The crazy kimchi premium and the dream of getting rich in the bones of the coin people

2023-11-10 15:05:55

According to The Block, in October, the cumulative turnover of crypto CEXs has reached $443.27 billion, while South Korea's Upbit ranked second with a spot turnover of $51.88 billion in October.

South Korea's Upbit jumped to the second largest CEX, showing the strong demand in South Korea's current crypto market. In fact, looking at the data in recent years, the South Korean market has been one of the most active forces in the crypto market, and despite the impact of the global economic downturn in 2022, its user size and trading volume continue to expand.

So how did the crypto market in South Korea develop and how is it developing so far?**

"Korean Dream" in "Kimchi Premium"

When you think of South Korea, what comes to mind? Is it a thriving entertainment industry, superb plastic surgery techniques, or sour and delicious kimchi?

However, in addition to these well-known Korean labels, there may be another one more that needs to be added, and that is the country of fried B.

Bitcoin has been very popular in South Korea, especially at the peak of the bull market in 2017, and Bitcoin can be said to be known to everyone in South Korea. From students to seniors, from office workers to freelancers, Koreans are trying to find opportunities to trade in the market in order to find a way to get rich. So much so that buyers on South Korean trading platforms were once willing to buy Bitcoin at a 50% premium.

! [Cowardly Korean Crypto Circle: Crazy Kimchi Premium and the Dream of Getting Rich in the Bones of Currency Users] (https://img-cdn.gateio.im/webp-social/moments-40baef27dd-36bb54af8c-dd1a6f-cd5cc0.webp)

When the local Bitcoin price was 40% higher than the US exchange, Coinmarketcap even removed the price of South Korea from the cryptocurrency market. This phenomenon came to be known as the "kimchi premium".

In 2018, the South Korean government began cracking down on speculation, starting to enforce the use of real-name bank accounts for cryptocurrency transactions, and then in the same year it banned Aisiou altogether, and the kimchi premium disappeared.

While the pickle premium may have disappeared, the crypto hype craze continues.

South Korea's total crypto transactions reached nearly $20 billion in 2021, ranking fourth globally, behind the United States, Japan, and the United Kingdom.

In 2022, South Korea ranked third in terms of Bitcoin trading volume, behind the United States and Japan.

South Korea's digital asset market also grew significantly in the first half of 2023, with the crypto market cap rising by about 46% from the first half of the year to a total market capitalization of 28.4 trillion won (about $226 billion), according to a research report published by KOFIU on October 31, 2023.

So why are Koreans keen to fry B?**

**On the one hand, it has something to do with its long-standing national conditions. **The fast-paced life in South Korea has made the acceptance of new technologies faster in South Korea, with local support for the Web3 space, a strong economy, and a focus on technology and innovation all contributing factors:

The Korean War from 1950 to 1953 made South Korea one of the poorest countries in the world, and in 2023, it is one of the richest.

Led by a family conglomerate (known as a chaebol), the emphasis on exports, and the development of capitalism, South Korea's economy has taken off in just a few decades, which is known as the "Han River Miracle". This rapid development has also led to a fast-paced lifestyle where every second counts, food must be delivered quickly, trains arrive on time, and buildings are built in a matter of weeks. Whatever you do, do it quickly and efficiently, and getting rich is no exception. Therefore, Koreans advocate the value of "get rich quickly" and the culture of speculation, and are eager to get rich quickly through speculation.

Before 2012, the Korean market mainly relied on innovation and surplus value of labor to achieve economic growth, however, after 2012, economic growth slowed from double-digit growth in 2000 to about 3%, it became difficult to get rich, the upward path for ordinary people became narrower and narrower, and the strict real estate policy and high stock market threshold led to many South Koreans speculating only on gambling.

When crypto assets appeared, South Koreans felt that new gambling products appeared, and new opportunities to get rich were coming.

South Korea, on the other hand, is a country that welcomes cryptocurrencies with open arms, and at one time implemented relatively loose policies in the cryptocurrency market, as it stands, South Korea is arguably one of the most cryptocurrency-friendly countries.

It's just that the bankruptcy of the LUNA project in South Korea in 2022 has brought heavy losses to Korean investors, not only did they not make any money, but even because of debt, many people's "Korean dream" was shattered. At the same time, the LUNA collapse has also caused great concern in the South Korean government, which has only begun to tighten regulations on crypto.

In the first half of 2023, the South Korean market counted the trading of around 622 cryptocurrencies, including market leaders such as Bitcoin, Ethereum, Ripple, and Dogecoin. During this period, a total of 169 new cryptocurrencies were listed, of which 115 faced suspension of trading due to project risks, investor protection, and more.

Koreans who are looking forward to getting rich overnight

Despite the huge risks of crypto, it still can't stop South Koreans from getting rich by speculating.

During the epidemic, many young Koreans even quit their jobs in large companies in order to fire B, just wanting to give it a try, hoping to change the trajectory of their lives from now on.

In the first half of 2023, about 26% of South Korean adults participated in the crypto space, with increasing participation from women and the younger generation, with 25% of crypto investors making their first crypto investment in the past six months, and 38% of young crypto investors hoping to get rich overnight through crypto assets. **

According to this narrative logic, the most active in the DeFi space should be the Koreans. However, after the kimchi premium, although the "craze" of speculation B still exists, the development of DeFi has not improved.

