With over 1 million cryptocurrency trading accounts, the high level of public interest in virtual currencies in the third-biggest market has surprised the rest of the world, swaying prices in the international market. (Image courtesy of Pexel)
SEOUL, Jan. 27 (Korea Bizwire) — The cryptocurrency craze continues to sweep across South Korea despite the government’s hard-line stance, particularly thanks to young people who are hoping to turn their lives around with a get-rich-quick investment scheme.
With over 1 million cryptocurrency trading accounts, the high level of public interest in virtual currencies in the third-biggest market has surprised the rest of the world, swaying prices in the international market.
Earlier this month, reports that the South Korean government was planning to introduce stricter regulations, including a possible all-out ban on cryptocurrency trades, saw the values of cryptocurrencies plunge, with Bitcoin at one point dropping 14 percent in value, according to cryptocurrency exchange Bitstamp.
Billionaire investor Warren Buffet has said he would never invest in Bitcoin, predicting that ‘cryptocurrencies will come to a bad end’ during a CNBC interview. The Guardian also reported that Nobel Prize-winning economist Robert Shiller warned bitcoin won’t be a ‘permanent feature of our lives’ while speaking at the World Economic Forum in Davos on Thursday.
Despite the warnings, the interest in cryptocurrency investment shows no sign of stopping soon, and experts say frustration with a lack of social mobility is behind the investment boom among young South Koreans.
According to WiseApp, a mobile app analysis, nearly 1 in 4 cryptocurrency app users were in their 20s, the biggest age group following those aged between 30 and 39.
The cryptocurrency craze continues to sweep across South Korea despite the government’s hard-line stance, particularly thanks to young people who are hoping to turn their lives around with a get-rich-quick investment scheme. (Image: Kobiz Media)
Kim Jung-sik, a professor of economics at Yonsei University, says the affordable nature of cryptocurrency investment has appealed to young people.
“As young people feel like their monthly income will never be enough to purchase a home, many see bitcoin and the lottery as one last chance in their life,” Kim said.
Adding fuel to the fire is South Korea’s high youth unemployment rate, drawing a stark contrast with other advanced economies where growing job opportunities are being recorded.
Data from the Organization for Economic Cooperation and Development (OECD) says the country’s unemployment rate among those aged from 15 to 24 reached 10.2 percent between July and September of 2017.
Along with the growing interest in cryptocurrency investment, an increasing number of young South Koreans are using their savings to go into property speculation.
Many young people are taking a chance in so-called ‘gap investment’, a method in which investors buy an apartment amid soaring prices, which they can then rent out to recoup their investment.
According to WiseApp, a mobile app analysis, nearly 1 in 4 cryptocurrency app users were in their 20s, the biggest age group following those aged between 30 and 39. (Image: Yonhap)
According to data from the National Tax Service. the number of buy-to-rent investors in their 20s jumped 20 percent last May compared to the previous month.
Shin Kwang-yeong, a professor of sociology at Chung-Ang University, says a long-term employment plan for young people is necessary to tackle the cryptocurrency investment boom.
“The investment boom comes against the background of a lack of stable job opportunities, which means not only taxation on profits but also long-term plans are necessary,” Shin said.
The cryptocurrency boom is beginning to spill over into politics, with President Moon Jae-in’s approval ratings dipping to a new low according to a Gallup Korea poll as of last month.
Amid confusion over cryptocurrency policy and controversy surrounding North Korea’s growing role at the PyeongChang Olympics, support from young people in particular has dwindled in recent weeks.
President Moon reportedly used a strong tone during a meeting with cabinet members on Thursday to question ministers’ efforts, and urged them to do more to create job opportunities for young people.
“To fundamentally resolve the issue of youth unemployment, we have no other option but to continue creating good jobs in the private sector,” the president said, while emphasizing the importance of small and medium-sized enterprises.
Ashley Song (ashley@koreabizwire.com)
