Why is Cryptocurrency Trading Popular in South Korea: Investors were paying attention to the performance of cryptocurrencies in key markets as cryptocurrencies rose towards 2020. One of these markets is South Korea. The South Korean National Assembly approved new legislation in March 2020 that allowed for regulation and legalization.
This was done in recognition of the growing cryptocurrency ecosystem, even during the COVID-19 crisis. This legislation was created to supervise an emerging industry and create rules for anti-money laundering.
The young generation of South Korea sees cryptocurrencies as a way to prosper in an environment of high unemployment.
South Korea is a long-standing early adopter and proponent of new technology. The culture is so open to new opportunities and technological innovations that it has been able to do so for many years.
The stateless investment of cryptocurrencies appeals to South Korean investors who are wary about the political climate and the proximity to North Korea’s threat.
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South Korean investors are keen to invest in cryptocurrency and digital assets. According to survey data from 2021, 40% of 1,885 respondents said they have invested in cryptocurrency. Surprisingly, 49.8% of South Korean workers between the ages of 30 and 39 said that they had invested in cryptocurrency. The 37.1% followed by workers in their twenties.
These data provide valuable insight into South Korean investor acceptance for blockchain and cryptocurrency. A positive outlook and a positive attitude have fueled investment in what many South Koreans consider the future for finance.
The excitement that South Korean investors have felt about digital assets has had a negative impact on their ability to make money. Regulators and criminals are now aware of the situation. South Korea is currently undergoing a cryptocurrency crackdown to increase exchange transparency, decrease criminal activities like money laundering and provide crypto investors with a layer of regulatory safety.
What is the attraction of cryptocurrencies in South Korea?
Many newspaper reports and articles have examined the South Korean affinity for cryptocurrency and offered theories about why they are so popular. These theories can be summarized into three main points.
The country’s current economic situation is the first reason cryptocurrency has become so popular. Although the economy is large and well-developed, South Korea still has a high rate of youth unemployment. In 2020, the unemployment rate was between 7.5% and 11%.
This pattern will continue into 2021. In February, March, and April 2021, the youth unemployment rate was 10%. The unemployment rate fell to 9.3% in May and to 8.8% in June.
The government announced a program to encourage small and medium-sized businesses to hire young workers. However, in 2018, cryptocurrencies emerged as a viable option for financial stability for young South Koreans who live in a hierarchical society with high living costs and a highly competitive job market.
According to The Verge, “For young Koreans cryptocurrency seems like a rare chance at prosperity.” A 20-year-old journalist is quoted in the same article, who believes that cryptocurrency investments can also be a way for a well-educated and homogenous workforce to stand out from their peers.
Another reason cryptocurrencies are so popular is their familiarity with micropayment transactions. South Koreans are long-time early adopters of technological innovation, be it social networks or games. It has the fastest Internet speeds in the world and has developed a telecommunications system to allow mobile payments.6 Japan is another country where cryptocurrency trading is very popular.
South Koreans are more comfortable using electronic micropayments because of their robust gaming industry. This idea is still being adopted in the West. Hangame, a Korean gaming firm, earned $30,000 per day using micropayments at 50 cents each in 2001 when online casual gaming was almost free. The same company earned $80,000 per day by the end of the year and had reached $93 million in revenue within three years.
Its games and black markets have seen a flurry of businesses. 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.
Political uncertainty is the third reason cryptocurrencies are so popular. The third reason for cryptocurrency’s popularity is political uncertainty. South Korea’s neighbor North Korea is considered a “state of concern.” North Korea has made rapid advances in its nuclear weapons program, which it claims is essential to defend itself against an invasion by the United States.
The nation revealed a submarine-launched missile ballistic missile in early 2021 that it called “the most powerful weapon in the world.” This was done at the parade of Kim Jong-un, just days before Joe Biden’s inauguration as US president.8 Bitcoin isn’t tied to any country, so it appeals to investors who are concerned about North Korea’s intentions.9
The bottom line
South Korean investors have found cryptocurrencies attractive due to their familiarity with micropayment systems and political uncertainty. It has been a pioneer in the adoption of important technologies that can transform the world. The country could lead again in incorporating cryptocurrency into mainstream trading.
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