A Stunning Look Inside The World Of South Korea's "Bitcoin Zombies"

When it comes to investing in bitcoin and other cryptocurrencies, while Japan's "Mr Watanabe" retail investors may be the marginal traders  "propping up the bitcoin market", no nation has as much of its population invested - literally and metaphorically - in cryptos. In fact, according to a recent study, more than 3 in 10 salaried workers in South Korea have invested in one or more cryptos.

And the sole reason why bitcoin remains an unprecedented investment craze even as hackers have stolen millions, lawmakers are pushing for new taxes and regulations, and leading financial officials have called it a “Ponzi scheme" is that - so far at least - it has been the best investment for virtually anyone who has bought it: the S.Korean survey (which polled 941 people via email from Dec. 19 to 20, with about 80% of respondents in their 20s and 30s) revealed that of those who invested in cryptos, more than 80% made money from it, and about 20% made an average return of 425% on their investment. The average Korean investor owned some 5.66 million won ($5,260) in virtual currencies.

One more thing: what happens in South Korean crypto trading, does not stay in South Korea: the country is the world’s third-largest market in bitcoin trading after Japan and the US, with roughly 2 million digital-currency investors by one estimate - one in every 25 citizens. The country is also home to one of the world’s biggest cryptocurrency trading exchanges, Bithumb.

The country's crypto-trading craze is so pervasive that the country has developed the term “bitcoin zombie” referring to people who check the cryptocurrency’s price around the clock. Even the country’s prime minister Lee Nak-yeon expressed concerns over Korea’s bitcoin craze, warning  that “young people and students are rushing into virtual currency trading to earn huge profits in just a short period of time,” and that “it is time for the government to take action as it could lead to serious pathological phenomena if left unchecked" forcing young people into illegal activities like drug dealing.

For now, the "bitcoin zombies" are winning.

As an example, as Reuters details  in its just released deep dive in South Korea's crypto-community, on a recent weeknight at Sungkyunkwan University in Seoul, more than a dozen students crammed into a classroom not to study, but 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.

Make no mistake: it's a countrywide craze: “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."

At least until the industry crashes that is.


A student a member of a club studying cryptocurrencies in Seoul

For now however, 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.

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.

None of this matters to the grizzled 20-something traders: 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 added 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.

Meanwhile, with Bitcoin soaring to record levels, younger investors have gravitated toward “altcoins” which often trade at much lower values, analysts say. Today's surge in Ripple is just one such example. Another is Iota, which traded at $0.82 in late November and now stands at $3.89, a gain of 375%. Energo gained 400% during the same period.

“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.

Obsessing over these get rich quick schemes, young investors say they don’t sleep until after 2 a.m., when there is a lull in the cryptocurrency markets as investors in places like South Korea and Japan log off.

And so the zombies meet to strategize and plan what to do once they get rich: members of the club say they call each other to make important decisions together, and see information sharing as key to navigating the volatile cryptocurrency markets.

“I literally knew nothing about cryptocurrencies or the economy,” said Lee Ji-woo, a 22-year-old sports industry major. “Everyone here has taught me a lot.” It’s now emboldened her to dream of a different future. “I can have two jobs maybe, one as an athlete and another as an investor,” she said.

And if Lee did know about the economy, she would also know that despite the soaring price of cryptos and the local stock market, things are far worse than the traded securities would suggest. In fact, according to Reuters, tntense competition for jobs in South Korea is likely helping to drive interest in virtual currencies among young South Koreans, especially as they see others reaping big gains, said Shin Dong-hwa, head of the Korea Blockchain Exchange.

“Whenever they go onto social network services, they are easily exposed to so many examples of young people around their age earning huge money,” he said.

But some in South Korea’s financial establishment say those hopes may be unfounded. Kim Yong-beom, vice chairman of the Financial Services Commission, said Monday that the only reason prices were going up was because each investor expected the next buyer down the line to pay a higher price. “That really is a Ponzi scheme,” he said.

Well, so are stocks, and unlike stocks, this particular ponzi scheme does not have central banks to bail it out as the end buyer when things go south.

