Korea Catching up to Africa for Bitcoin Demand

On most exchanges aroundsouth korea bitcoin the globe, Bitcoin still did not reach the psychologically important threshold of $10,000. Even though most cryptocurrency observers believe that it just a short matter of time until Bitcoin does reach that historical mark, as of Tuesday, Bitcoin was averaging roughly $9,500 on most of the world’s crypto exchanges. However some notable exceptions have been reported.

Several weeks ago – when the average Bitcoin price was still floating around the $7,000 mark – it was reported that the price of Bitcoin in Zimbabwe was well over $10,000. This difference in price was not reflected globally, as the reason for it stemmed from a confluence of politico-economic factors unique to Zimbabwe. The country’s political and economic problems made cryptocurrency a choice of necessity for most Zimbabweans, rather than convenience. The resulting level of demand for cryptocurrency was so much higher than in most other countries that it alone was cited as the main factor that the price of Bitcoin in Zimbabwe reached the $10,000 mark much earlier than it did in other parts of the world.

Since that point and until now, Zimbabwe held the title for most expensive Bitcoin in the world. Lately however, South Korea has become as a contender for that title. The Asian nation has emerged one of the world’s leaders in blockchain technology innovation and cryptocurrency adoption. It has in fact been reported by various news outlets as having the third highest demand for digital currency on the planet. The reasons for this high demand are off-course quite different than ones found in the third world. Africa’s problems make digital currency a much needed solution. Koreans on the other hand tend to view cryptocurrency as a clever investment into a technology of the future.

With high mobile penetration, world-leading 4G and a densely packed population where latest trends and news spread like fire, Korea seems to be an ideal testing ground for cryptocurrencies. Local investment options have been focused primarily on real estate and the domestic stock market. The high demand for both, means a very high entry-level threshold has to be overcome, which could be difficult for a non-institutional investor. More and more regulation in both markets also meant the investment process became more and more cumbersome. Such limited opportunities to turn a profit made Korean risk-takers extremely willing to pour hot money into anything that looked interesting. While looking into other assets with high volatility, a number of them have discovered Bitcoin. High-risk traders soon began to put their money into the Korean Bitcoin market. Once other members of the Korean public saw that Bitcoin started to rise meteorically, “…herd instinct took over and people just poured their money into it,” commented Lee Seung-gun, president of the Korea Fintech Association and CEO of Viva Republica – Korea’s largest e-payment provider. “People here are just going crazy over it! Grandpas and grandmas come to our office lobby and say they want to invest half a billion won ($447,000) into Bitcoin,” added Mr. Lee.

The enthusiasm for blockchain technology and digital currency seems to be equally shared by members of the Korean general public as well as its government and business community. South Korea’s biggest financial services provider – Shinhan Bank – has announced this week that is in the process of testing Bitcoin vault and wallet services, which (if the testing goes well) the bank will begin to offer to its clients in mid 2018.

Even the municipal government of Seoul – South Korea’s national capital – is getting into the act. This week Seoul’s Metropolitan Government has announced a new initiative, in a partnership with Korean electronics giant Samsung, to apply blockchain technology to the urban area’s entire administration, with the goal of increasing civic convenience and administrative transparency. Seoul’s municipal authorities have tasked Samsung with drawing up a detailed roadmap for the application of blockchain technology to “ … the entire municipal administration by 2022.” Samsung’s software unit will design and propose future models alongside plans to systematically implement them. The city’s government has already identified a number of applications for blockchain technology including welfare, safety, traffic and other municipal affairs. The core characteristic of the blockchain as a secure, immutable ledger will see immediate use for recording personal information of citizens, processing of payments of unemployment benefits, and tracking deeds in sales of used cars.

Seoul’s city government’s initiative is a notable endorsement of blockchain, the underlying technology of cryptocurrencies like Bitcoin and may represent another step towards its mainstream acceptance.

As interesting as it may be, the development in Seoul is not unique and has drawn comparisons with a similar effort in Dubai, the latter voicing ambitions to become the world’s ‘first blockchain city’ by 2020, perhaps foreshadowing a possible “blockchain race” between countries.
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