Other factors that discourage the use of bitcoin on top of its volatility are prejudice that digital currencies are often used in criminal activities, including the drug trade and tax evasion, and its vulnerability to theft and hacking. (image: KobizMedia/ Korea Bizwire)
SEOUL, Dec. 12 (Korea Bizwire) – Bitcoin – once hailed as the world’s digital currency of the future – is gradually waning in popularity.
According to the Financial Supervisory Service, the amount of bitcoin in circulation at three of Korea’s largest bitcoin exchanges was 1.49 million from January to October this year, a number that is likely to fall short of last year’s figure of 1.68 million.
Bitcoin was first introduced in 2008, invented by an anonymous programmer (or programmers) referred to as Satoshi Nakamoto, who also conceptualized the idea of blockchain, which is used as a public ledger for all bitcoin transactions.
Although they can be used to purchase goods and services both online and offline at companies that accept them, local authorities speculate that a large majority of Koreans are using bitcoins as an investment rather than for payment, given that few local businesses (about 100) accept the digital currency.
Just like any other currency, the value of a bitcoin can fluctuate, often by significant values relative to other physical currencies, making it a highly attractive product to invest in, but at the same time a risky one. One bitcoin, which was priced at $452 on May 1, now stands at $767 – a 70-percent increase in value in seven months.
Other factors that discourage the use of bitcoin on top of its volatility are prejudice that digital currencies are often used in criminal activities, including the drug trade and tax evasion, and its vulnerability to theft and hacking, which seemingly happen more often than expected despite claims of impenetrable security from the currency’s proponents.
“Bitcoins have lower international wire transfer fees (than conventional currencies), but most Korean residents wiring bitcoins from Korea to other countries are foreign workers from China, the Philippines, Indonesia, and so on,” said an official from a local bitcoin operator. “There are Korean students studying overseas taking advantage of this capability, but still only a few.”
Despite the uncertainty of bitcoin as the digital currency of the future, its core software technology, blockchain, is highly praised for its security with some financial authorities and businesses around the world embracing the system.
In Korea, 21 local financial investment companies launched a blockchain consortium earlier this month to help establish blockchain solutions in personal authentication, clearing and settlement automation, and over-the-counter trading.
By Joseph Shin (jss539@koreabizwire.com)
