By Dahee Kim
Hackers have stolen millions, lawmakers are pushing for new taxes and regulations, and a leading financial official has called them a “Ponzi scheme“
But that hasn’t cooled a frenzy for bitcoin and other virtual currencies that is gripping young investors in South Korea.
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 23-year-old Eoh Kyong-hoon, 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.
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