By any chance is there anyone who earned a lot of money through bitcoin? Most Koreans might not believe the experience that someone became to possess about three billion starting from only one million won. Maybe most of them felt that the terms like bitcoin, cryptocurrency, and virtual money were unfamiliar. Of course, the experience such as earning three billion with one million won is rare. However, when someone near you has earned money through Bitcoin, this topic cannot be heard as an unrealistic story to you. Some people described Bitcoin as “The last escape of our generation.” There are lots of tales of heroism such as “Earned one million” or “Earned a billion.” Although earned experience has spread a lot, there are many people who lost money. Therefore, the dark side of society is hidden. Most Koreans who participate trading bitcoin utilize it as a high profit financing package rather than being interested in block chain technology. Recently, the Korean government started to investigate and offer some alternatives. Bitcoin fever in Korea, really is it okay?
Confused Korea, Cryptocurrency Has Burst into Korea
Block chain? Virtual Money? Cryptocurrency?
The Korean Ministry of Justice uses the term of imaginary tokens. The dispute of terminology happens due to different points of view. Cryptocurrency means “Cipher which uses block chain technology.” The side which insists that cryptocurrency is an innovation of modern technology says that we should use code rather than virtual to prevent bank fraud crimes and makes people confused. Many Koreans acknowledge it as an inessential currency due to using the term of virtual money. In Korea, the term of virtual money is used as a pronoun, essentially the exact term is cryptocurrency. The main technology is block chain, which makes books with transaction information data and connects them as chains. Therefore, counterfeit is impossible because all data is connected and shared with everyone. The block chain technique makes cryptocurrency anonymity and prevents double payment allowing bitcoin to grow to become a Top 100 Global Currency.
The Back of Korean Society Surrounding “Kimchi Premium”
The unfamiliar term ”kimchi premium” appeared in regards to Korean bitcoin fever. It refers to the abnormal exchange volume and high price in Korea, while the similar term is “sushi premium” in Japan. Japan is the biggest bitcoin trading nation and the sushi premium is just as high as the kimchi premium. However, Japan is viewed as a positive case because the government has a positive feeling toward the cryptocurrency market. In April 2017, the Japanese government settled cryptocurrency systems and investors spread deals who came to convince the Japanese market. Due to the wealth effect, if the number of people with increased assets increased, expenditures also increased, and therefore GDP in this year is expected to increase about 0.3%. On the other hand, Korea’s atmosphere is different. The government determined on December 13th, 2017 a policy to ban investment by minors, foreigners, and financial companies and tax implementation for investment profit. After that determination, government offered the possibility of stock exchange closing at the first time on December 28th. Furthermore, on January 10th, the National Tax service started to bear hard on “Bithumb,” which is the biggest cryptocurrency stock exchange market in Korea. There are a lot of various perspectives toward the government’s actions. Many of the world’s main countries regulate but acknowledge cryptocurrency, but the current Korean government seems to only actively regulate it.
Writer Rhyu Si-min expressed bitcoin fever as “Making people come out with money for unsure dreams in the far future.” Unlike the intention of developers, he recognized that it attracts people to speculate. He pointed out that the incentive system does not match well with the first intention, but people are mistaken if they think there is very big value. Many experts agree with the fact that the soulless society atmosphere and controversy of “the golden spoon” (Golden spoon refers to people born into rich families.) appeared to contribute to the development of the kimchi premium. Bitcoin fever acted as an infectious disease. It caused people to fall, not only in terms of comparative deprivation, but also in regards to the motivation to participate in the cryptocurrency market. Bitcoin might be a tempting offer to Koreans who live in hard and cold inside. Especially, an acknowledgment s that feel bitcoin fever is the final chance to make a good chunk of money has spread to among people in their twenties and thirties. Also, the high unemployment rate contributed to bitcoin fever. Many Koreans thought that it could be an opportunity to solve every problem they have. Except these elements, geopolitical factors such as North Korea’s nuclear ambitions have made people to utilize bitcoin as a safe asset and a high distrust toward government has also contributed to the situation. The point that government does not tax the profit from cryptocurrency also increased the price premium and many expect that if it is taxed, a price decrease will happened.
Various Arguments about Cryptocurrency
Some people describe these occurrences as part of the innovations of modern technology for the 4th industrial revolution. However, others insist that these are just falsehood and confidence games that make people confused. Recently in JTBC, KAIST professor Jeong Jae-seung and writer Rhyu Si-min caused controversy. Nobody could offer exact answers to this phenomenon. Like this, the reasons why these occurrences continue include the following. First, there is no objective explanation about how cryptocurrency really does perform the currency functions of other currencies. Second, there is no precise basis why bitcoin fever is just speculation. Third, unfamiliar terms like bitcoin and block chain have mixed understandings.
