According to the technology media The Verge, young South Koreans who lack investment channels regard cryptocurrencies as the “only way out”, but many young people suffered heavy losses in a round of slumps at the beginning of this year. The number of "Bitcoin blues" patients is increasing, and some are even committing suicide, and the South Korean government has become wary of the pathological phenomenon caused by cryptocurrencies.
Ye-won Oh, a resident of Seoul, South Korea, keeps a close eye on the cryptocurrency market, refreshing her phone almost every minute of the day. In early 2017, she invested $40,000 in ether. Ethereum is very popular in South Korea, and many young people in the country see cryptocurrency investments as “the only way out.”
Now in her 20s, Oh Ye-won has an enviable resume: a senior position at a fast-growing startup, a college degree abroad and work at some of the most enviable companies in Korea. But she and her husband still couldn't afford a house. "People like us, who are just beginning their careers, have a hard time because they can't build a stable life," she said.
For young people in South Korea, cryptocurrencies seem to be a rare way to make a fortune. Last year's cryptocurrency bubble started to burst in February this year, but until now, the South Korean won remains the third most traded currency in bitcoin. South Korea reported in February that 17% of total ether transactions took place in South Korea, where two-thirds of the world’s largest bitcoin transactions took place last winter, with a population of around 52 million.
A survey by South Korean recruitment firm Saramin showed that two-thirds of the country’s wage earners had invested in cryptocurrencies by December 2017. 80% of them are between the ages of 20 and 40.
But now , the prices of cryptocurrencies like Bitcoin, Ethereum and Ripple have fallen sharply, bringing a mental and financial impact to many young Koreans. South Korean psychologists say "bitcoin blues" are on the rise, and divorce counselors say investment failures are a reason marriages are falling apart. The country's prime minister also said virtual currencies are causing "severely distorted or pathological social phenomena" among South Korea's young population. Wu Yiyuan said: "Once I get rid of the situation, I will leave, which is psychologically unhealthy."
Young people feel there is no way out
From the outside, South Korea's economy appears to be booming: South Korea's Samsung, Hyundai and Kia are all industry leaders. South Korea is also the world's 11th-largest economy, with exports dominated by semiconductors, automotive liquid crystal displays and other high-tech products. South Korea's overall unemployment rate is just 4.6%.
However, it is difficult for young people to find jobs. The youth unemployment rate in South Korea has been around 10 percent for the past five years. According to Justin Fendos, a professor at Dongseo University in South Korea, the underemployment rate (referring to involuntary job positions that are over-held or part-time) this year is even higher than 38 percent in 2016.
South Korea has a high education rate, and it's hard for you to be "outstanding" among a group of young people. Nearly 70 percent of South Koreans between the ages of 25 and 34 have a college degree, the highest rate among OECD countries, and almost everyone has a high school degree. Seoul is full of college graduates who are learning how to pass recruitment exams in order to enter South Korea's biggest companies or become coveted civil servants.
“South Korea’s social structure is a big reason why cryptocurrencies are so prevalent, and Koreans are generally dissatisfied with their current social class,” said Yohan Yun, a 25-year-old assistant reporter in Seoul. He invested $400 in ether.
Even those young people who have jobs are pessimistic about their economic prospects: a survey conducted in 2015 showed that half of young South Koreans believed they would be no better off than their parents’ generation, up from 29 in 2006 %.
“I can keep working for 30 years, I can pay off the mortgage on a so-so two-bedroom, and a car. This is the end of my life,” Fedos said of the young Koreans. idea. Even if young South Koreans have disposable funds, there are few investment channels, he said. Real estate used to be the traditional way to invest in value-added in Korea, but now even for middle and upper class people, house prices have become very high. And when you put money in the bank, the annual interest rate rarely exceeds a few percent. "So, when they see a situation like this, they think, what can I do to escape this fate?" Fedos said.
