Big news from South Korea could start the uptrend and new bull run on crypto for 2018. Last week there was a buzz about South Korea hastening approval of cryptocurrency exchanges as the G20 directive called for loosening crypto rules. Cryptocurrency exchanges were recognized as financial institutions and banks.
Crypto exchanges can't simply startup a run free any longer in South Korea, they have to apply and obtain approval from local government agencies to meet the necessary security measures. The Financial Services Commission (FSC) now has direct control and authority over the Korean crypto sector, providing greater protection for crypto investors.
Shortly after, the South Korea Blockchain Association which oversees the crypto and blockchain sector, approved 12 crypto exchanges, including the recently hacked Bithumb exchange. Bithumb, UPbit, Gopax, OKCoin Korea, Korbit, Coineone, CoinZest, CPDAXX, HanbitKor, Huobi Korea, and NeoFrame, and DexKor were approved due to having the necessary security measures and internal management systems.
South Korean local news looked favorably on this decision and suggested it would bring in an expected wave of capital into the crypto market, locally and abroad. The rest of the world will likely be influenced as well, and could be the start for wider acceptance and investment globally. South Korea had previously brought doubt to the crypto sector this year, as it was putting a "hold" on the crypto sector before deciding what to legitimize the exchanges by regulating them as financial institutions.
Despite the positive news about more security in the crypto investing sector, most investors reacted negatively due to the approval of Bithumb. Bithumb was victim of hack in June which resulted in the loss of over $40 million. $16 million was recovered, but the rest of user's funds remained lost. Bithumb was the top exchange in SK for years prior, but lost trust from investors when it froze withdrawals and deposits after the hack until now.
This created a gap in the price of South Korean crypto exchanges compared to foreign exchanges, called the 'Kimchi Premium'. The premium was in due to the increase in demand and speculation that fueled an unusual spike of over 50% in the South Korean crypto market. But the SK markets are now near identical to other markets.
Things are looking good for crypto from South Korea, and Coinbase CTO, Balaji Srinivasan, says that that he expects the crypto userbase to grow by over 60 times.
In A Tweet, Srinivasan said:
About 8% of Americans hold crypto and probably <1% of the world. By contrast, about 63% of world adults own smartphones. So that’s >60X growth remaining for crypto in terms of userbase size. It’s all just getting started.
He referenced two sources for his claims:
- Why haven’t we all bought cryptocurrency yet?
- Two-thirds of adults worldwide will own smartphones next year
A survey from finder.com asked 2,001 American adults aboiut crypto, with 7.95% saying their purchased crypto. But still is a small sample size, and many doubt the approximate 8% figure can apply to the whole US population.
Is the Tweet an accurate prediction? It might not be, but it could be. Think about it. When a technology comes out, early adoption is scarce. But then the technology gains momentum and greater adoption as more people get into it.
Music tapes were dominant, then CDs came along and that took a while before nearly putting tapes out of existence, although there is a recent revival of tapes for music. Even vinyl isn't completely gone.
There was VHS, then DVDs came, then Blu-Ray. Video chains like Blockbuster were popular, then they went out of business when the Internet rose in dominance globally.
Cellphones took a while, and smartphones boosted their use. Crypto is similarly in the early stages compared to previous technological emergences. If crypto is a worthy new technological innovation, then it can potentially reach a global acceptance and use on par with cellphone usage, meaning over 60% of the world will be using crypto in the long-term future.
Canada is at an approximate 5% crypto ownership according to the 2017 Bitcoin Omnibus Survey (BTCOS) conducted by the Bank of Canada last year. Developing nations are likely further behind, just as they were with cellphone use.
People find crypto risky, as the prices fluctuate greatly. They think it's a bubble in general that will be worthless in the end, or that there is still another rubble ongoing and the price will fall back to near its $1,000 value before the last bull run. Other reasons for not getting into it are that it's hard to use, requiring more know-how compared to just using a credit card or bank card. There are also fees to pay for transacting which they don't like.
Many people don't know enough about crypto or why it's useful to speed up the adoption. They still think everything is fine with the financial system they use, as they simply have trust, loyalty, faith and belief in it's honesty and stability (while that isn't the reality). They don't see crypto as an evolution to more independent financial freedom. Crypto adoption will likely come as more people use it, spurring popularity. The ease of use will generate greater mainstream adoption and potentially lead to the 2/3 global use of crypto in the long-term.
If light of such possibilities, it might be wise to consider holding for the long-term and not get caught up in the bear market FUD.
Thank you for your time and attention. Peace.
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