable resurgence and on Oct. 13 it reached a new highest ever value of $5,856.10.
One country that has really taken to Bitcoin and cryptocurrency more generally is right here in Korea. In fact, trading volume on Bitcoin in the country has surpassed that of the country’s main stock exchange, KOSDAQ.
The recent rally in Bitcoin prices has even been partially put down to increasing demand in South Korea. In fact, at one point, Bitcoin in Korea was trading at $46 above theglobal average.
As well as this, two of Korea’s most popular Bitcoin exchanges have set up shops in Seoul that people can visit in person to buy and sell coins.
This is all happening in a changing environment where the government is starting to introduce ways to regulate coin trading in Korea.
There have been many reasons suggested for why Korea is such a hotbed of Bitcoin activity. Some people have pointed to high entry barriers to those wanting to trade on the stock exchange and the fact that gambling is heavily regulated.
The more optimistic observers out there suggest that the simple fact is that the value of Bitcoin has been constantly increasing and that people look at it as a good investment. They say that the people investing in cryptocurrencies are simply taking advantage of an asset that is always going up in value.
▲ The price of Bitcoin on cryptocurrency exchange Korbit. Screenshot from Korbit.com
Another reason for its popularity could be the fact that several high profile Korean companies have become involved in projects related to cryptocurrency.
Samsung, along with Microsoft and J.P. Morgan Chase, joined an alliance that aims to create a computer system based on the cryptocurrency network Ethereum.
While the plans that companies like Samsung have won’t actually involve Bitcoin itself, the simple fact that it is being associated with such a popular and trusted brand has been great for popularising cryptocurrency in Korea.
Meanwhile, computer game giant Nexon has reportedly agreed to buy a 65 percent stake in coin trading exchange Korbit, suggesting that they also believe the blockchain market will continue to grow.
The start of a new era?
However, in part due to the increasing popularity of the currencies, the recent trend seen worldwide is that of governments looking to regulate their trade.
In fact, since July this year in Korea, various task forces have been set up and bills slowly announced to help regulate the trade of cryptocurrencies and also to ensure the safety of consumers in Korea.
Since these policies were announced, other more invasive policies have been introduced including banning ICOs (Initial Coin Offerings, a fundraising mechanism were new projects sell their underlying crypto token in exchange for Bitcoin or other coins) and also most recently, discussing how best to tax the cryptocurrency.
Of course, regulation is not something new to cryptocurrency and in fact, many countries have set-up regulations on how the coins can be used.
Two of the biggest cryptocurrency markets out there; the United States and Japan, have both set up guidelines for how to tax the profits made from cryptocurrency.
It seems though, that as of yet cryptocurrency users in Korea have not been put off by any of these threats of regulations.
In fact, if other countries are to go by, regulations could actually cause the volume of trading to increase. In Japan, for example, a national licensing program caused cryptocurrency trading volume to increase.
This could also happen in Korea. The above-mentioned regulations on cryptocurrency exchanges could be seen by some as a government stamp of approval. Something that makes buying and selling cryptocurrencies in Korea more secure than ever before.
Surely, it's not all roses?
There are still issues though. As is the case with many things in South Korea, its northern neighbors are never far from the story.
Reports have suggested the not only is North Korea trying to mine new Bitcoin they are also thought to have hacked into currency exchanges both in South Korea and elsewhere as a way of raising funds.
This shows two of the main problems that people have with cryptocurrencies. The first being that the security of exchanges is generally not regulated and, as such, likely to vary in strength.
The second that it shows is that cryptocurrency can potentially be used to raise funds for illegal activities, to the point where it seems like North Korea see it as a possible way to generate funds in an environment where they are under sanctions being enforced by the most powerful countries in the world.
The other main problem would seem to be the fact that other than the promise of potential, when it comes to actually buying things, the coins have little to no value in Korea.
While there are plenty of people and companies who are fully behind cryptocurrencies, there are also many who don’t see the value. Jamie Dimon, head of J.P. Morgan Chase, has recently suggested that people who buy Bitcoin are stupid and setting themselves up for loss.
While there are some services worldwide that accept cryptocurrency and its use on the darknet has long been a source of controversy, it is pretty much impossible to buy or sell things in Korea using the currency.
This means that currently, the value is mainly due to the fact that someone else is willing to pay you for the currency and also in its future potential, as opposed to the fact that you can purchase things with the currency.
Of course, cryptocurrency in Korea is seen as a way to make money. The fact that the price of these currencies is (albeit in a very volatile way) pretty much constantly rising means that, at the moment at least, it would currently seem to be a good way to do so.
As long as this continues to be the case it would seem like the popularity of the coins is set to continue.
ⓒ Jeju Weekly 2009 (http://www.jejuweekly.com)
All materials on this site are protected under the Korean Copyright Law and may not be reproduced, distributed, transmitted, displayed, published without the prior consent of Jeju Weekly.
Mail to email@example.com | Phone: +82-64-724-7776 Fax: +82-64-724-7796
#505 jeju Venture Maru Bldg,217 Jungangro(Ido-2 dong), Jeju-si, Korea, 690-827
Registration Number: Jeju Da 01093 | Date of Registration: November 20, 2008 | Publisher: Hee Tak Ko | Youth policy: Hee Tak Ko
Copyright ⓒ 2009 All materials on this site are protected under the Korean Copyright Law and may not be reproduced, distributed, transmitted, displayed, published
without the prior consent of jeju weekly.com.