Others - that would be most - say students seem more focused on ways to get rich quick rather than on the underlying financial or technological values of digital currency. “There’s no way to measure their true value yet but students are just going for them, believing that they can earn a big fortune in just a snap,” said Yun Chang-hyun, economics professor at the University of Seoul.

So far the student are clearly correct.

* * *

Going back to the Korean student "bitcoin zombie" collective, members of Cryptofactor say they founded the club because of a lack of dedicated cryptocurrency classes on campus and see their efforts as a way to move beyond speculation to informed investing.

“I realized that I was actually speculating rather than investing before I came to this club,” said Kim Myung-jae, a 19-year-old fine arts student, adding that she was especially attracted to altcoins.

"Now that I fully discuss which one to invest in with the members, I‘m actually looking at the true value."

And with 19-year-old traders like Kim opining on the "true value" of cryptos, one can be pretty certain how it all ends. The only question is when.


SafelyGraze VWAndy Fri, 12/29/2017 - 23:55 Permalink

checking the cryptocurrency’s price around the clock is actually meaningful work

no need to make fun

it's social. it's uplifting. and unlike playing video games, it generates spectacular profits.

the koreans are ahead of the curve. when everyone spends all day watching crypto prices increase, the world will be a safe, peaceful, and happy place to live.

In reply to by VWAndy

cheech_wizard SafelyGraze Sat, 12/30/2017 - 05:05 Permalink

> it's social. it's uplifting. and unlike playing video games, it generates spectacular profits.

Just like before the Internet bubble burst.

i'm just telling you this in case you were too young to remember. People stopped working because they were too busy checking the stocks they owned. A $1 increase in the company I worked for (between stock options and stock i owned outright) would generate an increase in my wealth on paper by about $50K...

Tell me how this is any different.

In reply to by SafelyGraze

Mementoil cheech_wizard Sat, 12/30/2017 - 06:57 Permalink

Moreover, if everyone is checking to see how much Bitcoin has gone in price and no one is working and manufacturing anything of real use, then what on earth will you be able to buy with your Crypto profits?

What people in our day and age fail to realize is that true wealth is tangible. Real estate, commodities, means of production - these are real wealth. All else are paper claims over wealth, which may or may not exist. And one day we will all wake up from this paper dream we are all dreaming together, and discover that tangible goods are far more scarce than we have imagined.

In reply to by cheech_wizard

JRobby cheech_wizard Sat, 12/30/2017 - 07:26 Permalink

I recall those days. They bought a Bloomberg and put it out in the reception area of our offices.

It all seemed normal until it wasn't. The same behaviors are present in all bubbles. But people do make huge $$ if they get out in time.

Companies are already doing the "name changes" as they did during the dotcom run up.

In reply to by cheech_wizard

fattail SafelyGraze Sat, 12/30/2017 - 07:48 Permalink

i couldn't help but draw the line from the crypto zombies trading alt coins, to the daytraders trading penny stocks when everything was going up in the dotcom bubble.  That was where you could leverage your $5-10,000 the most and get the stupid money....  Until you couldn't.  You can say the same thing about the geniuses selling VIX.  Let's see how they do next year with a trillion less of CB money liquifying the system.  

All this money going in to crypto currencies on some level is deflationary.  If its not in a bank, or financial and physical assets its not propping up the credit bubble.

It seems to me money is leaving the system.

If you love what you do, you will never work a day in your life.

In reply to by SafelyGraze

Honest Sam SafelyGraze Sat, 12/30/2017 - 09:43 Permalink

".......yada.....the world will be a safe, peaceful, and happy place to live."

Hate to break it to you but with 7 going to 8 billion people ( i use the term people very loosely, since a great many of the billions, billions of them, are little more than ignorant, uneducated, dumb (thru no fault of their own) copies of their libidinous parents unable to control their libido) the probability of a safe, peaceful, happy place to live approached -zero when the first of our Neanderthal forebears, Ork, used a jawbone from an ass as a weapon to bonk Merk, on the head, to take that juicy, buxom, and beautiful female, Shawneekwa, from him for his own use.

See the NBA megamonsters with a dozen children by a dozen different women hoping to monetize their wombs. 


