South Korean Prime Minister issues warning over Bitcoin mania 南韓總理︰炒風釀社會病態

Tue, Dec 05, 2017 - Page 14

Bitcoin has its origins in the aftermath of the 2008 financial crisis, when the blockchain technology was developed. Due to the unique qualities of the blockchain technology behind Bitcoin — decentralization, anonymity, virtual untraceability and independence from the existing currency system — it has been used to sell illegal drugs and as a tool to launder money by criminal organizations. However, in recent years Bitcoin has taken over from gold and other commodities as a new target of speculative hype for retail investors in China, Japan and South Korea. On Tuesday last week, South Korean Prime Minister Lee Nak-yeon issued a warning, saying he fears young people and students are at risk from the speculative mania surrounding cryptocurrencies, while some have become embroiled in pyramid schemes and narcotics criminality which Lee believes is turning into a serious social problem.

Bitcoin has surged in value since the beginning of this year, undergoing violent price swings along the way. A dispute between opposing factions of the Bitcoin community has also caught the attention of investors. The ongoing optimism toward Bitcoin in both Japan and South Korea has attracted a frenzied rush of investment from Chinese “aunties,” Japanese housewives and South Korean youngsters. Currently, South Korea’s Bithumb exchange handles the highest number of cryptocurrency transactions of any trading platform in the world.

During a cabinet meeting last Tuesday, Lee warned that domestic transaction volumes in cryptocurrencies have already surpassed those of the KOSDAQ index of South Korean small and medium-sized businesses and said: “If we allow this situation to continue, I believe there may be serious consequences.” Lee believes youngsters and students have embraced cryptocurrencies in search of quick profits and this has caused some to become drawn into committing fraud.