I’ve lived in South Korea for over 6 years and have been involved with Bitcoin in South Korea since 2012. Bitcoin has been making big news in South Korea in regards to regulation. Here is my view of Bitcoin as well as all other digital currencies and why I feel the South Korean government is looking to regulate the industry.
Bitcoin is backed by nothing
I feel that for money to actually be money it needs to be backed by something tangible. Currency is usually backed by the government and in the case of the United States, it is backed by gold. Even gold has the value that it has because it can be used for products such as jewelry. So even if it loses its value, it will still hold some kind of value because it can be used for something. The same can not be said of Bitcoin. It is backed by nothing.
Why is the South Korean Government Trying to Regulate Bitcoin?
Why does Bitcoin hold so much value? What Bitcoin provides is anonymity. The ability to use it to do illegal activities. China saw the corruption behind Bitcoin use and put a stop to it in late 2017. What Bitcoin is showing to the world is that people want to do illegal activities if they can get away with it. This is why so many people are curious about not only Bitcoin but all cryptocurrencies. The reason why cryptocurrency prices are always up and down is that no one knows what the market price should be. That is why we don’t see 40% changes in any other market. This is something that can last long term.
South Korean Government is Worried About Bitcoin Collapse
Clearly, there are members of the South Korean government that feel Bitcoin is about to collapse at some point. They don’t know when that bubble will pop. Therefore that uncertainty of when it will pop has them scared to fully embrace Bitcoin in South Korea. As the South Korean government puts more regulation on Bitcoin, Asian investors will look to other investments. The main cause of the rise of Bitcoin, in my opinion, is with the Asian investors. For example, once China got rid of digital currency exchanges the price of Bitcoin fell 25%. Once all the Asian investors move away from Bitcoin will we see Bitcoin TRUE pricepoint.
South Korean Government can Kill Bitcoin in Korea.
If the South Korean government wanted to, they can kill Bitcoin in Korea. They haven’t because the South Korean government knows that Bitcoin in South Korea is not truly anonymous. You will have to store it on a server and all transactions are recorded on a public ledger. This is why the South Korean government rather than killing Bitcoin is setting up regulations to make sure real names are associated with trades and exchanges.
Bitcoin is not the Future of Money
Bitcoin in South Korea is too volatile to be an alternative to real money and it is not backed by anything. Cryptocurrencies of the future will be backed by SOMETHING, like gold. Gold is the ultimate standard and if that enters the market, that will the best investment potential. If South Korea truly wants to be the Fintech hub of the world they need to make their own cryptocurrency which is backed by gold. Korea should let the way and be innovative when it comes to digital currency. Instead of setting up barriers and regulations they need to be researching and innovating.