The truth is that most Koreans do not understand Bitcoin mainly because most are not explaining it correctly. This is a good thing. The general explanation of Bitcoin is that it is the future of money, a payment mechanism unlike any other. However, the truth is that Bitcoin is more like a store of value or a digital asset. Most Koreans are not buying Bitcoin to use it for payments. A vast majority of Koreans are holding on to Bitcoin simply as an investment. Most look at it as a type of “collectible” they feel will go up in value in the future. So in a way, Koreans are doing the right thing and looking at Bitcoin for what it is.

The average Bitcoin holder in Korea holds around $8,000 worth of Bitcoin, is around 50 years old, and is male. Most are typical office workers and over 30% of them hold other forms of cryptocurrency. Bitcoin hit an all-time high in early November of 2021 at over $68,500 per bitcoin. The fear of inflation due to COVID-19 is considered one of the main contributing factors. 

So why do so many Koreans own Bitcoin?

Koreans are Prepared to Lose it All

Koreans are natural risk-takers. They are always looking for the next big thing. They know what it feels like to fail and lose it all. Koreans are not concerned about what Bitcoin’s price is today or tomorrow. They are counting on the future. Now there were a few traders that made a killing with the Kimchi Premium but in general, most Koreans hold Bitcoin for the long term.

This used to be the case with real estate in Korea. Most would hold their money in property. However these days, real estate has gotten too expensive, especially in Seoul, that new investors have turned to cryptocurrency. This gets multiplied by the younger generation in South Korea. Many understand that buying an apartment in Seoul will take more than 20 years or is simply unattainable. Seoul’s housing prices now rival New York without the salaries of New York workers. Therefore the younger generation has looked elsewhere and cryptocurrency has become the cheaper option for not just real estate but stocks as well. 

The Success of Bitcoin

Since Bitcoin has been created in 2009, it has outperformed every currency, even with governments hostile to it. So it is amazing the valuation it has today with most banks and governments around the world looking to try and kill it. The Korean government has not necessarily embraced Bitcoin but Blockchain technology. If it was up to them they would get rid of Bitcoin ownership in Korea and strictly focus on the benefits of Blockchain technology to innovate a variety of sectors such as medical and financial.

The recent success of Bitcoin around the world is attributed to the coronavirus outbreak. The pandemic has caused a lot of uncertainty in stock markets around the world. In addition, China’s import/export, retail, and manufacturing have all taken a hit in recent months with their trade battle with the United States. However, through all this Bitcoin continues to rise and shows that during an economic recession, Bitcoin is looked at as a smart asset to hold. 

Not only in Korea but around the world, trust in global institutions and markets is continuing to deteriorate. However, there is always a risk as Bitcoin still continues to be volatile. As more and more people jump in the faster it will climb but inevitably it will come back down. The rollercoaster might be too much for investors, but Koreans, know it is all part of the long-term plan. 

A Way for the Average Korean to Get out of the Middle Class

In Korea, it is very difficult for the average salaryman to get into the upper class. So much wealth in Korea is concentrated because only a small number of people have access to a cost of capital that’s so much cheaper than anyone else. The rich in Korea can basically win every bid on an asset that they’re interested in buying. Therefore there is no competition for buying the best assets and that is a product of Korea’s current financial system.

So how can the average Korean worker accumulate wealth?

This is why cryptocurrencies are so popular in Korea. Many in Korea think their only answer is to put a certain percentage of their wealth in cryptocurrency. There have been some studies that show that if you put 5-10% of your money in crypto that it improves your overall total portfolio return. This is why you not only see the common office worker investing in Bitcoin but Koreans of all genders and classes. 

Koreans Know that Being First is the Key

Korea is a great early adopter of technology. They also know that people who move first will make more money than those that move second. Eventually when crypto is broadly adopted then people will start using it as an exchange and it will no longer be volatile in pricing. Most of the volatility in pricing comes from the uncertainty mainly with the government and its policies toward it. The Korean government’s role will be crucial in the success of not only Bitcoin in Korea but other cryptocurrencies.

Those that feel the Korean government will embrace Bitcoin are holding their Bitcoin now to hopefully hit it big in the future. Signs from the Korean government are showing that the Korean government likes Blockchain technology even if they are scared of Bitcoin. In fact, Seoul is looking to launch S-Coin, its own cryptocurrency in the not-too-distant future.