The essential characteristic of cryptocurrency is “Horizontal Networking.” The appearance of a decentralized cryptocurrency can be described as a reaction to the authority movement. The reason is that centralized authority structures of the analog generation has collapsed and dispersed self-regulating order of the digital generation has been implemented and cryptocurrency is part of this movement. The fruit of the analog generation might be nations and central banks, and negative positions toward cryptocurrencies might be natural.
Different from Japan’s successful cryptocurrency market, Korea still has a lot of controversies. Adam Smith, the father of economics, would have summarized Japan’s cryptocurrency market in two points. First, cryptocurrency makes paying a bill system easier and cheaper so it affects GDP to increase. Second, humans’ psychological change optimistically occurs due to cryptocurrency’s unrealized profits. However, above all, the appropriateness in Korean society, which has an anxious social atmosphere, will decide the future direction of cryptocurrency. Now, checking controversies is necessary for us. The pros focus on the utility of cryptocurrency in future society, but the cons concentrate on if cryptocurrency really can function as currency. The difference between them is a complex issue because it is not only a technical problem such as a mutual benefit mechanism, but also a problem of human society, and even a philosophical problem.
Q1) Can cryptocurrency really be currency?
Institutions that issue money are different in all countries. In Korea, the government issues and the law of Korea acknowledges lawful money. Currency is acknowledged as a legal system and people accumulate wealth. If it is acknowledged in private through cryptocurrency, then how would the existing system continue to exist?
Pros: “The Essential Function of Currency is Information, Cryptocurrency can Function Normally”
Cryptocurrency is a new concept that has appeared according to technical innovation, not currency based on politics. Therefore, we should not deny cryptocurrency with the reason that it is not currency based on politics. Already lots of countries in the world are using dual currencies For example, some are using dollars and their own countries currencies. The President of the IMF expects that many will use cryptocurrency instead of dollars in the future. Finally, this change is just a technical change and we should not doubt the functions of cryptocurrency because cryptocurrency has enough information to deal with.
Cons “Cryptocurrency Cannot Be an Actual Trading Tool”
Basically, the main conditions of currency are two. It should be a trading tool and value-stable so it can be function as a measure of value. However, in this point, bitcoin is not used as a trading tool universally and its value is changed by itself, so it cannot be a measure of value. The supporters of bitcoin assert that people can pay with cryptocurrency everywhere, all over the world. However, it is a fact that payments can be confirmed anytime between ten minutes and three days. Also, they insist that it is free of charge, but stock exchange markets are receiving charges. Due to receiving many charges, people might not do micro payments. Furthermore, we cannot ignore the possibility of double-payment characteristics of bitcoin.
Q2) Is the Korean Government’s Aggressive Regulation toward Cryptocurrency Needed?
There is no different view toward the necessity of cryptocurrency regulation. However, the degree of government’s regulation is hot issue. A case in point, the American, German, and Japanese governments acknowledge and regulate to some extent, but the Chinese government bans cryptocurrency. Therefore, some compare cryptocurrency closing as the Communist Party in China. The Korean government’s regulations will greatly affect the future cryptocurrency market. In the final part of 2017, although the government threatened cryptocurrency investors, cryptocurrency prices in Korea were restored. Even so, Park Sang-gi, president of the Ministry of Justice, mentioned the possibility of the cryptocurrency stock exchange market closing, causing the disappearance of ten billion dollar, which was the biggest affect. The cons of the Korean government’s aggressive regulations insist that we should consider the efficiency of regulation. Hong Gi-hun, professor of Hongik University, said that keeping a transparent market and protecting investors should be kept. He emphasized that if not, the government in trying to participate in the market and adjust the price, should find a progressive direction rather than regulation. The grounds of regulation uselessness is that there are too many complementary goods. There are a lot of cryptocurrency stock exchange markets all over the world and cryptocurrency should be considered as a process of money evolution. However, the pros insist that bitcoin can cause an economic disaster, leading to the IMF’s second home. They think it should be progressed to prevent individuals’ damage such as young people’s over-investments in bitcoin.
In the past, Koreans dreamed of Korea becoming as a finance hub. However, there was no big result compared with Japan, Singapore, and Hong Kong. On the other hand, now Korea has a large quantity of cryptocurrency and cryptocurrency deals account for the third biggest all over the world. Many expect that Korea can hold a dominant position in this field. Therefore, some who see cryptocurrency appearance positively insist that we should seize the opportunity to study related techniques and create jobs. The voices that insist regulation by government is necessary to control price fluctuations are bigger than the past. However, bitcoin dominates Koreans’ daily lives and there are a lot of side effects appearing to Koreans. Some students’ studying will is decreased because they are addicted to bitcoin. Cryptocurrency is not just a simple issue and it has become a social-political phenomenon. According to this fever, conflicts between class and generation are explored. In what direction should Korea go in regards to cryptocurrency?
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