Jason Cho, a consultant at the Bitcoin Korea Center, said, “The way out for young people is blocked again and again, and only the few at the top get the benefit.” And for some, cryptocurrency is the way out.
"Kimchi Premium" craze
Volume data from South Korean cryptocurrency exchange Korbit shows that massive interest in cryptocurrencies within South Korea began in the fall of 2017. Wu Yiyuan entered the market in early 2017, so it may be more profitable than many Korean currency speculators.
Yun Yaohan entered the market in the summer of 2017, when the currency market really began to heat up. "When you hear that so many people are getting extra money out of it, some of your friends who have nothing, suddenly they can buy a car, you can't help but get a little jealous."
The development of the Internet in South Korea has also stimulated the popularity of Bitcoin. Korean teens use mobile phones for about four hours a day. Almost every Korean household has access to the Internet, and 88% of households own a smartphone, the highest rate in the world. Therefore, potential coin speculators of all ages in Korea can understand this craze and know that someone has made a lot of money by speculating on coins. Cryptocurrency trading clubs are popping up in various universities in South Korea, where speculators can meet like-minded people and share their trading tips.
Fueled by this frenzy, some cryptocurrencies in the South Korean market are priced 51 percent higher than elsewhere, dubbed the "Kimchi Premium." Some foreign currency speculators were attracted by this, bought cryptocurrencies abroad, and sold them in the Korean market.
Diving and "Swimming"
But the price of cryptocurrencies took a nosedive at the beginning of the year. Data from Korbit shows that from Jan. 6 to Jan. 16, 2018, the price of bitcoin against the Korean won fell from a high of $25,065 to $13,503. By February 5, it had fallen to $7,410, while on April 2, Bitcoin was at $7,241.
According to Bloomberg, Bitcoin lost $44 billion in January, more than the entire market capitalization of Ford. And new regulations for cryptocurrency trading, particularly those issued by the South Korean government, are one reason for the decline.
Sijin Lee, 22, did not enter the venue until November last year. He is a third-year student at Kyung Hee University, a famous university in South Korea. During the winter months, Li Sijin's investments quadrupled, but now, he has lost half of his principal. By his estimates, 70% of his friends who speculate in coins have lost money.
The large fluctuations have unbalanced the emotions of many coin speculators, many of whom have used all their savings to buy coins. When bitcoin fell 10 percent in January, speculators shared photos of them smashing computers, sinks, bathtubs and doors in anger. "Why is my life always like this? I don't even want to clean up." One coin speculator posted a picture of vomiting in anger. There is a bitcoin community that shows the temperature of the Han River in Seoul, so that speculators who want to "swim" (jump into the river) there are prepared to go.
South Korean media say there are multiple suicides linked to the cryptocurrency crash. A college student in his early 20s committed suicide on Feb. 1 after investing $18,500 in cryptocurrencies. Later that month, a 30-year-old IT worker committed suicide. His friends told local media that he had lost nearly $10,000 in coin speculation.
Wu Yiyuan said that she is still bullish on cryptocurrencies, but she also knows that cryptocurrencies are too hot. She and her husband lost $20,000 in a "mining" scam. “It was terrible, but it didn’t stop me, I still believe in the power of ether as a currency, so it didn’t really hit me.”
This "firmness" by speculators has worried many senior government officials, who issued a series of regulations earlier this year. As the Prime Minister of South Korea said in November last year, “Young people and students are scrambling to make huge profits in a short period of time. It is time for the government to act, because if left unchecked, this could lead to serious morbid phenomenon.”
Li Sijin, a college student who lost half of his currency speculation, said he still wants to be a PE teacher. "Money is not the only thing in life," he said.
Wu Yiyuan's husband is now looking for a more stable investment, hoping to buy a house one day. She said: “I think a lot of coin speculators don’t want to live a luxurious life, they want to travel the world on a yacht or something, they just want to buy a house. That’s why they are so crazy.