Since crypto currencies rising towards the end of 2020, a lot of investors were taking a particular notice of the performance they have made in certain major markets. South Korea is one of these markets. In March of 2020 South Korea’s National Assembly passed new legislation. South Korean National Assembly passed new legislation that opened the way to regulate and legalize the use of cryptocurrency exchanges and crypto currencies.
The move was made in light of the emerging cryptocurrency industry, even amid the COVID-19 epidemic. The law was created to monitor the growth of the sector and establish rules for the prevention of money laundering The legislation was drafted to regulate processes .
- South Korea has long been the first to adopt new technology. The society is so tolerant that the Koreans are quick to adopt the latest technological advancements and new opportunities.
- The cryptocurrency market is a stateless investment and attract South Korean investors wary of the political environment and their closeness to the threat from North Korea.
- Cryptocurrencies are an investment option that is popular with the young generation of South Korea who view them as a pathway towards prosperity in a world of high unemployment and constant inflation.
South Korean investors have been looking to invest in cryptocurrency and digital assets markets. According to the data of the survey for 2021, 40.4% of 1,885 respondents said they had made investments in cryptocurrency. Surprisingly, around 49.8 percent from South Korean workers aged 30 years and older stated that they had invested in cryptocurrency. The younger generation were next with 37.1 percent.
This information provides valuable insight on what appears the South Korean investor acceptance of blockchain and cryptocurrency. A positive outlook has fueled the interest in investing in what South Koreans consider the future of finance.
However, the enthusiasm that is shared among South Korean digital asset investors hasn’t been without consequences–as the enthusiasm has drawn the attention of regulators and criminals alike. This is why South Korea is in the process of cracking down on cryptocurrency that aims to increase transparency in exchanges and decrease criminal activities such as cash laundering and to provide a layer of security for investors in crypto.
What Is the Allure of Cryptocurrencies for South Korea?
Many newspaper articles and articles have looked into the inclination for South Koreans for cryptocurrencies and develop theories about their popularity. These theories can be reduced to three.
The primary reason for the rise of cryptocurrency is the economic climate in South Korea. While it’s quite big and prosperous country but it is a South Korean economy suffers from an issue of youth unemployment. In the year 2020, the rate of unemployment varied between 7.5 10% to 11%, and it will continue the same pattern until 2021. The rate of youth unemployment was 10% during the months of February, March in April, and February 2021. As of May, the rate of unemployment fell to 9.3 percent, and by June, the rate fell further to 8.8%.3
The government announced a plan to offer incentives to small and medium-sized companies to employ young workers.4 After the Bitcoin bust in 2017, cryptocurrency emerged as a possibility of secure financial stability in the year 2018 for the young South Koreans living in a social system that is a hierarchical one with high expenses for living and a highly competitive job market.
“For young Koreans, cryptocurrency seems like a rare shot at prosperity,” an article in the website The Verge states. The article also includes a young journalist who believes that investments in cryptocurrency are also a way for a mostly educated and homogenous workforce to differentiate themselves from their peers.
Micropayments are a common feature in the South Korean market. This is another factor in the popularity of cryptocurrency. South Koreans have long been the early adopters of technological innovations regardless of whether it’s gaming or social networks. Also, it has the fastest Internet speeds as well as a highly developed communication system that can support the use of mobile payments systems. Japan, another nation that has an enviable reputation for cryptocurrency trading is also experiencing the same.
A thriving gaming industry has brought South Koreans comfortable with electronic micropayments. This idea isn’t yet gaining traction within the West. For instance, Hangame, a Korean gaming firm, earned revenues of $30,000 per day based on micropayments that cost 50 cents each in 2001, when casual online gaming was largely free. At the end this year, that company was making $80,000 per day, and within 3 years exceeded $93 million in revenue.7
Businesses have popped in the vicinity of its games , as well as black markets. While cryptocurrency-related businesses have yet to see similar revenues, they may be poised to do so now that the South Korean government is putting the appropriate regulations in place.
The third factor that has led to the rise of cryptocurrency is the uncertainty in the political landscape. Its neighbor to the south, North Korea, is classified as an “state of concern.” North Korea has made rapid advances in its nuclear program, which it says is essential to protect itself from an eventual US invasion. In the early 2021s North Korea revealed a ballistic missile launched by submarines, that was described as “the world’s most powerful weapon.” The announcement was made during an event led by Kim Jong-un. It was also a few days before the official inauguration of Joe Biden as US president.8
Since Bitcoin is not tied to any government Bitcoin is appealing to investors who are skeptical of the intentions of North Korea.
The Bottom Line
The mix of political instability, acquaintance with micropayments systems, and economic issues created cryptocurrencies as a viable option to South Korean investors. South Korea has been the first to adopt important technologies that are changing the world. It’s possible that the country could take the lead again by incorporating cryptocurrency into mainstream trading.
Making investments in cryptocurrencies as well as various other Initial Coin Offerings (“ICOs”) are highly uncertain and risky This article is not an endorsement from Investopedia or the author to invest in cryptocurrency or any other ICOs. Because every person’s circumstances are unique and requires a professional with experience must always be sought out prior to making any financial decision. Investopedia does not make any claims or representations regarding the reliability or accuracy of the information in this article. In the year that the article was published, the author has a small amount of bitcoin.
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