Blog > Industry > Articles
Why Korea loves cryptocurrency
Table of Contents
South Korea accounts for less than 1% of the world’s population, but when it comes to cryptocurrency, the land of kimchi and K-pop is a fierce contender. Some 30% of all crypto trading worldwide is driven by the Korean market. The Korean market is incredibly important to Liquid.Polls suggest that roughly 30% of of all salaried workers in South Korea own cryptocurrencies in some form. That means three out of every 10 working people are already using and trading digital assets. If the holy grail of the crypto industry is mass adoption, then it’s time to ask some important questions about the Korean market: What is driving adoption in Korea? Where is the industry right now? Where is it headed, and what can we learn from its development?
A technology-driven culture
Koreans have a history of embracing new technologies faster than any other nation. One time South Korea proved to be at the forefront of socio-technical innovation was in the late 1990s, when a couple of students at KAIST university decided to experiment with an online social networking platform, long before Zuckerberg even dreamt Facebook. Cyworld went from early stage failure - once running a deficit of 1.5 billion won - to becoming a social media sensation among the Korean public, more than tripling its monthly visitors (from 2 million to 7 million) through the course of 2003.
Today, Korea has the fastest internet speeds and is ranked among the top countries in the world for adoption of IoT devices. Technology has been woven into the national identity as a driving force and indicator of national development.
Koreans are so used to digitization that new forms of technology, and new ways of interacting with technology, are quickly absorbed into mainstream culture. Korea ranks third for purchases on the Google Play Store and in 2017, Koreans spent USD3 billion dollars on digital goods such as character avatars, digital gifts and app upgrades. This society has consistently shown that it has no trouble assigning high values to digital goods, and so when cryptocurrencies came along, the transition was intuitive.
At Liquid, the biggest participation in our ICOs often comes from our Korean users. They’re eager to gain from the prolific innovation in the industry, but they’re also better suited for embracing these new technologies because for them, digitization and tokenization makes sense.
Fundamental to blockchain is the strength of networks, and in Korea, hyperconnectivity is what drives new trends. With a population of 51 million people and over half of them living in Seoul - a sprawling metropolis with twice the population density as New York - news spreads like wildfire. Social media has played a huge role in the adoption of cryptocurrencies in Korea. Blockchain interest groups and trading circles operate through tightly knit Kakao channels. When crypto boomed in late 2017, everyone wanted in. Young and old rushed to get a piece of the pie, taking huge risks that sometimes lead to disastrous consequences.
If you think you’ve seen market volatility, then Koreans take this to a whole new level. Many argue that the Korean market is what fuelled the meteoric rise of Ethereum in early 2017. At one point, the price of Ether on Korean exchanges reached an all time high of $1,800 - trading a full $534 above the global average price.
Koreans don’t just trade. They trade big, and they trade often.
It is estimated that the average crypto holder in Korea invests at least $900 into their wallet. While most US crypto exchanges place a deposit cap of $5,000-10,000 per day, Koreans have enjoyed daily limits of up to $100,000. Millennials, particularly the children of wealthy Korean business owners, set the trend for investing large sums in cryptocurrencies in early 2017 and even now, despite bearish market conditions and stringent regulations, the fever continues strong.
This “go big or go home” attitude stems from a number of reasons. For one thing, local investment options are narrowing as real estate prices heat up and interests rates continue to rise. Changes in regulation have increased the barriers to trading in derivatives and most gambling is illegal. Koreans are looking for assets with high volatility and high returns, and the crypto market has provided the perfect opportunity for risk-takers to flex their muscles.
At Liquid, we believe in a future of finance will come when crypto and fiat are seamlessly integrated. With the recent launch of our world-class crypto platform, our goal is to better serve our customers with efficient, safe and intuitive products. Part of this effort is to learn from the people who’ve brought us to where we are.
The strength of the Korean cryptocurrency industry is unparalleled. Only time will tell whether the Korean “crypto craze” is a passing trend or the signs of a nation yet again at the forefront of the world. If history is anything to go by, we know which side we’re on.