Crypto of Korea – TheNews.Asia
Ch. 1: Global Speculation and all Eyes on Korea
It all started in the late summer of 2017. Two friends, Jim and Chrissy, met so Chrissy could share an amazing investment opportunity. He told of his good friend, Yoonie, who had been investing in Bitcoin for the better part of the year and had already raked in tens of thousands of dollars. He pressed Jim to look into it further and to set up a meeting with Yoonie who had just bought his dream car: a big, bad BMW, which was proof positive that there was a tremendous amount of money to be made here.
Chrissy met Yoonie at a restaurant in Seoul years before where the latter was selling slices of Pineapple for petty cash. He was a ragged hard worker who, by all appearances, would not amount to being as wealthy as he purported to be in 2017. He was poor and living with his father in 2014 and needed to do any odd job to help pay rent. By his turn of events, it stood to reason that if Yoonie could now live on his own laying bricks by day then trading Bitcoin by night to afford a BMW, then a skilled trader who put all their efforts into it could be independently wealthy in a short time.
For sure Chrissy thought it was possible. Shortly through the first conversation they all had together the word ‘Ethereum’ was thrown out which required even more research to conduct on an already complicated topic. Chrissy went to work right away on figuring out a quick route to profitability in the matter. He immediately began repairing the bridges he had likely burned, as was his style, with the person or people he knew were in the tech industry in Korea. His sleepless, schizophrenic focus shook those who knew him from the instant he saw how much gold Yoonie carried with him ‘just to be safe’. Jim nodded along as he tried to piece the puzzle together in his mind. What is Ethereum? For about a week Chrissy urged his friend daily to open an account on the most active exchange in Korea at the time, Bithumb.
It was all quite overwhelming. Soon after that meeting, however, Chrissy had established a chatroom dedicated to general discussion about cryptocurrency on a popular Korean messaging platform just to ensure that the target audience of English-speaking people in Korea would know where to go to hold such discussions. He invited Jim as an admin since they were destined to get in on this racket together and were very close friends. It made sense that they would do this together since they had helped each other in social and professional matters quite a bit in the few years they knew each other. Jim handled crowd control and public networking whereas Chrissy started promoting the chat on Reddit to some success.
It didn’t take long for the chat to explode in membership numbers. Unbeknown to Jim then was the huge global interest that had taken hold in Bitcoin and other cryptocurrencies. That interest can be easily explained. Despite the long history Bitcoin had even up to that point in 2017, that calendar year had seen an incredible price increase between January and August. In January, the price bottomed out at $768. By August, it was around $4,500 per Bitcoin. By the way so many people with questionable profiles were flocking to the scene, it was basically as if someone left out the honey so the flies and the bees could come get a taste.
The cause for the huge upswing in price is more difficult to nail down. At the beginning of 2017, Bitcoin had a market cap at around fifteen billion dollars. By August It was around seventy billion. By December, market cap of Bitcoin topped off around $325 billion. Bitcoin investing was a gross phenomenon which people were likening to the Dutch tulip mania of the 1600’s where a handful of people were becoming extraordinarily wealthy beyond comparison in the blink of an eye while many others were losing out in a wildly speculative market.
Was it a chicken/egg scenario? Did new people enter the market, causing price to increase, or was the price increasing ‘organically’ which led to more fresh money being attracted to the easy opportunity? It’s hard to answer that definitively but surely we can say that the mass media were doing their job to keep the public informed. By early August, BBC published Bitcoin soars to record high value. Not long after that article, Bitcoin.org was advertising how and where to buy Bitcoin, thereby ostensibly inviting new money to come in. By December, The New York Times, the Guardian, Forbes, Bloomberg, and pretty much everyone else was publishing stories and talking about what Bitcoin is, how much it was worth, and how nobody knew why. Define: speculative market.
At any rate, people were flocking into Bitcoin trading faster than the price could keep up. There were many times when the price would pump so hard that buy orders couldn’t be entered fast enough before the price had jumped hundreds of dollars higher. Sometimes orders would skip by the hundreds of dollars at a time on exchanges, making it impossible to manually enter an order. Further evidence of the global influx of players was in the ethnic and national make-up of the demographics of Crypto of Korea. There were Brits, Americans, Canadians, Koreans, Chinese, Singaporeans, Russians, French, Japanese, a Mexican, a Chechen, and even a Kenyan. We were all speaking in English about Bitcoin and its little brothers and sisters known as cryptocurrency in South Korea at a time when every new morning brought new price action and riches or sorrows.
