Want to understand the Korean currency circle and ecology? It is enough to read this article
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1 Introduction
The blockchain industry is mainly composed of a currency circle, a chain circle, and an industry circle. Compared with the chain circle with mostly technical attributes and the industrial circle that is difficult for outsiders to understand, the currency circle is the most "down-to-earth".
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2. Currency circle
2.1 Definition of currency circle
The currency circle is a circle formed by people who pay attention to blockchain technology and digital currency, or a circle naturally formed by digital currency players.
Different from the technology-based chain circle and the application-oriented industry circle, the currency circle has many more financial attributes and human attributes. It can be said that it is the most colorful circle, focusing on encrypted digital currency, and it is an entry point among the three circles. The circle with the lowest threshold.
The currency circle mainly refers to the fusion of the following contents:
1) Digital currency
Digital currency, "Digital Currency" in English, is an alternative currency in the form of electronic currency.
The European Banking Authority defines a virtual currency as: a digital representation of value that is not issued by a central bank or authority and is not linked to legal tender, but is accepted by the public as a means of payment and can be transferred, stored or traded electronically .
At the same time, the central bank digital currencies of various countries also belong to the category of digital currencies.
2）Token
Token, which can be translated into certificates or tokens. In the chain circle, its more accurate translation is "token", which represents a proof of equity on the blockchain. In the currency circle, Token is usually called a token, and it is a currency used for circulation in the blockchain ecosystem. Just like our current mainstream Bitcoin and Ethereum are Token (tokens). And Token can be classified into mainstream currency, altcoin, air currency, etc. (not explained in detail here).
3) Digital currency exchange
Digital currency exchanges are platforms for trading digital currencies. Huobi, OKEx, BINANCE, COINBASE, etc. are all well-known exchanges in the world. If you want to get started in the digital currency industry, you must go through an exchange, because if you want to own digital currency, you can only go to the exchange to buy it, except for mining yourself. (It is not recommended for readers of this article to trade on small exchanges without security guarantees)
4) Mining
Mining (mining circle) can be regarded as a branch alone, or it can be regarded as a part of the currency circle.
In order to make every transaction reliable, blockchain technology saves every bill in every node of the network. Open and transparent, this allows everyone to know the flow of funds, and there is no need to establish a separate regulatory department to record every transaction information.
However, the validity of the bill needs to be confirmed by "miners". Miners will be rewarded with "tokens" after confirmation, and will share the transaction bill with each node at the same time. Only then can the transaction be successfully completed.
With the development of the mining circle, multiple concepts such as mines and miners have been extended. It can be said that there will be "mines" before there will be coins.
2.2 Domestic currency circle
China is a country with a large population, and its citizens have a high degree of perception of new things and numbers. In the "2018 Hurun Report", a total of 14 people in the blockchain-related field were on the list; plus there are many wealth myths in the circle, the base number of "currency people" in the Chinese currency circle ranks first in the world. Especially since 2021, with the sharp rise in the market, many people are eager to try, and this base is still increasing exponentially.
From December 2016, the blockchain was first included in the State Council's "Notice on Printing and Distributing the 13th Five-Year Plan for National Informatization" issued by the State Council as a strategic cutting-edge technology and disruptive innovation technology, and now the blockchain has become a hot topic in the two sessions. Words, it can be seen that the Chinese government attaches great importance to the blockchain. With the support of the government, China also has many excellent blockchain projects.
As for the currency, although there is not much relevant support, and there may even be suppression from time to time, it can also be seen that the Chinese government maintains concern about the currency circle. The overall attitude can be understood as that, on the one hand, they do not want to suppress the development of new things too much, and on the other hand, they are also worried that overindulgence will cause weeds to grow in the circle and cause losses to the "new currency people" who do not have the discernment.
2.3 Korean currency circle
2.3.1 Overview of the Korean currency circle
China's "currency renminbi" only ranks first in the world in terms of base, not "percentage base". If you want to mention the real big country where "everyone is a citizen", it must be South Korea.
With a population of 51 million, South Korea wields enormous power in the world both economically and technologically as a producer and early adopter of new technologies, nowhere more evident than in the new field of virtual currencies.
Despite its small size, South Korea is one of the leading countries in terms of virtual currency trading and adoption, investing, trading and using virtual currencies is very common in South Korea. In 2017, the per capita trading volume of virtual currencies in South Korea exceeded that of any other country in the world.
