The protests raged on from October 2015 until Park was removed from power in March of 2016. During this time, the price of Ethereum went from under $1 to over $10 USD and word was spreading fast around Seoul. It's hard to say what exactly the government would have done had they not been embroiled in scandal, but it is likely they would have imposed some sort of restrictions - either an all out ban or an imposed limit on the amount of cryptocurrency someone could buy at one time. Unlike Coinbase, America's biggest exchange where individuals can only purchase cryptocurrency in $10,000 intervals, the Korean exchanges had no such limit. As a result, the average wealthy Korean was purchasing in $100,000-$500,000 intervals. When others got wind of how profitable these investments were, it became common for people to mortgage their homes in order to get in on the action.

Questions Answered

To sum it all up, a tech savvy nation that highly valued digital goods and also had a penchant for gambling without a viable outlet was naturally drawn to cryptocurrencies. The densely packed and hyper-connected composition of Seoul allowed for word of the massive gains being made from cryptocurrency investments to spread rapidly throughout the population, creating a mania. The rise of cryptocurrency's popularity coincided with political turmoil that distracted the government from a situation that under normal circumstances, it would have tried to control.

Once I understood how South Korea developed it's ravenous appetite for cryptocurrencies, I followed up with Simon at Hashed's office in Gangnam (yes, as in Gangnam Style) to discuss where he thought this was all going.

Regulations and Government

After the dust settled and President Moon Jae-in was elected, the government took a look at the situation that transpired amidst its own chaos and didn't like what it saw - a nation heavily invested in an asset that the government didn't fully understand. At multiple stages throughout 2017, the government expressed skepticism and negative sentiment towards cryptocurrencies.

When the South Korean Minister of Finance said during a radio interview in early 2018 that a ban on cryptocurrencies was "a live option," it sent the markets into a panic. In the following days, the market shed over $300 billion dollars in the sharpest correction in recent memory. After the comment, outraged South Koreans generated a presidential petition with 200,000 signatures urging the government not to move forward with a ban. The government eventually backtracked, stating that there would be no bans but that regulations would be coming.

On January 23rd, the governement announced that regulations would go into place effective January 30th. The government stated that it will put an end to "anonymous trading," meaning that only trading from accounts associated with legal South Korean citizens will be permitted. This will allow the government to tax gains while preventing minors and non-Koreans from trading cryptocurrencies on Korean exchanges.

Future Ban Unlikely

I asked Simon if he thought there was any possibility that the government would move forward with a ban in the future. He thinks that in the future, the government will be stewards of the crypto-economy as opposed to adversaries of it; his logic seems solid.

Whether the government likes it or not, Korea is already heavily invested in cryptocurrencies and there's nothing anyone can do to change that. It's also impossible to ignore the fact that Koreans have prospered more from the cryptocurrency boom than any other nation in the world. At the same time, given their level of exposure, they would be disproportionately affected by a major market downturn. Basically, the only thing the government can do is support the growth of the cryptocurrency market because a healthy market is good for South Koreans.

If America or China banned trading, only a small percentage of their populations would be affected. A Korean ban would create widespread panic and could cause systemic damage to the Korean economy. Not to mention that South Korea is a democracy, so any politician that takes an anti-cryptocurrency stance is likely to find themselves without a job come election time.

Upcoming Trends and Optimism for the Future

With a future ban on cryptocurrency trading unlikely, I asked Simon what he thought we should expect from blockchain and cryptocurrencies in the coming years within South Korea and beyond.

Simon is optimistic about the future of blockchain and cryptocurrencies because he sees them as a means of bringing about a more equitable society. He explained that the current corporate structure creates a divide between corporations, shareholders and customers. Corporations are required to maximize the profits of their shareholders, often at the expense of their customers. Only a small percentage of people get to be shareholders. By the time corporations issue shares to the public they're already billion dollar companies so most of the value has been created. In a distributed and tokenized economy, the average person can participate in value creation from the onset by participating in an ICO (Initial Coin Offerings are a way of funding early stage blockchain projects that are open to the public). In a decentralized economy, end users will have more ownership over the services and products they use and thus, share in the value they create.

One of the major trends he sees coming is major corporations decentralizing themselves by moving to the blockchain and "tokenizing" their products and services with their own cryptocurrencies. Last year, all of the blockchain and cryptocurrency product pitches Simon heard were from startups. This year, he says that the majority are from large companies. It appears that corporations are starting to see the writing on the wall and are moving towards decentralization in order to avoid being replaced by a blockchain based competitor.

One of the trends Simon foresees in the longer term sounds straight out of science fiction. "In the future, instead of working for companies, people will work for protocols." For example, instead of being a cab driver for Uber, people will drive for decentralized ride sharing protocols running on a blockchain, owned and maintained by a collective of tokenholders. Instead of paying a large cut of each ride to a centralized company, the passenger will pay a transaction fee to the miner whose computer executes the smart contract that enabled the ride to take place - the driver keeps a much larger cut of the fare. People who improve the overall network by contributing resources will be compensated in cryptocurrency based on the value they provide.

South Korea - A Technological Trendsetter

South Korea has a unique set of characteristics and attributes that created the perfect environment for the embracement of cryptocurrencies as a vehicle for speculative investment. These same attributes make it highly likely that South Korea will be the first region to see widespread adoption of cryptocurrencies and blockchain as a technology. That begs the next question: will the rest of the world catch up?

Simon pointed out the last technological trend that South Korea embraced well before the rest of the world: social media. The world's first major social network was South Korea's Cyworld, introduced in 1999 when Facebook was still a twinkle in Zuckerberg's eye.

I'll end on an overly used quote that may or may not have been said by Mark Twain. "History doesn't repeat itself, but it often rhymes." Time will tell.