In reply to by SafelyGraze

Andre Honest Sam Sat, 12/30/2017 - 10:52 Permalink

Here's an idea...

If we are being lied to about global warming - which DEFINITELY appears to be the case - why not lie about global population?

It makes people afraid.

It justifies massive corporate and government expansion and control.

It justifies the killing of millions, if not billions.

For example, "African population is expected to increase 40 percent in the next 20 years." A land that has massive poverty, lack of food, AIDS and other diseases, and war - Malthus' playground - is going to have a massive population increase.


I could go on, but you get the point.

In reply to by Honest Sam

hootowl Gaius Frakkin'… Sat, 12/30/2017 - 09:07 Permalink

Does anybody really think the central bankster Faux-Hebrew-Khazars are going to just stand meekly by and let these upstart rogue Kharzars steal their central banking currency scam from them without a fight?  These reptilian Khazars start world wars and unending permawars to protect their fuedal turf.  The banksters have brought about centuries of mayhem and the slaughter of hundreds of millions of goyim humans in order to build and maintain their worldwide globalist economic empire.  World governments are their golem, godless, soulless, mudpuppets.


It doesn't take a genius to discern who is behind this moneysucking illusional distraction and just who it is that will immensely profit from it.  Watch carefully as this newfound delusional, non-existent, wealth circles the involutional digital toilet of soon-to-be-imposed worldwide illegalization/confiscation.


Hang on tight, suckers. There will be some violent blowback when the Faux-Hebrew bankster political puppeteers implement the correction........There will also be some magnificent economic opportunities for those wise enough to see through this Ponzi scam.

In reply to by Gaius Frakkin'…

greenskeeper carl Clock Crasher Fri, 12/29/2017 - 23:35 Permalink

As a percentage, sure. It will have climbed higher, faster, than any other bubble in history. But its still pretty small potatoes in the grand scheme of things. When this does pop, it will probably just be used to herd the very same people into the stock market. Having learned their lesson the hard way, they'll be more inclined to follow the traditional route and put what money they have left in stawks, where they will promptly have the rug pulled out from under them again in short order and left truly destitute. One way it could play out, anyway.

In reply to by Clock Crasher

TheReplacement greenskeeper carl Sat, 12/30/2017 - 00:17 Permalink

But what if one or more of these companies/technologies/ad-hoc-global-networks actually is as good as they are billed?  It will either have to be strangled in the crib or it will change everything.

And these kids are not blind to the fact that the real world situation sucks because they are in cryptos.  They are in cryptos because they know the real world situation sucks and they don't want it that way.

There is a fortune to be made and a lot of eyes to be opened.  The world is going to change, for better or worse, because of cryptos.

In reply to by greenskeeper carl

Endgame Napoleon Clock Crasher Sat, 12/30/2017 - 18:52 Permalink

One part of me says, hey, young people, go for it. The economy is bad here, too, no matter what most so-called experts on TV say. 

Another part of me wonders how these underemployed young people are getting so much money to bet and to buy laptops. But then, before I got a series of so-called “real jobs,” I had more money too, as students often do, strangely. 

It probably comes from their parents. Wonder what their parents think of their Bitcoin betting. They are probably telling them to follow the studying-hard path, knowing that it will all end up just like it did for earlier generations. 

Some of those students sound about as realistic as US youth, like the one planning a career combining Bitcoin trading and athletics. 

In reply to by Clock Crasher

zebra77a Clock Crasher Sat, 12/30/2017 - 06:23 Permalink

Do a bit of homework the implications are staggering - this revolution into blockchain / crypto / bitcoin  is barely even started...

Ethereum is sitting on approximately 17 Million wallets, Bitcoin even less at 14 Million.   It would be impossible to know what each wallet represents (a company, an investment group, grandma?) nor is it determinable to know how many wallets are overlaps (aka one guy owns an Ethereum wallet AND a Bitcoin wallet but is still defined as [one] individual (not even counting the companies).  We could just say 20 million individuals participate in bitcoin...

However world wide...

There are 45508 Stock Listed Companies listed on world exchanges of which NEAR ZERO have even begun to invest in crypto.

There are an additional 250+ MILLION companies around the world which have not begun to invest in crypto.