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Why are virtual currencies so popular in South Korea?
With the advent of Bitcoin and blockchain technology, Koreans are actually well-prepared for this new era. After all, South Korea has been using online transactions for decades, and trading Bitcoin is not that different from trading other currencies, stocks, or commodities.
Before 2017, there were very few investments that the average Korean could make huge profits in a short period of time. Coupled with rising youth unemployment and a slowing economy, many South Koreans are looking for a way out of their predicament. Also, as Koreans started to notice the rise of Bitcoin in the fourth quarter of 2017, many started investing without understanding the technology behind Bitcoin.
In 2017, millennials in South Korea were very enthusiastic about Ethereum. Many young people invested their life savings in virtual currency, and the daily trading volume of the exchange reached a crazy level.
As of the end of 2017, one-third of South Koreans had invested in virtual currencies. At its peak, a country with less than 1% of the world's population accounted for 30% of the world's virtual currency transactions. At the time South Korea was the third largest Bitcoin market in the world (behind the US and Japan) and the largest market for Ethereum. During the peak period of virtual currency premium, the premium of some virtual currencies was 30-50% higher than the market price. This high price in Korean markets is called kimchi premium, named after the famous spicy kimchi in Korea.
Furthermore, the emergence of virtual currencies in the South Korean economy comes at an opportune time. On the surface, South Korea has a strong economy with a growing GDP. However, South Korea's economic and population growth has not been the same as Japan's in the 1990s and Singapore in the early 2000s. In contrast, South Korea's per capita gross domestic product (GDP) has been gradually climbing while opportunities for young Koreans have stagnated.
On the one hand, the youth unemployment rate in South Korea is extremely high, and on the other hand, the high housing prices in South Korea have shattered the dream of young people to buy a house by their own efforts. While young Koreans are struggling to find jobs, many have turned their attention to virtual currencies as a way to make quick money, and it is true that some young Koreans have created wealth myths. From 2014 to 2017, virtual currencies enjoyed incredible returns. Successful investors will vigorously promote virtual currency, and even pull their relatives and friends to invest together.
With such market penetration, South Korea holds a dominant position in the virtual currency market, and any change that affects Korean consumers will affect the entire virtual currency market. Virtual currency investors around the world are watching South Korea, studying Korean news to predict how the South Korean government will respond to the growing virtual currency market.
To put it simply, the reason why the Korean currency circle is so fanatical is mainly due to the following two reasons:
1. Due to the unfair domestic environment and high housing prices in South Korea, the younger generation cannot break through the existing status class and wealth class through simple efforts, so they pin their hopes on the virtual currency that has the possibility of getting rich.
2. The surge of wealth myths in the currency circle and the exaggerated increase in the market have left people with the idea of getting rich.
2.3.2 Korean Policy
In July 2017, the government legalized Bitcoin as a remittance method for financial institutions. The fintech firm can process up to $20,000 worth of Korean won for bitcoin transactions. The government has also required local virtual currency exchanges to operate in partnership with South Korea’s Financial Services Commission (FSC), which appears to have accepted and regulated Bitcoin.
But in September of the same year, when the boom in virtual currencies reached its climax, the South Korean government began to crack down on virtual currencies. The South Korean government views virtual currencies as unregulated channels for gambling and has vigorously opposed South Korean ICOs. In addition, in December of the same year, the South Korean government also started to crack down on anonymous trading accounts of virtual currency exchanges. From the beginning of 2018, it coincided with the virtual currency bear market, and the prosperity of virtual currency ended in this way.
While the South Korean government has been against virtual currencies, they are interested in how blockchain technology can create a service platform for the benefit of the nation. Therefore, South Korean blockchain projects such as Ground X and ICON have started to cooperate with the Korean government to jointly develop blockchain projects for the public sector. In addition, the mayor of Seoul has previously revealed a five-year $150 million plan to turn Seoul into a blockchain center. This is why there was a mini-blockchain boom in South Korea in 2018-2019.
Afterwards, with the arrival of the Bitcoin bull market, South Korea revived the virtual currency craze. The number of users of South Korea's two largest virtual currency exchanges (Upbit and Bithumb) in 2021 will increase by more than 2 million.
