"Everyone's into Coins but Me" 20/30 Somethings Lost in Cryptocurrency

[경향신문]

An image of the cryptocurrency bitcoin. Reuters / Yonhap News

Heo (36), a teacher at a university recently stopped playing games, a hobby he had long enjoyed, because he has been immersed in trading cryptocurrency, more exciting than games, since two months ago. After he had invested in ripple, one type of altcoin (an alternate cryptocurrency other than bitcoin), only to see the value crash three years ago, he had forgotten about “coins.” But he revived his account after watching the value of bitcoin soar after the second half of last year.

Heo began mining cryptocurrency with three computers last February. A month later, he earned profits of 1.5 million won. In April, the price of ethereum doubled and Heo’s earnings increased to 3 million won. He began trading cryptocurrency only last month. Heo said, “I would invest 3 million won before lunch and when the value rose 1% after the meal, I would immediately sell.” He explained, “That way, I could earn 20,000-30,000 won each time after excluding the fees.” Unlike the securities market or KOSDAQ, the cryptocurrency exchange is open 24 hours.

Heo said, “The day I made the most number of transactions, I traded 80 times a day including both sales and purchases,” and added, “Right now, the value of coins have dropped a lot, so I am waiting for prices to rise again.” Heo invested 30 million won in cryptocurrency. He financed the money by selling his Korean shares and taking out a loan on credit. He plans to maintain his overseas shares, but will stop investing in Korean stocks. He said, “About twenty graduate students in the lab are all into coins.”

Due to the “coin” craze, which began sweeping through South Korea since the second half of last year, people in their twenties and thirties are leaving the stock exchange and heading to the cryptocurrency exchange. The “loan investment (taking out loans to make investments)” craze has moved to the highly volatile cryptocurrency market. According to a survey of investors in the four major cryptocurrency exchanges--Bithumb, Upbit, Cobit, Coinone--that People’s Party lawmaker Kwon Eun-hee, a member of the parliamentary National Policy Committee released after obtaining the data from the Financial Services Commission, in the first quarter of this year, a total of 2,495,289 people newly entered the market. Among them, twenty-somethings accounted for 32.7% (816,039), followed by thirty-somethings with 30.8% (768,775). Six out of ten people who entered the market were in their twenties and thirties. People in their forties only accounted for 19.1% (475,649) and people in their fifties, 8.8% (219,665).

■ 20/30 Somethings Deep in Virtual Currency

The twenty-somethings deposited 88.1 billion won last month, a 154.7% increase from January (34.6 billion won). During the same period, deposits by the thirty-somethings increased from 84.6 billion won to 191.9 billion won, a 126.7% increase.

Rising real estate prices; soaring cryptocurrency prices, which rose at a rate of up to thousands of percentage points; fear of being left out, that everyone else is trading coins; and the plateau in the stock exchange after a record-breaking high in January are all cited as factors fueling the coin craze among the twenty and thirty-somethings. Hong Ki-hoon, a business professor at Hongik University said, “Real estate prices have gone up too high and stock prices have also risen significantly, so there is little expectation for the rate of return. Meanwhile the number of people who claim to have earned money increased significantly.” He further explained, “The fear that I’m the only one who hasn’t earned money and the idea that there is no future if I don’t do anything is dragging people in their twenties and thirties into the cryptocurrency exchange.”

Investors in cryptocurrency seem to see the high volatility of virtual currency as a strong point for investment rather than as a risk. One thirty-something employee at an IT company who claims to have started investing in cryptocurrency at the end of March said, “I saw a colleague invest ten million won and earn 150 million won.” He also said, “There is little change in the price of stocks, but coins are volatile, so returns of 100-200% of the investment is common.” Another strong point is the fact that one can cash cryptocurrency faster than stocks and that there is no restriction in trading time. Jo, a man in his twenties who works as a food delivery rider said, “You need to have sizeable seed money to invest in stocks and it takes two days to receive the money after you make a sale, but with coins it all happens immediately.” He also said, “Because of work, I don’t have the time to keep my eyes on the stock exchange, which opens at nine in the morning and closes at three-thirty.”

Recently, the government announced that it would fiercely crack down on illegal activities in connection to the trade of cryptocurrency. This caused the price of the bitcoin, which had reached 73 million on the morning of April 20 to drop to 65 million in the afternoon. But experts point out that this was different from how the price of bitcoins crashed after the government announced strict measures in 2018. Jo (34), who works in the financial sector, said, “I don’t think there is going to be any impact in the long term,” and added, “I don’t think the people will trust the government, for it is displaying an ambivalent attitude, refusing to recognize virtual assets, but planning to levy taxes.”

Trust in cryptocurrency, which had mainly been regarded as a subject of speculation, has strengthened. Bak (37), an office worker said, “The government and the central bank claim that cryptocurrency doesn’t have any intrinsic value, that it’s speculation, but investors don’t care.” He argued, “When it comes to the dollar, the volume is artificially controlled, but with the bitcoin, the amount that can be mined is determined, so it is gaining trust.” Son (38), a venture capital insider who invested ten million won in bitcoins early this year said, “Recently, investment banks are also entering the cryptocurrency market, so I think there is trust in cryptocurrency as a form of asset.” He further said, “There are many ‘moths’ who are dangerously attracted to the ‘light,’ looking to make quick money, but it is true that uncertainty has decreased significantly compared with the past and I invest thinking of it as a stable investment for retirement.”

Experts call for caution when investing in cryptocurrency for it is highly volatile and the true nature of cryptocurrency is complex. Professor Hong said, “Unlike the stock exchange, cryptocurrency exchanges do not monitor transactions, so if the prices are manipulated, they can’t detect it.” He argued, “One must always keep in mind that the market may not be fair and never forget that they are responsible for any investment failures.” Park Sung-joon, director of the Blockchain Research Center at Dongguk University said, “Since it is not a mature market, the risks are big,” and added, “People should get rid of the idea of striking it rich and start with leading cryptocurrencies and gradually increase the scope of investment in the mid to long-term.”