Bitcoin Awareness Grows in South Korea After Central Bank U-turn

Asia's reputation as an international hotspot for bitcoin news is growing.

While China's central bank caused a major stir with yesterday's statement on digital currencies, South Korea’s central bank, the Bank of Korea (BOK), this week provided statements of caution and optimism.

The BOK released a report on bitcoin on 3rd December, according to BusinessKorea, which pondered the measures required to “open the virtual currency to the public”. It may not sound like much, but the BOK had previously ruled out any possibility that bitcoin could become a regular currency.

However, this report did counter this idea with a more pessimistic view of bitcoin's ability to go mainstream.

In the complex and multi-faceted world of government, any sign of leeway on digital currencies is more welcome than a rush to block or ban them outright.

Bitcoin's usefulness

In Korea, as with several other countries, it may be up to the business community and general public to demonstrate bitcoin’s usefulness first. BusinessKorea reported bakery chain Paris Baguette's recent move to become the first physical store in the country to accept bitcoin.

Similar to neighbouring Japan, none of the world’s major payment processors work smoothly with Korean bank accounts and there are no local competitors.

The owner of the Paris Baguette bakery in Incheon City, Lee Jong-soo, is using a smartphone-based payment app developed by his son Lee Jin-woo. He says he became interested in bitcoin after an introduction from his other son, Lee Chan-woo, who had studied finance in the US.

Apparently only a handful of customers have asked to pay with bitcoin since he set up the system, indicating the bitcoin community will need to engage in more promotional activity to help him spread the word.

Local traders

Often, though, it’s cutting-edge local traders like Lee who communicate most effectively by demonstrating a daily use case to other curious businesses. Additionally, it's small businesses who feel the pinch of bank processing fees and credit card chargebacks hardest.

Kevin Lee is a Seoul-based bitcoin entrepreneur and CEO of BitcoinKorea, South Korea’s first bitcoin business and portal. He has traveled around Asia attending bitcoin-related conferences and meetups, and wants to be instrumental in promoting its use in his native land.

He thinks South Korea’s need for digital currency options are similar to China’s: a way to diversify investments and find a way around capital controls. He explained:

“Most Koreans are interested in bitcoin for investment purposes. They do not care about the central bank of Korea's policy. The Korean government will follow the international trend of bitcoin.”

“The Korean government is strict on sending dollars from the country, since Korea is always short of dollars,” Lee added.

Lee, a friend of Asia-based bitcoin missionary Roger Ver, said the pair will tour South Korea from 8th to 23rd January to spread the word – talking to major news organisations and helping to introduce Kraken, an exchange that launched in the country just last Friday.

KRW Exchanges

Kraken has Korean as a language option and allows deposits and withdrawals in South Korea's local currency, won (KRW). It is open to users both inside and outside South Korea.

With Kraken’s launch there are now four bitcoin exchanges in Korea, the others being: Korbit, BitUP and ddengle. Lee reveals that more will be coming soon.

Ddengle is also South Korea’s primary bitcoin user forum, with about 7,800 visitors per day. The platform has plans to introduce litecoin trading in future.

Bitcoin’s price in KRW was generally higher than the rest of the world, Lee added, presenting an arbitrage opportunity for anyone with using Korean exchanges.

Seoul image via Shutterstock