In March 2021, South Korea's "Specific Financial Information Act" was officially implemented, stipulating that virtual currency exchanges must obtain bank real-name accounts to fulfill anti-money laundering obligations. South Korea has more than 200 virtual currency exchanges. However, the vast majority of them find it difficult to meet the conditions set by the Korean government in terms of regulatory approval. Many South Korean banks are reluctant to work with virtual currency exchanges due to concerns about money laundering through virtual currencies. The deadline for meeting these regulatory conditions has been set at 24 September 2021. Only a few virtual currency exchanges in South Korea such as Upbit, Bithumb, Coinone and Korbit meet the requirements, and these top Korean virtual currency exchanges cooperate with local banks such as Shinhan Bank. At that time, with the reshuffle of the Korean exchange, the Korean currency circle will definitely become more and more formalized.
Still, the demand for virtual currencies in South Korea is at a high level, and Korean investors are willing to pay more than the global market value for some virtual currencies.
Essentially, South Korea's virtual currency ecosystem has become a closed system, with strictly controlled passages between the won and virtual currencies. Korea's regularization progress is also at the forefront of the world.
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（1） UPbit
Upbit was only launched in 2017. It is a global digital exchange jointly launched by South Korea's Kakao's technology company and the US-based Bibtterx exchange. Although it sounds very international, in fact the main users of Upbit are Korean users; in addition, South Korea’s financial regulation is very strict, and foreigners are basically unable to register or withdraw cash. This is also to prevent foreign users from profiting from the “kimchi premium” ( You can check the previous article of "Zhike Innovation Institute" to understand the premium of kimchi).
Overall, Upbit is a strictly Korean exchange, making it difficult for foreign users to participate. But it has to be said that despite being heavily regulated by the South Korean government and constant negative press, the exchange has about 1.2 million users and a daily trading volume of more than $300 million.
（2）Bithumb
Bithumb was established in June 2016, with its headquarters in South Korea. At its peak, Bithumb's trading volume accounted for more than 75% of the Korean market, and it is not an exaggeration to say that it is the largest head exchange in South Korea.
However, on June 19, 2018, Bithumb was hacked, and about 35 billion won (about 200 million yuan) of virtual currency was stolen. Bithumb took measures to suspend the withdrawal and deposit of virtual currency in the early morning of the 20th. At the same time, the chairman of Bithumb was also accused of market manipulation and economic fraud, which caused Bithumb to have a little more negative impact.
But it has to be said that the Bithumb market is highly transparent and can meet a large number of selling or buying needs; and when trading, you can enjoy much lower handling fees than other exchanges, which reduces a lot of burden for many, especially contract users.
（3）Coinone
Headquartered in Seoul, South Korea, Coinone was established in February 2014 and is one of the largest virtual currency exchanges in South Korea.
Although the Coinone exchange also focuses on the Korean market, the exchange website provides an English version and can only be traded in the Korean won stable currency (KRW).
Unlike the above two exchanges, Coinone has never been lost or stolen by hackers, relatively speaking, it gives users more sense of security. As an old Korean exchange, Coinone has few currencies, strict procedures, high security, and also has a very high average daily trading volume, and is safe, serious about customer service, and has an excellent interface that can meet the needs of most traders. , and almost no negative news.
If one day Coinone wants to expand to the global market, it may be a strong competitor to other exchanges; but for now, it is still more focused on the Korean market.
（4）Korbit
Korbit is the first Korean virtual currency exchange in history. Korbit, considered one of the four major virtual currency exchanges in South Korea, is headquartered in South Korea. NXC (Nexon) acquired Korbit for $150 million. Only Korean Won and mainstream currencies are supported.
Compared with traditional exchanges, Korbit is more accepting of new things and develops horizontally in various fields of blockchain. Korbit may be the first platform in Korea to create synergy between various fields.
2) South Korea's leading projects - taking KLAY and ICON as examples
Projects that can be regarded as high-quality or leading projects must have the following characteristics:
1. Have a strong background or strong technical level
2. A certain number of users or applications 3. The currency price does not have a cliff-like decline or the bubble is eliminated after the decline, and there is no death to rebuild the bottom
Here we take KLAY and ICON as examples to help you have a preliminary understanding of Korean high-quality projects and certain criteria for judging them.
