Despite millions lost to hackers, warnings from financial regulators of a “Ponzi scheme”, and the impending government regulation, some students in South Korea are banking in on bitcoin and other virtual currencies.
According to CNN, students are checking the price between classes, workers are trading it as they line up for coffee, and grandparents are playing the market at home as cryptocurrencies are mainstream.
As the home to three of the world’s biggest bitcoin exchanges, South Korea accounts for as much as 20 percent of all bitcoin trades around the world.
College student Isaac Chung, who says he has made thousands of dollars trading digital currencies, was quoted as saying:
“First, it was just tech people. Now, literally everyone is interested in bitcoin,”
On a recent weeknight at Sungkyunkwan University in Seoul, more than a dozen students crammed into a classroom to share tips on investing in so-called cryptocurrencies, which have driven tales of fantastic returns for savvy investors.
The group sat in rapt silence – broken only by a sudden shout of “there was just a big jump!” from someone monitoring his virtual currencies – as one student gave a presentation on how to read financial data and predict future trends.
“I no longer want to become a math teacher,” said Eoh Kyong Hoon, 23, who founded the club, Cryptofactor.
“I’ve studied this industry for more than 10 hours a day over months, and I became pretty sure that this is my future.”
Driven in part by a dismal economic outlook – including an unemployment rate almost three times the national average – young South Koreans are flocking to virtual currencies despite the risks and warnings from officials, analysts say.
It’s a trend that has caught the eye of South Korean leaders and regulators, who announced new measures this week to regulate speculation in cryptocurrency trading within the country.
Concerns about security and thefts of cryptocurrencies by hackers have also been rising. A South Korean cryptocurrency exchange recently shut down and filed for bankruptcy after being hacked for the second time this year.
“Young people and students are rushing into virtual currency trading to earn huge profits in just a short period of time,” Prime Minister Lee Nak Yeon said in November. “It is time for the government to take action as it could lead to serious pathological phenomena if left unchecked.”
Eoh said the talk of more regulation had not dented his plans, especially after making what he said was a 20-fold gain on his investments over the past six months.
He said that many students were bringing laptops to class to track the movements of their investments and participate in actual trading. “Even when professors are giving lectures right in front of them,” he said.
Younger investors have especially gravitated toward so-called “altcoins”, or virtual currencies other than bitcoin, which often trade at much lower values, analysts say.
“Since young people are more mobile-friendly, they can actually make more out of altcoin investments as long as they are able to discriminate gems from pebbles,” said Kim Jin Hwa, one of the leaders of the Korea Blockchain Industry Association, an association of 14 virtual currency exchanges.
Some young investors say they don’t sleep until after 2am, when there is a lull in the cryptocurrency markets as investors in places like South Korea and Japan log off.
Some say students seem more focused on ways to get rich quick rather than on the underlying financial or technological values of digital currency.
Economics professor at the Seoul University Yun Chang Hyun said:
“There’s no way to measure their true value yet but students are just going for them, believing that they can earn a big fortune in just a snap.”
Cryptofactor members, however, say they founded the club because of a lack of dedicated cryptocurrency classes on campus and see their efforts as a way to move beyond speculation to informed investing.
“I realised that I was actually speculating rather than investing before I came to this club,” said Kim Myung Jae, a 19-year-old Fine Arts student, adding that she was especially attracted to altcoins.
“Now that I fully discuss which one to invest in with the members, I’m actually looking at the true value.”
Additional reporting by Reuters
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