Crypto of Korea the chat room could easily serve as a microcosm of the rest of the world at the time. To newcomers into the space, it was decidedly overwhelming. There was so much Jim needed to learn while at the same time he was expected to be something of an example for people. Granted, by December it seemed like Chrissy and Jim really were seasoned veterans after all the fortuitous rises and ever-unexpected drops in price, all the announcements and listings that we didn’t understand but knew would cause some dramatic price action, and the lost hours of sleep waiting for your price point to hit before you knew to just set it and forget it that others were totally unaware of if they entered in December.
Quickly the global focus shifted from trading Bitcoin on exchanges to trading Bitcoin to and from South Korea in something known as arbitrage. By the end of 2017, the price of some cryptocurrencies, Bitcoin included, were dramatically higher in South Korea than the rest of the world. For XRP (Ripple), the value was 50% higher. This meant that someone could buy $10,000 of XRP on an American exchange and send it to a South Korean exchange where it would be worth $15,000 in seconds since that’s the amount of time it takes to get the coins over (assuming you didn’t fat finger a wallet address). There’s an entire chapter on the topic so just bear with this until then.
Crypto of Korea was essentially a troll box about the global market. There was a healthy dose of bombast in many people’s comments, especially those boasting to have constantly won big. One of the most infamous claims was a member pseuodnymed Derrick who announced that if Bitcoin Cash reached a certain high point, he would buy everyone in the chat an iPad. Of course it hit that point and of course he didn’t pony up the loot, but that was the sort of toxic uselessness that the chat had devolved into which led many of the more aware members of the chat to break into smaller group chats to collaborate meaningfully. Many close friendships were made as a result of that chatroom.
The useful information we could discern from various sources would sometimes be kept secret and other times published on the international online forums. Those forums absolutely devoured any advance information they could obtain regardless of its validity. Announcements about announcements became routinized phenomena designed to spark a pump. Even before anything was announced a coin would pump because there was an announcement that the company would soon make an announcement. The Korean pump news was about listings. These days listings happen with little fanfare except among closed communities that closely follow a project. Then, when Bithumb’s offerings could fit on just the front page of the site in one small box, a listing meant huge pumps so that’s what we were after. Bad tips among friends would sometimes lead to shouting matches. Jim often played the referee between Chrissy and Yoonie who turned into rough children when talking about and going in on trades.
—
Somehow this little country with an unsettlingly dense population, curiously high GDP for its geography, and spiritually bankrupt K-pop culture found itself in the spotlight for yet another drama that was unfolding in real life. Traders worldwide watched every day as South Korea led pumps and dumps of various cryptocurrencies. They tried to follow the trends that they perceived in the charts and get inside tips from their friend across the ocean. At the time, reliable information in mass media about what was happening in South Korea was difficult to come by.
Bithumb, Upbit, CoinOne, and a small handful of others were all in on a profitable scheme wherein they knew the international traders had eyes set on their ledgers but they would throw a hair in the soup by randomly pumping or dumping a coin. You have to remember that the speculation in the market was worsened by these seemingly random pumps because people would be left wondering why such-and-such coin had pumped and what it would mean for the rest of the day or week. In reality, it was just the people at Bithumb pushing buttons that would ultimately lead to their increased profits. There were no regulations about such questionable business practices.
Now, in light of the randomness of these pumps, some managed to get ahead of the curve. In Jim’s case, he had been burned so many times by bad information in his own chat from people who merely blew hot air. As a result, he stopped taking their advice altogether. Instead, he noticed a trend at the exchanges: they reset their daily ledger at 9am every day, at which point traders would see fresh 0% displayed on the up/down meter and go straight to the charts to see what was low in order to pump it.
Knowing that, he would arrive at his place of work at about 8:30 every day to ‘do his job’ and check the charts to see what looked good for a 9am breakout. Make no mistake, this was just Jim throwing mental darts at a metaphysical dart board known as a cryptocurrency exchange but it worked more often than it didn’t. Usually by 10 or 11am that day he would have notifications that his sell orders had been filled and lament time and time again how he should have put more in or placed a higher sell point.
If you think he was the only one in on this scheme, you are very wrong. This was gambling. He had no idea what he was investing in but knew it would make me money if he didn’t know how to technically operate the user interface. This was a social ill, as seen by the Prime Minister of Korea at the time. Coindesk brandished the headline Crypto Corrupts the Youth? South Korean Prime Minister Says So. BBC wrote about a North Korean hack of a South Korean exchange, which would turn out to be one of many, in December. The Verge wrote about how South Korea had banned Initial Coin Offerings (ICO) in September. The direction of discussion around the world perpetrated by pretty much everyone who even mentioned the word Bitcoin should clearly illustrate how at this time, the end of 2017, was a toxic cesspit of speculation and led to the ruin of countless individuals. As mentioned before, a tremendous amount of South Koreans traded cryptocurrency. Many of them were led to financial ruin by going as far as to take out bank loans to increase their positions and maximize gains. The thought process was simple and decidedly poorly thought out: “[It’s a sure thing so I will just take out this loan and pay it back after the pump.]” That thought process was undoubtedly fed by the discussions in my chat and others in the country, and bolstered by mainstream media outlets confirming the unbelievable gains people were realizing.