（1）KLAY
Klaytn is a project of Kakao, the largest mobile platform in South Korea. Its subsidiary Ground X launched the virtual currency wallet service "KLIP". In just 21 hours, the cumulative number of users reached 100,000, and the total number of users currently reaches 380,000. Klaytn is a service-centric blockchain platform that utilizes KLAY's ecosystem to provide services to related companies. At the same time, KLAY is greatly expanding the use of Kakaotalk, the most representative chat tool in Korea.
Klay’s trading volume and currency price experienced explosive growth in February. Although it fell by more than 60% compared to the highest point due to various reasons (market conditions, panic, etc.), there was no retaliation after many shocks It can be seen that the company's operation of the currency price still exists, and users still have confidence in it.
Relying on Kakao's endorsement and its own growth, Klay has become a local leading project in the Korean currency circle.
（2）ICON
ICON is the largest public chain and cross-chain technology project in South Korea, supported by a Korean consortium. The development team is all Korean (and there are many people), and the application scenario is also Korean. The team consists of consultants, foundation council, blockchain, AI, design, marketing, security and other departments, with a large and complete team structure. There is a strong lineup of investment institutions, including Pantera Capital, Kenetic Capital, Hashed, etc.
ICON has cooperated with many Korean banks, securities companies, insurance companies, hospitals, universities, and e-commerce platforms. Therefore, distributed application DApp services such as blockchain ID, payment and transaction can also be used across domains.
But it has to be said that the price of ICON’s currency has fallen off a cliff, falling 97.5% from the highest point at one time; even now that the market is recovering, the price is only 10% of the high point. From the perspective of technology and application, ICON is worthy of trust and investment, and it is also a leading project in South Korea. But purely from the perspective of currency prices, it is indeed somewhat unstable.
3) South Korean blockchain leading enterprises and investment institutions
Many companies in South Korea are researching blockchain, and one of the main reasons is that the Korean government updated its tax laws in 2019. As a result, companies developing blockchain technology can deduct up to 30% of their R&D expenses in taxes. If you want to know the future of the Korean blockchain industry, look no further than a large conglomerate like Samsung. What is certain is that the research and development of blockchain technology in South Korea will develop rapidly.
(1) Samsung:
Samsung Electronics has created a user-friendly blockchain environment that allows users to easily use blockchain applications through Samsung Galaxy S10 and Note 10. Additionally, Samsung Electronics plans to expand its blockchain services, which include health and identity verification. The Galaxy S20, S20+ and S20 Ultra also support Bitcoin and other virtual currencies. They also created a security processor specifically designed to protect users' PINs, passwords, and blockchain private keys. Samsung SDS, a subsidiary of Samsung Electronics, will work with the Seoul Metropolitan Government to formulate an Information Strategic Plan (ISP) to innovate in building a blockchain city in Seoul. Additionally, they have partnered with Syniverse, a communications solutions company, to develop a mobile payment platform that combines its blockchain platform Nexledger with Synverse's blockchain solution, Universal Commerce.
（2）KT:
South Korea’s communications giant KT combines blockchain technology with a small-scale electricity transaction intermediary, foreign roaming settlement and points management system.
（3）Kakao:
Kakao created Klaytn, a global public blockchain platform developed by Ground X (Kakao's blockchain subsidiary). Ground X also stores and verifies NFTs on its public blockchain. Another Kakao subsidiary, Dunamu, is a developer of Korean newspaper and magazine apps. Dunamu also operates the most popular stock app in South Korea. In 2017, Dunamu launched UPbit, one of the largest virtual currency exchanges in South Korea.
(4) Korea Electric Power Corporation:
Korea Electric Power Corporation has signed contracts with two power suppliers in South Korea to build a blockchain-powered system for trading renewable energy certificates.
（5）Mirae Asset
Mirae Asset Financial Group, headquartered in Seoul, was established in 1997 to provide financial services in South Korea and has branches in Hong Kong, Singapore, India and the United Kingdom. Mirae Asset Group claims to have introduced mutual funds to the Korean market in 1998 and maintained a 30 percent market share of these funds in 2002.
Mirae Asset Group invested in Huobi’s $93 million China-Korea investment fund along with other investors. They also invested in Ground X, Kakao's blockchain subsidiary, and Coinplug, a veteran blockchain firm that operates virtual currency exchange CPDAX.
