In South Korea, the Virtual Currency Boom Hits Home

SEOUL, South Korea — Choi Whal-soo has been through the wringer of speculative bubbles.

After selling his real estate agency near Seoul, he invested in South Korean stocks and then watched them plummet in value after the Asian financial crisis of 1997. He tried to recover, continuing to play the stock market and lotteries, but lost yet more money.

Now, at 77 years old, he is hoping he can make it all back in the booming virtual currency markets, which have pushed the price of Bitcoin to new highs above $10,000 and pulled up the price of many alternative digital tokens.

Last week, Mr. Choi visited the physical location of one of South Korea’s many new virtual currency exchanges, with a plan to put about a quarter of his remaining $18,000 in savings into virtual currencies.

“I may have missed the Bitcoin boat but new boats are coming and I want to hop on those,” he said. “It is possible that some might be scams but even with those, the prices will rise at least in the middle of their life cycles so that there will be a chance to make money from trading them.”

Around the world, ordinary people, with no prior experience in virtual currencies, have been lured into the virtual currency markets in recent weeks by the soaring prices of Bitcoin and its competitors.

In Japan, small-time speculators have swarmed to Bitcoin since the government there essentially legalized the virtual currency earlier this year and gave licenses to several exchanges.

In the United States, the biggest Bitcoin brokerage, Coinbase, gained 300,000 new customers in a week, according to recent research reports.

But nowhere has the public frenzy been more feverish than in South Korea. It was on South Korean exchanges that the price of Bitcoin first hit $10,000 last Monday, hours before traders in the United States reached the same level of exuberance.

And last week, trading between the Korean currency, the won, and Ether, the most valuable Bitcoin competitor, was nearly as active as trading between the dollar and Ether — despite the fact that Korea’s population is one-sixth that of the United States. With some virtual currencies, like Ripple and Bitcoin Cash, the won accounts for more trading than the dollar, according to the site CryptoCompare.

These volumes are all the more remarkable because just a year ago virtual currency markets barely existed in Korea, unlike in the United States and China, where virtual currency trading has grown over a number of years.

The sudden rise of virtual currency trading has been dramatic enough that the country’s prime minister, Lee Nak-yeon, expressed concern last week.

Ra Saeyong, left, the owner of Bitcoin Center Korea, the Blockchain exchange office in Itaewon, watched a Bitcoin status chart on TV with a customer. Woohae Cho for The New York Times

“This can lead to serious distortion or social pathological phenomena, if left unaddressed,” he said in a statement after a cabinet meeting.

Mr. Lee called on the Ministry of Justice and other agencies to take a closer look. South Korean regulators have already announced a ban on so-called initial coin offerings, in which entrepreneurs sell custom virtual currencies.

But the exchanges where existing virtual currencies are traded come under essentially no regulatory oversight in South Korea, unlike in the United States and Japan.

Mr. Lee said he was particularly worried about young people who have gotten caught up in the markets.

“There are cases in which young Koreans including students are jumping in to make quick money and virtual currencies are used in illegal activities like drug dealing or multilevel marketing for frauds,” he said…

Read Full: In South Korea, the Virtual Currency Boom Hits Home