**This is still related to the national conditions of South Korea. **

First, South Korea's financial regulatory environment is relatively volatile, although financial regulators have taken some steps in the past to regulate the cryptocurrency market, including DeFi. However, these policies are not enshrined in legislation, and there is policy uncertainty that can hinder some DeFi projects and investors.

In addition, the South Korean government has highlighted KYC (Know Your Customer) and AML (Anti-Money Laundering) requirements, which may have an impact on the anonymity and decentralization of DeFi platforms. These requirements make it difficult to promote and grow DeFi projects in South Korea.

And South Korea has a strong traditional financial system, including banks and securities firms. This makes South Koreans more inclined to use traditional financial instruments rather than DeFi. Cryptocurrencies and DeFi are still relatively new and may take more time to integrate into South Korea's financial culture.

Finally, the educational and cognitive aspects are also a challenge. DeFi has too high a barrier to entry for ordinary investors, and the returns cannot provide enough gambling incentives. Therefore, unlike the Western concept of "digital gold" of Bitcoin, South Koreans value the speculative nature of cryptocurrencies more. This is exactly the same as the usual operation of the Korean stock market, except that crypto opens up new possibilities.

According to the Digital 2022 Global Overview Report, in 2022, the number of crypto investors in South Korea accounted for more than 13% of the Korean population, accounting for about more than 6 million of the total population, and the main activities of these investors revolve around CEXs, which makes CEXs' influence in the Korean crypto market quite significant. **

A map of the distribution of countries with cryptocurrencies for the global population

So what are some of the well-known platforms and projects in South Korea?

A mainstream platform that specializes in "Kimchi Coin".

During the cryptocurrency boom of 2017, South Korea became a popular trading destination for Bitcoin and other virtual currencies, and even at some moments, the Korean market contributed the vast majority of the global market share. However, 2018 saw a series of security breaches and hacking incidents, affecting several South Korean platforms, such as Bithumb, Coinrail, and Youbit. Youbit even lost 17% of its assets in a second hack and was eventually forced to file for bankruptcy.

These events have also caused significant losses to the investors involved, but despite this, Upbit jumped to the world's second-largest platform, indicating that South Korea's crypto trading volume is still quite significant. In addition to Upbit, the current mainstream platforms in the Korean crypto market include Bithumb, Coinone, and Korbit, but Upbit is far ahead, accounting for nearly 80% of the Korean cryptocurrency trading market. **

Bithumb maintains a strong position as the second-largest player in the market, accounting for 15% to 20% of the total trading volume of the four major exchanges, Coinone has a market share of between 3% and 5%, and Korbit has a share of less than 1%.

**Analysis shows that South Korean traders have a high-risk appetite, with Bitcoin and Ethereum trading volumes underrepresented by global markets. Conversely, altcoins such as Loom Network, eCash, and Flow account for the majority of transactions. **

Among Upbit's user base, most individual investors likewise prefer high-profit altcoins because of their higher risk, which is the main reason why altcoin trading is so popular in the Korean cryptocurrency market.

Popular in the Korean market are Steem Dollars, MossCoin, Hippocrat, Aha Token, etc., but such crypto assets are also mainly traded on Upbit and are known as "kimchi coins". These tokens are mostly traded by Korean investors and have formed their own market on the Upbit platform as they don't get much attention in the global market.

As a result, on Upbit, mainstream tokens such as Bitcoin (BTC), Ethereum (ETH), and Polygon (MATIC) have performed relatively poorly, which have significant trading volume across the globe. However, within Upbit, their trading volume is relatively low, with only 2% of their trading volume coming from ETH and only 9% from BTC.

**From a global market perspective, Upbit has been ranked second so far this year. **

**This phenomenon shows that Upbit has unique characteristics compared to global markets and reflects the differences in investor preferences and investment strategies between regions. **It's also worth noting that Upbit was approved by the Singapore regulator last month, paving the way for subsequent Singapore developments.

Summary

Many young people hope to get rich by "speculating on B", get rid of economic pressure, and achieve a class jump. However, like any emerging industry, there are many problems due to the huge economic interests involved, and the relevant regulatory norms have not yet been kept up. **

Although since 2017, various forms of Token coin issuance have been banned in South Korea. At the same time, the government has also made regulations on related illegal and criminal activities. But it's not Congressional-level legislation, it's regulations issued by government agencies or departments, and regulatory legislation hasn't yet emerged.

**Since 2022, perhaps due to the impact of many lightning explosions, especially after the collapse of Terra and the collapse of FTX, South Korea has begun to adopt more intensive crypto regulatory measures. **South Korea began drafting the Basic Law on Digital Assets last year, hoping to strengthen the regulation of the country's cryptocurrency market, and plans to launch a CEX system to ban illegal platforms, which will further optimize regulations to support sustainable development.

In addition, with the new "crypto-friendly president" President Yoon Suk-yeol winning the election in May 2022, he promised to loosen crypto regulations, and the market is moving towards significant legalization.

Overall, as the fourth-largest economy in Asia, South Korea is one of the most active countries in the cryptocurrency market and has become an integral part of the crypto market. With the legalization of crypto activities, will South Koreans who want to get rich by "speculating on B", get rid of economic pressure, and achieve a class jump?

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