What Makes South Korea the World’s Biggest Cryptoland
For anyone familiar with the dynamics of crypto markets, it comes as no surprise that South Korea is the world’s third biggest trading market, trailing only the US and Japan. For most people trading in the Western world, the overnight “Korea effect” has become a familiar phenomenon, as the high volumes traded in South Korea when most Western traders are asleep tend to have a strong impact on the currencies’ fluctuations.
With a population of 51 million, the Korean Won, is the third most traded currency for Bitcoin. It boasts one of the world’s biggest markets for Ethereum (by absolute volume) and has the biggest concentration of crypto investors in the world (over two percent of the population are active traders — many more have invested long-term).
These figures are extraordinary and far exceed any other country in the world in terms of adoption. In Korea exchanges like BitHump, Coinone or Upbit are household names, with open offices where crypto traders can exchange tokens in person.
The interest is so high that Bitcoin and other currencies in Korea are often traded considerably above market price in what has been dubbed the “Kimchi Premium” (after South Korea’s staple dish). At its hype, the Kimchi Premium was as high as 50% above market prices in other parts of the world.
South Korean Cryptocurrencies, a Love Story
A number of variables are at play for making South Korea the epitome of crypto land. First, the country has one of the world’s best internet networks. Almost everyone in South Korea is constantly connected to the web, regardless of gender or age. Second, the country is very technology-focused, with names like Samsung, the SK Group or LG amongst its leading firms. Third, the younger generations are tech-savvy and highly educated, with the vast majority holding post-secondary degrees. Lastly, and most importantly, the rising cost of living, the lack of jobs to absorb all of the country’s highly educated young and the lack of other investment opportunities, have all combined to make cryptocurrencies this generation’s shot at prosperity. Nowhere else in the world have these factors combined in such a strong way as in South Korea.
This conversion of variables did not mean that Koreans arrived particularly early at the market. Most of the volume growth in Korean exchanges did not materialize until relatively late in 2017. Unsurprisingly, this meant that a lot of people invested a lot of money just before the December market bust, giving rise to a social phenomenon called the “Bitcoin Blues”, defined by the psychological blow that losses incurred by the Bitcoin bust caused.
And yet, the craze around cryptocurrencies continues in a maturing market, with South Koreans moving from simple investors to promoting some of the world’s most interesting blockchain projects.
The Korean Ethereum
One of the biggest success stories coming out of South Korea is ICON, which has been dubbed the Korean Ethereum. ICON is building an ecosystem known as the ICON Republic, which in essence uses smart contracts to connect different blockchain ecosystems, aiming at “building one of the largest decentralized networks in the world”. ICON has received great international attention and last year raised nearly USD$43 million in a crowd sale. Here at Coinvision we follow ICON’s progress very closely. In fact, just in April an entry point alert went out on our exclusive Discord community that saw many of our members make a solid 255 profit in just 12 days.
While the most popular, ICON is just one of a multitude of blockchain based projects that have emerged in South Korea in recent months. Blue Whale, Terracoin, Doom Network or Public Network are only a few of the better known projects coming out of Seoul and that we follow closely here at Coinvision.
Sentinel Protocol and Fantom are another two very interesting projects coming out of Korea. They are both in ICO phase and currently rank number 5th and 6th respectively on Coinvision’s ICO Top 20.
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These projects and developments intertwine into a social fabric that is perhaps unique to South Korea in its intensity. Clusters, hubs, blockchain cafes and clubs have sprouted all over. Hashed, perhaps the best known of these blockchain dedicated venues, hosts and accelerates dozens of startups focused on DLT development and manages a wide crypto-investment portfolio. In fact, it was responsible for hosting ICON at its birth and is now home to Sentinel Protocol.
Further, in the run up to June 2018, blockchain is gaining considerable space in the public debate, with the Mayor of Seoul demonstrating strong support for the technology. In APril he announced the Korean capital city is developing its own cryptocurrency “S-Coin” that will be used in public social programs.
Korea ICO Ban
These are the reasons why when the Korean blockchain ecosystem sneezes, the global markets get a cold — and sneezed it has. The sheer level of disruptive adoption of crypto trading amongst Koreans made the state so nervous that in September last year it tried to address the lack of regulation surrounding ICOs by threatening banning them all together. Two months later, it barred all minors and non-resident foreigners from trading cryptocurrencies. When the police raided the offices of the Bithumb and Coinone exchanges on January 9th, the price of Bitcoin crashed from over USD$16 thousand to just above USD$13 thousand in less than 24 hours. Since then, authorities have hinted at banning crypto trading all together by closing down exchanges, a threat that the advent of decentralized exchanges is promising to put an end to.
However, despite this month’s raide of UpBit’s offices in a case related to money laundering, Korean politicians seem to have moderated their attacks on the crypto universe. Yoon Suk-heun, who was appointed governor of the Korean Financial Supervisory Service (FSS) has since made supporting comments about blockchain technology, stating that regulation should help the market grow rather than squash it. Efforts are being made by some legislators to also reverse the attitude towards ICOs fronted last year that so many Korean companies choosing to settle in other more friendly markets like Switzerland or Gibraltar to launch their crowd sales (even if the ICO ban was not effectively made into law).
Just last week, reports stating that South Korean officials intend to adopt the unified cryptocurrency regulations being developed by the G20 countries indicates that bigger clarity should soon be reached on the country’s regulatory stand. Until then, however, the future of crypto trading, ICOs and blockchain technology development in South Korea remains surrounded by doubt, which is rarely a positive thing for market trading.
And that is South Korea in crypto for you in 5 min.
We will continue to follow the South Korean market and bring you the most interesting projects coming out of the Korean peninsula so stay tuned.
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