4) Bank of Korea using blockchain technology
Why is the Bank of Korea researching blockchain technology?
As traditional financial institutions, banks are the most active explorers in the blockchain field. In recent years, many banks at home and abroad have applied blockchain technology to credit, liquidation and other fields. The unique trust mechanism of the blockchain is regarded by banks as a key technological breakthrough for innovative risk management and simplified transaction processes. The Bank of Korea is forming its own R&D department and investing in Korean startups based on blockchain technology.
Since Shinhan Bank officially launched blockchain technology in 2018, South Korean banks have begun to actively introduce blockchain technology, and the "blockchainization" of Korean banks is expected to be further developed.
In 2019, five of Korea's largest banking institutions, including Shinhan Bank, joined JP Morgan's blockchain payment platform and became part of the blockchain payment system.
The Bank of Korea attaches so much importance to the blockchain. On the one hand, it has a high degree of acceptance and sensitivity to new things, and on the other hand, it is also the support behind the government; the deeper reason must be that the country is worried about falling behind in this silent competition. resulting in a financial backwardness.
(1) Bank of Korea
The Bank of Korea is making huge waves in the crypto space in 2021 as they are working on a Central Bank Digital Currency (CBDC) for South Korea. The Bank of Korea has reportedly been researching a CBDC since 2018. In 2019, the Bank of Korea formed a legal team to advise them on how to launch a CBDC, and the Bank of Korea plans to launch a CBDC pilot in 2021.
(2) Industrial Bank of Korea (IBK)
The Industrial Bank of Korea (IBK) has partnered with South Korean telecommunications company KT to launch a blockchain-based currency exchange service. The service aims to provide a faster and more secure form of transaction through its surveillance system, allowing IBK customers to book on mobile app or PC before collecting money at unmanned check-in kiosks in different locations (e.g. hotels/airports) foreign currency. Blockchain technology will be used to help combat double transactions and glitches. The service is currently being tested by IBK and its technology demonstration lab. They plan to commercialize the service in 2021.
IBK Bank is also partnering with South Korean blockchain startup Terra, which operates a blockchain-based payment system, to jointly develop payment services and financial products. IBK Bank processes more funds from South Korean virtual currency exchanges than any other bank in South Korea.
(3) Nonghyup Bank
Nonghyup Bank is part of R3CEV, the world's largest blockchain consortium. Nonghyup Bank is believed to be the first bank in South Korea to launch a blockchain-based service. Their app allows users to receive bill notifications related to state taxes, fines, utility bills, credit cards and insurance premiums. The app uses the main features of blockchain technology so users can make payments quickly and easily, which makes it not only transparent but also prevents falsification of records.
(4) KEB Hana Bank
Hana Bank is focused on becoming a data company in 2021 rather than a traditional commercial bank. Hana Bank is also a member of JP Morgan IIN, which is part of the Technology and Services Alliance.
Hana Bank is also the leader of GLN Consortium, a global financial platform that enables easy and secure sharing of distributed ledgers, clearing accounts, and remittances via blockchain.
Meanwhile, Hana Bank is collaborating with Korea University to promote blockchain-based technology. They are already collaborating to jointly develop research and development projects and train blockchain technology experts. In addition, they will share blockchain-based data and develop blockchain-oriented financial services and products; at the same time, Hana Bank is also cooperating with the Busan government to develop a new currency based on blockchain, and cooperating with expressway companies to try to introduce a Blockchain-driven fee payment platform, etc. To date, they have applied for more than 45 blockchain technology patents.
(5) Shinhan Bank
Shinhan Bank has partnered with South Korean blockchain startup Ground X (Kakao's blockchain division) and blockchain developer Hexlant to develop a blockchain security system. Together, they will create a Private Key Management System (PKMS) for their banking services.
Shinhan Bank has also cooperated with companies such as SEMAS, a small business market promotion company, and Directional, a Korean blockchain startup, to establish a blockchain-based loan management, distributed ledger, and lending. Shinhan Bank hopes to develop solutions using the latest technologies such as DLT and facial recognition to launch its own virtual currency in the future.
At the same time, South Korea's first CBDC (central bank digital currency) may come from the Bank of Korea, and Shinhan Bank will play an important role in the distribution and promotion of digital Korean won.
