South Korea, a country of rapid change, is not only the home of K-Pop and delicious food, but also the cradle of virtual currency craze. As of the end of 2021, South Korea's virtual asset exchanges have attracted more than 5.58 million actual trading users, which is almost one-tenth of South Korea's total population.

However, in recent years, the virtual currency market has been experiencing twists and turns, with the price of major cryptocurrencies such as Bitcoin falling by nearly 70%. Among them, South Korea's local virtual currency Luna coin fell into the abyss overnight, which makes people wonder what kind of temptation makes Koreans still obsessed with virtual currencies?

South Korea’s Crypto Frenzy

To understand the craze for virtual currencies among South Koreans, we first need to understand some background. Before the emergence of virtual currencies, South Korea's stock market has always been one of the world's largest financial derivatives markets. This reflects the South Korean people's preference for high-risk and high-return financial products.

However, in recent years, due to the continued global economic downturn, many investors have turned their attention to the virtual currency market. South Korea has quickly emerged as one of the world's three largest Bitcoin trading markets, accounting for 30% of the world's total virtual currency transactions.

South Korea's virtual currency market not only has a huge trading volume, but also a variety of currencies. Among the total virtual currency transactions in South Korea, Bitcoin accounts for less than 10%, and most of the rest are alternative coins. These alternative coins are high-risk and of unknown origin, but this has not stopped Koreans' enthusiasm for virtual currencies.

The rise and fall of Luna coin

In 2019, a South Korean virtual currency called Luna Coin emerged and became the new favorite of the whole nation. Luna Coin was created by Kwon Do-hyung in 2018 and quickly became popular at the end of 2021, climbing from the initial $5 to nearly $120.

The market value of Luna coin is even close to 41 billion US dollars, ranking fifth among global cryptocurrencies. This nearly 24-fold increase has fascinated people, especially the local manufacturing background of Luna coin, which has made it known as the "Musk of South Korea".

At the beginning, many people may see such a rate of return and invest with the idea of ​​"making a quick buck and leaving". However, once they embark on the journey of cryptocurrency speculation, the desire to make more profits becomes irresistible. Investors have fantasized that "this time I may be able to pay off my debts", "I want to buy a luxury item", "I want to earn the capital to start a self-employed business".

However, things were not as good as they imagined. Not long after, the Korean virtual currency market ushered in its darkest moment. In May 2022, Luna coin fell from a high price to near zero overnight. Within a few days, the price of Luna coin continued to plummet, eventually falling to $0.00017, almost collapsing. Many Koreans who invested in Luna coin lost their savings overnight, and even lost their families and lives.

Young people’s participation

The cryptocurrency craze in South Korea is mainly concentrated among the younger generation, the millennials. In South Korea, millennials account for the majority of cryptocurrency trading users. About 3.08 million young people (20-39 years old) are involved in cryptocurrency trading, accounting for almost 23% of the total population in this age group.

So, what is the reason why young Koreans are so obsessed with cryptocurrency trading? This needs to be understood from the background and characteristics of Korean society.

Social pressure and class stratification

In South Korea, young people face huge social pressures. Traditionally, Korean society is very competitive for higher education and careers. While studying hard and getting into a good university is a goal, even then, one may face difficulties in the job market. Family background and social status also play an important role in employment.

This high-pressure environment has led to a situation of "class solidification", that is, social class is difficult to change. Young people begin to feel that they cannot change their social status, which leads to the phenomenon of "low desire", that is, unwillingness to engage in important life topics such as marriage.

The lure of virtual currency

In this high-pressure and low-desire social environment, virtual currency has become a way for young people to change their destiny. The risk and return potential of the virtual currency market fascinates young people. They believe that virtual currency may be the last chance to achieve class leap.

Another factor is the rapid spread of information. Success stories of virtual currencies quickly spread across social media, and young people saw stories of their peers getting rich overnight, and they couldn't help but think, "It's better to give it a try than to sit and wait for death."

Regulation and policy

The South Korean government has been trying to strike a balance in regulating the virtual currency market. Although it had proposed a plan to close virtual currency exchanges, it had to change its position under public pressure. The government also postponed the implementation of the virtual currency tax bill to cater to the needs of the younger generation.

President Yoon Seok-yeol said during his campaign that taxation of virtual currencies should be postponed for two years in order to win votes from millennials, suggesting that virtual currencies are a done deal in South Korea.

Conclusion

Behind the craze for virtual currencies in South Korea are complex social, economic and psychological factors. The younger generation seeks opportunities to change their fate under social pressure, and virtual currencies have become a lifeline in their eyes. Despite the volatility of the market, Koreans' enthusiasm for virtual currencies remains unabated. This story tells us that we need to be cautious when investing in virtual currencies, but it also reflects society's desire for change and opportunities.