South Korea is gradually gaining the upper hand over the other countries in cryptocurrency dominance. Over more than a half of this year alone, South Korea has made a couple of breakthroughs related to cryptocurrency, including LINE Corporation expansion to blockchain development, Jeju Island proposal as a blockchain haven, and Z-POP entertainment provider initiative to use Ethereum on its business.
LINE Corporation Joins Blockchain Playground
One of the most important moments of Korea’s crypto craze started when LINE Corporation, a Japanese subsidiary of the South Korean internet search company Naver Corporation, first revealed its future on blockchain development at The 2018 Dev Week Conference April 2018 in Seoul, South Korea. Euivin Park, the Chief Technology Officer (CTO) of LINE Corporation disclosed its long-term development roadmap, which focused on blockchain development by applying blockchain technology into LINE’s various features and opening dApps based on incentive-type information services. Furthermore, LINE Corporation planned on supporting the development of dApp services outside of the LINE platform and developing its own blockchain mainnet soon. In order to achieve the goals, LINE established developer bases, accelerated talent acquisition in other regions, and added Blockchain Lab in Korea and Japan[1].
In order to comprehend those goals, in July 2018, LINE Corporation began the operation of a cryptocurrency exchange called BITBOX, followed by the launch of Unblock Ventures; a token venture fund with a capital commitment of $10 million a month after that, August 2018. This rapid expansion continued to shock cryptocurrency enthusiasts, especially because a few days after the launch of Unblock Ventures, LINE Corporation announced its own blockchain mainnet and cryptocurrency. “We’re excited to announce that #LINE has launched its 1st #cryptocurrency “LINK” and its first #blockchain network “LINK Chain.” More than just a cryptocurrency, #LINK is at the heart of LINE’s token ecosystem.https://linecorp.com/en/pr/news/global/2018/20 …#LINEFintech #BITBOX #LINKChain #LINKCrypto”.
LINK will be available on BITBOX for overseas users and a temporary LINK Point for Japanese residents since BITBOX has not gotten an exchange platform license in Japan. LINE Corporation states that LINK will play an important role within their ecosystem, including[2]:
1. Payment for music, videos, and webtoons
2. Payment for products/services, discount benefits, and payback
3. In-app payment systems and wire transfers between individuals
4. In-game trading and character improvements
5. Payment of commissions, fee discounts and cryptocurrency trading at BITBOX
Jeju Island to Become an ICO-Friendly Blockchain Hub
Won Hee-ryong, the governor of Jeju Island, suggested Jeju Island to be a crypto paradise during a meeting with South Korea’s finance minister Kim Dong-yeon and other high-ranking government officials. Startup companies, especially domestic startups, would be free to hold ICOs in Jeju Island; making Jeju Island an oasis in the middle of difficulties on investing cryptocurrency in South Korea, especially after the ban in September 2017. The self-governing island was inspired by Malta and planned to expand its source of income from the financial sector, besides from tourism sector[3]. If the proposal is granted, Jeju Island will be the next blockchain haven besides of Puerto Rico, Malta, the Philippines, Costa Rica, Georgia, Gibraltar, Liechtenstein, Denmark, the Netherlands, and Singapore[4]. This initiative strengthened Korea’s crypto craze movement to become one of the most powerful countries in the cryptocurrency world.
Z-Pop Dream Project Plans to Utilize Ethereum on Its Business
Continuing the hype against cryptocurrency that had been going on since several months before, Z-Pop, the South Korean entertainment management which has successfully produced superstar talents like Girls’ Generation, BTS, Big Bang, 2NE1, PSY, etc, announced a plan to use ethereum as part of its business. Jun Kang, the CEO of the famous entertainment provider, explained that Z-Pop would use ethereum to find the next K-pop star by allowing fans to use it to vote for their favorite talent in award ceremonies and auditions with a unique platform called “Star Creation.” Furthermore, Kang stated that the audition would be held in 10 Asian countries: South Korea, Hong Kong, Japan, the Philippines, India, Indonesia, Vietnam, Malaysia, Taiwan, and Singapore[5].
South Korean Government vs The People Towards The Crypto Craze
Although the euphoria towards cryptocurrency gets more vigorous, South Korean officials haven’t shown a green light to legalize cryptocurrency fully. According to Cointelegraph, at first South Korea’s government legalized bitcoin for payments, transfers, and trades back in July 2017 which caused a significant market growth in cryptocurrency. In August 2017, North Korean hackers allegedly targeted South Korean Bitcoin exchanges, and by the beginning of September, South Korea planned to stricter regulations on digital currencies. By December the same year, these rumors became more serious[6]; which led to a massive confusion in January 2018, when the Ministry of Justice announced plans of a bill intended to ban cryptocurrency trading in the country, while on the other hand, the Ministry of Strategy and Finance stated that it didn’t share the same view[7].
Soon after that, Financial Services Commission Vice Chairman Kim Yong-beom announced that effective from January 30, 2018, anonymous trading on domestic exchanges would be ban, while foreigners and minors would be completely banned from trading through cryptocurrency accounts[8].