All Eyes on South Korea
The South Korean legal system is flawed at best. That is, Jim’s western ‘law and order’-based mindset sees it as flawed and fraught with gaping loopholes that are utilized with reckless abandon and minimal consequences. They will allow rapists to go free with a slap on the wrist, but drug users and gamblers will face the highest penalties. That’s right, gambling is illegal for South Korean citizens. ROK is the only country who imposes her laws on its citizens even when they are not on ROK soil, too. Look up how many K-pop stars have had to apologize publicly for smoking marijuana on their trips to Canada or the United States; entertainers are largely exempt from even the harshest laws there, too. There are plenty of casinos, but they are reserved only for those with a passport from any country other than ROK. Taking all of that into account, how could the president of the country allow cryptocurrency trading to go on as it was without some measures of restraint?
Well, the short answer was that he wasn’t going to, but the long answer will be the second part of this chapter. Hopefully it’s clear that the entire crypto-trading world outside of Korea was waking up to the shenanigans that had taken place in the country’s exchanges while they slept and did normal-person things. By December, some 30% of all spot trades were made in South Korea. That loan money was going a long way to keep exchanges well above water by transaction fees alone.
People had realized by around October that South Korea was the genesis of the major trading action. Around 30% of salaried workers admitted in a poll to have traded or currently trade and/or hold cryptocurrency. By comparison, only about 11% of those polled in the USA responded in the affirmative. When news about cryptocurrency from South Korea would hit common media outlets like any of the big boys or Reddit or Bitcointalk for example, the market would react. The problem was that a good chunk of the information that came through those outlets was often incorrect or outdated. That’s how traders’ apparent roles started to expand as hunters of the best information.
Jim and Chrissy enlisted a small group of contributors from Crypto of Korea to launch a website dedicated to publishing relevant updates about the South Korean crypto industry. Theirs were often ahead of the big outlets. They also offered various other services like organizing meetups and things of the sort. People reached out to them in droves to get a glimpse of the inside track that they were offering. They weren’t the only ones doing this but were the only honest ones with a horse in the race.
The Crypto of Korea community become a beacon to many who were hungry for South Korea news. The discussion itself was enough to drive some market forces. It came to be that some news outlets were sourcing spreadsheets and various updates that streamed through our public chat on their website. Jim was interviewed multiple times by people from all over the world including Russia and Australia. Chrissy opened a Twitter account in order to further their social media reach. It worked.
As mentioned before, listings were the big money makers for traders. Coins that got listed on any of the big exchanges in South Korea reliably pumped well over 100%. One of our members, pseudonym Luffy, posted a fairly detailed report about what coins would be listed on Bithumb and when, down to the hour. These days, listing times and days are made public well in advance (because that’s the only way most exchanges can make any money these days), but back then it was hush hush until moments before the listing.
That report caused a stir in the chat room as the hungry and thirsty ants who were excited just to be in the chat and benefit from the banter alone had some hard, profitable news. What could be more profitable than a listing timetable at one of the world’s biggest exchanges? I realized just how much influence we were having on the market because this document went viral.
Within a day after sending us that document, it was being sourced on major news sites that Luffy from Crypto of Korea predicts exchange listing schedule with the sense that Crypto of Korea was a household name for crypto people in South Korea. It was one of those situations where ‘everyone’ had seen or heard about the document and Crypto of Korea all at once. The news came as something of a revelation for many of the active members of the chat since then they realized the impact that they were having on the markets. Regardless of the other many indications of their impact, for some reason that Luffy rumor made the biggest net splash of anything.
—
So it goes without saying that while the chapters of Crypto of Korea revolve around the daily crazy ins and outs of the cryptocurrency industry in Korea and around the world from 2017 through 2019, the focal point of it all is through the lens of the Crypto of Korea chatroom. Many have much to say about what happened there.
It doesn’t exist anymore in its original form. It has changed and gone through a number of revisions and migrations. It stands now as an artifact that we can learn from and laugh at. For the people who were in it at its height, it stands as an entertaining memory and ultimate learning experience. For those who read about it for the first time here, consider yourselves apprised that the accounts need no exaggeration because they were often as ridiculous and cautionary as they appear.
To be continued…
Original Source