5) South Korean currency circle media
(1) Mainstream traditional media:
Korean traditional media, such as Maeil Business News (www.mk.co.kr), MoneyToday (www.mt.co.kr), Seoul Economic Daily (www.sedaily.com), etc., all have blockchain news sections.
（2）SNS：
The main social media used by young Koreans are: Facebook, Youtube, Kakaotalk and Telegram. KOLs who are active in the currency circle generally upload content through Facebook and Youtube channels, conduct market analysis, project recommendation and other activities. Kakaotalk is equivalent to China’s WeChat, and it is South Korea’s national communication software. Generally, a blockchain project will have one or more Kakaotalk and Telegram communities, managed by specialized personnel, and some KOLs will also operate their own communities.
（3）Naver：
Naver in South Korea is similar to Baidu in China, including Naver News, Blog, Community, Cafe, Q&A, Encyclopedia, Video and other comprehensive searches. It is the most important way to obtain information online in Korea.
(4) Korean blockchain news website:
There are many famous blockchain news websites in South Korea, including domestic and foreign blockchain news, forums, interviews, policies, activities, education, etc. The famous blockchain news websites include Blockchaintoday (www.blockchaintoday.co. kr), Blockmedia (www.blockmedia.co.kr), Dstreet (dstreet.io), Decenter (www.decenter.kr), Coindeskkorea (www.coindeskkorea.com), Coinness (kr.coinness.com), etc.
(5) Korean currency circle community:
The Korean currency circle community is also one of the important channels for Korean users to obtain information. The famous currency circle community has
Cobak (cobak.co.kr), Coinpan (coinpan.com), Blockchainhub (blockchainhub.kr), Talken (talken.io/main), Ddengle (www.ddengle.com), Moneynet (www.moneynet.co.kr )wait.
2.3.4 Suggestions for investing in the Korean currency circle
(1) First of all, it is necessary to understand that any investment is risky, and the risk is directly proportional to the return. The currency circle is an investment choice with very high risk and return. Many people have listened to the wealth myths in the currency circle, and when they fantasize about getting rich, they rush in. But in fact, only about 30% of the people can make a profit, and 70% of the people are losing money. Rich people are even rarer.
(2) Those who can make a profit in the end must maintain an apprenticeship at the beginning, calm down and continue to learn, replay and grow. No one can make a profit at the beginning, unless he is a genius or relies on luck, but the profit obtained by luck is the last majority will be returned to the market.
(3) The Korean currency circle is more brutal than the Chinese currency circle. Even with a giant company or a strong background, many projects will still experience unimaginable plummets due to market reasons or their own reasons. However, unlike most air coins, many of these projects will "resurrect from the dead", and after experiencing a cliff-like plunge, there will be a substantial increase in the follow-up. If there are promising projects, it may be an option to disperse and ambush at low points.
(4) Compared with pure currency circle attributes, South Korean projects pay more attention to technical support. A high-quality currency must have technical support and basic users. Through this, many bad projects can be filtered out.
(5) If you are a Korean student or have Korean friends, you can resell through Korean and foreign exchange accounts, and you can get good income from the "kimchi premium", although the income is much less than before as the supervision becomes more stringent (For specific methods, please pay attention to other articles of Zhike Innovation Institute).
3. Conclusion
Through this article, everyone must have a preliminary understanding of the Korean currency circle. Just like the purpose of Bitcoin is to resist monetary hegemony, the reason why South Korea is so keen on virtual currency is also for "resistance" and to break through the existing cage.
It sounds like virtual currency is free, but there is also a risk factor in freedom; on the one hand, the danger is that the Korean people may lose money in the market, and on the other hand, if the South Korean government cannot make good use of this application, it may lose its own sovereignty. and the economic situation will be affected and impacted.
This is why, on the one hand, it seems that South Korea is very keen on this new technology, but on the other hand, the Korean virtual currency market seems closed and strictly regulated.
With the advent of the digital age, especially post-COVID-19, more and more financial transactions will be conducted on virtual platforms rather than physical bank branches. Going forward, the South Korean government should use this virtual currency craze as an opportunity to fast-track global digital currencies, which is what many governments are doing.
If blockchain and virtual currency really become an inseparable existence in daily life in the future; then South Korea will definitely be one of the leading countries in this technology, and it may be at the forefront of developed countries.
