Young people in South Korea are defying warnings from lawmakers and financial officials who consider cryptocurrencies fraught with fraud. More than a dozen students gathered recently at Sungkyunkwan University in Seoul to share ideas about investing in cryptocurrencies, Reuters reports.
Eoh Kyong-hoon, 23, once an aspiring math teacher, founded the Cryptofactor club and plans for a career in cryptocurrencies, having studied them for more than 10 hours a day for several months. Young South Koreans are anxious for something new as their country’s economy has been shaken by high unemployment among people their age.
Government Clamps Down
The government this week announced regulations on speculating in cryptocurrency.
Government concerns aren’t unfounded, given the recent bankruptcy filing of a South Korean cryptocurrency exchange following its second hacking in one year.
Prime Minister Lee Nak-yeon warned in November that young people are chasing fast profits, which is why the government must take action to prevent a “serious pathological phenomena if left unchecked.”
Young People Not Swayed
Eoh remains unfazed, having recently made a 20-fold gain on investments in the past six months.
Many students bring laptops to class to trade and track their investments, oblivious to professors giving lectures.
Young people are gravitating to altcoins that trade at lower values than bitcoin, according to analysts. Jim Jinhua, a leader of the Korea Blockchain Industry Association, which includes 14 virtual currency exchanges, said young people, thanks to their mobility, can do better with altcoin investments providing they can ascertain the better values.
One altcoin, Iota, rose from $0.82 in late November to $3.89 at the present time, a 374.4% gain, according to coinmarketcap.com. Another altcoin, Energo, gained 40% during the period.
Some young people don’t go to sleep until after 2 a.m. when the cryptocurrency markets in South Korea and Japan close. Club members consult one another on investment decisions.
Lee Ji-woo, 22, a sports industry major, knew nothing about cryptocurrencies or the economy until recently. She now has different aspirations, including being an investor in addition to being an athlete.
Shin Dong-hwa, head of the Korea Blockchain Exchange, said the dismal employment outlook will continue to foster young peoples’ interest in cryptocurrencies. When they go on social media, they are exposed to reports of their peers earning large amounts of money.
Financial Establishment Skeptical
Members of the country’s financial establishment are skeptical.
Kim Yong-beom, vice chairman of the Financial Services Commission, said prices are only rising because investors expect new buyers to pay a higher price, likening cryptocurrencies to a Ponzi scheme. Some see students are more interested in getting rich fast than on focusing on the underlying financial or technological values associated with cryptocurrency.
Yun Chang-hyun, an economics professor at the University of Seoul, said there is no way to measure the true value of cryptocurrencies yet, but students nonetheless flock to them, thinking they will earn a lot of money quickly.
Cryptofactor club members argue they started the club due to the lack of dedicated cryptocurrency classes. They see their efforts as moving away from speculation to informed investing. Kim Myung-jae, 19, said she realized she was speculating rather than investing before joining the club. The fine arts student said she is fond of altcoins, and she is looking at their true value after discussing them with other club members.
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