There are an additional 3.5 Billion people with access to internet that can eventually participate in a crypto.. (Even Vietnam has 50% internet penetration and just hired 10,000 soldiers to police their internet - so basically internet is STILL growing huge for the next decade..)

in % terms against the world population crypto-participant's is  a tiny < 0.4%/.. Crypto prices will not stop rising until market forces release demand pressure. Because the media is consistently giving it attention we are going to witness another 3-5 YEARS of EXPLOSIVE inflows of wealth into crypto - minimum!  Secondly we will see more and more GDP go 'black box' where large sales such as homes and high end cars will begin to be traded in crypto. Investors will be looking to avoid  both inflationary devaluation of their fiat, AND aggressive taxation of parasitic regulators..


Bitcoin with it's 6.7 Transaction / second limit will never be for the commoner,  especially with it's $25 transaction fee costs. It is an inefficient crypto to handle world GDP transactions. Aside this, it will remain  an inflation escape vehicle for anyone with good money.  Bitcoin is already the 'grandfather' crypto.  But there are an additional 1300+ cryptocurrencies in existence all vying to present solutions, instantaneous transactions, peer-to-peer exchange (China has it.) and super-anonymity. Market flows will be the intelligent decider.

In short market forces will cause  the Crypto families to end-run all attempts at regulation, taxation, and exchange controls. Crypto can no longer be stopped - not without a world-wide internet shutdown.. Instead of the South Korean population looking at the stock exchanges, they will be looking at the crypto exchanges. You cannot sell stock if no one will look at it. Loss of focus = loss of capital.  Focus is dropping daily from what the stock market is doing to what the crypto is doing.  Crypto *will* eventually kill the fiat stock markets. 

A good example is Zerohedge which now has probably equal number of crypto articles to stock market articles. Soon it will be crypto-articles > stockmarket articles > fraud/scam articles. Think about it. What eyeballs look at is what eyeballs spend money on....


Wealth Distribution : https://blog.lawnmower.io/the-bitcoin-wealth-distribution-69a92cc4efcc

Bitcoin wallet counts (blockchain) : https://www.statista.com/statistics/647374/worldwide-blockchain-wallet-…

Ethereum wallet counts : https://etherscan.io/chart/address


In reply to by Clock Crasher

A Sentinel zebra77a Sat, 12/30/2017 - 07:33 Permalink

Just because something is dumb doesn’t mean it won’t work - granted. But there’s not only zero value in these cryptos, there’s a very limited and fragile market for them- price is the only thing they can have, and price is as ephemeral as it gets — value... a broad, robust demand and actual applications of the good ... these things will never have that.

In reply to by zebra77a

hootowl zebra77a Sat, 12/30/2017 - 09:38 Permalink

Crypto can no longer be stopped!!!!????  Crypto is a delusion/illusion that will consume itself.....Go back to your carnival scams. 


The bankster political mudpuppets will bury and confiscate cryptos as soon as the cryptos suck up enough fiat wealth so that the attendant crypto confiscations will be profitable enough to pay for the violence and human slaughter that will result from the confiscatory reset......and, of course, provide a comfortable margin of profit for the perpetrators of the scam........Guess who that will be.

In reply to by zebra77a

Stevious Clock Crasher Sat, 12/30/2017 - 12:37 Permalink

I guess then that I (who hold no crypto) am a dumb person.

For should hyperinflation truly occur I see zero doubt that crypto would soar to ungodly heights.  The end would be the same, but prolonged.

To truly understand hyperinflation I strongly suggest that you obtain a copy of Max Shapiro's 1981 book: The Penniless Billionaires.  About 4 years ago a lousy used copy commonly cost $50 or more.  Today (little interest in the possibility of hyperinflation) you can buy a readable copy for a buck or two plus postage.  Try the website addall (move to out-of-print books) or ebay's half com.  It's one of the most fascinating books I've ever read--even if we never see hyperinflation.  IMHO it should be on every single ZH'er's book list.

Crypto is a Ponzi scheme I'll heartily agree on that.  It's end might be in an hour or four years, but it will end badly for most.

In reply to by Clock Crasher