Despite of having issued a lot of bans and restrictions on cryptocurrency, the South Korean government emphasizes that South Korea is not opposed cryptocurrency; South Korea continues to legitimize and embrace cryptocurrency through a careful and considered approach, given the nature of vulnerable cryptocurrency. In May 2018, Korean regulators agreed to apply the G20’s set of “unified regulations” related to cryptocurrencies. South Korea’s Financial Supervisory Service (FSS) stated:
“It’s almost certain that cryptocurrencies will be classified as assets and the main issue will be centred on how to regulate them properly under the unified frame that will be agreed upon between G-20 nations. Given the current stance, this isn’t good, but we will step up efforts to improve things.[9]”
Although the legality status of cryptocurrency is as volatile as the price, people from all generations in South Korea have high hopes for cryptocurrency. South Korea is accountable for approximately 30 percent of all cryptocurrency transactions in the world, even though the country has less than 1 percent of the world’s population. South Korean exchange Coinone’s CSO Steve Lim, said in an interview in 2017 that South Koreans, from housewives, millennials, boomers, white-collared professionals, and even the elderly generation, have been frenzying over it. “People are crazed over it. Grandpas and grandmas come to our office lobby and say they want to put [in] half a billion won ($447,000). We ask them how they heard about us, and they say, ‘I heard about you through a friend who invested a couple thousand and made a killing, and I want to do it too’ … but they have no idea how to use the app or email.[10]”
What makes cryptocurrency so popular among South Koreans? In an interview done by The Verge, South Koreans, especially the millenials, see cryptocurrency as “the only way out”. The average young Koreans with brilliant career cannot afford housing in a city where the price of an apartment rental is more than $400,000, just for the deposit; let alone the rest[11]. This situation pushed the society to try a luck on cryptocurrency to help on their financial difficulties.
Is There Any Chance of Crypto Domination?
On a research done by Cointelegraph in February 2018, Korean Won contributed 5.14% of total BTC volume by currency and 12.02% of total ETH volume by currency; sat on top 5 on both rankings.
Figure 1: BTC & ETH Volume by Currency
Data Source: Cointelegraph
The power of South Korean Won is also proven by another analysis published by American Economic Association which pointed out that South Korean Won managed to be in the third position among all the mediums used for crypto transactions, including both fiat currencies and cryptos.
Figure 2: Currency Used for Crypto Transactions
Data Source: Pieters, G. Cryptocurrencies As a New Global Financial Asset. Texas: Trinity University. 2018.
Given the facts that South Korean Won plays a vital role in cryptocurrency and how potential the market is; it is very likely that one day South Korea will totally dominate the cryptocurrency world. Changes in law or economic decisions may be the greatest threat for South Korea’s cryptocurrency growth; yet cryptocurrency enthusiasts are still bullish about the future of this country’s digital currencies as shown by the sentiment below.
Figure 3: Sentiment Towards ‘Korea’s Crypto’ Keyword
Data Source: Sentiment Viz.
[1] LINE Corporation. 2018. LINE Engineers Take Aim at the Future with 2018 DEV WEEK. [https://linepluscorp.com/pr/news/global/2018/9]. Accessed September 6, 2018.
[2] Jones, J. 2018. Messaging Giant LINE Launch Own Blockchain and Cryptocurrency. [https://www.icoexaminer.com/ico-news/messaging-giant-line-launch-own-blockchain-and-cryptocurrency/]. Accessed September 8, 2018.
[3] Das, S. 2018. Jeju Island Aims to Become an ICO-Friendly Blockchain Hub Inspite of South Korea Ban. [https://www.ccn.com/jeju-island-aims-to-become-an-ico-friendly-blockchain-hub-inspite-of-south-korea-ban/]. Accessed September 9, 2018.
[4] The Element Group. 2018. 9 Unexpected Crypto-havens Around The World (and Puerto Rico). [https://hackernoon.com/9-unexpected-crypto-havens-around-the-world-and-puerto-rico-293670a34c08]. Accessed September 9, 2018.
[5] Coleman, L. 2018. Korean Entertainment Project Taps Ethereum Blockchain in K-Pop Idol Search. [https://www.ccn.com/korean-entertainment-project-taps-ethereum-blockchain-in-k-pop-idol-search/]. Accessed September 9, 2018.
[6] Pauw, C. 2018. South Korea and Crypto Regulations, Explained. [https://cointelegraph.com/explained/south-korea-and-crypto-regulations-explained]. Accessed September 10, 2018.
[7] Jenkinson, G. 2018. ‘Nothing Finalized’: South Korea Gov’t Ministries Diverge Over Crypto Ban Proposal. [https://cointelegraph.com/news/nothing-finalized-south-korea-govt-ministries-diverge-over-crypto-ban-proposal]. Accessed September 10, 2018.
[8] Ramirez, E. 2018. Why South Korea Is Banning All Foreigners From Trading Cryptocurrency. [https://www.forbes.com/sites/elaineramirez/2018/01/23/why-south-korea-is-banning-all-foreigners-from-trading-cryptocurrency/#3e07bda17345]. Accessed September 10, 2018.
[9] James, A. 2018. South Korea Moving Towards Cryptocurrency Acceptance. [https://bitcoinist.com/south-korea-moving-towards-cryptocurrency-acceptance/]. Accessed September 10, 2018.
[10] Moon, B. 2018. Why South Korea is ‘Crypto Crazy’ and What That Means for The Rest of The World. [https://venturebeat.com/2018/07/14/why-south-korea-is-crypto-crazy-and-what-that-means-for-the-rest-of-the-world/]. Accessed September 10, 2018.
[11] Premack, R. 2018. South Korean Millennials are Reeling from The Bitcoin Bust. [https://www.theverge.com/2018/4/3/17192886/bitcoin-cryptocurrency-south-korea-millennials. [https://www.theverge.com/2018/4/3/17192886/bitcoin-cryptocurrency-south-korea-millennials]. Accessed September 10, 2018.
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