Home Bitcoin Cryptocurrency Was Their Way Out of South Korea’s Lowest Rungs. They’re Still...

Cryptocurrency Was Their Way Out of South Korea’s Lowest Rungs. They’re Still Trying.

A generation of the young with dead-end social and economic prospects, calling themselves ‘dirt spoons,’ aimed to strike it rich. They’ve ended up with big losses.

Kim Ki-won, who lives with his parents, has yet to tell them about his obsession with cryptocurrencies.Credit Jean Chung for The New York Times

SEOUL, South Korea — Kim Ki-won is keeping a secret from his parents.

It isn’t just that he has bought and sold an immense number of digital coins. Mr. Kim, who is 27 and lives with his parents, once made so much money trading cryptocurrencies that he was spending $1,000 a month on whatever he wanted. He quit his job. He borrowed to buy more. He planned to buy a house.

Today he sits slumped over, at times hiding his eyes behind his hair. Which brings us back to Mr. Kim’s secret: He has lost a lot of money, perhaps tens of thousands of dollars.

“I don’t think it’s fair that people call it gambling,” he said of his cryptocurrency obsession. “But there are elements of truth here and there.”

A generation of young South Koreans like Mr. Kim, looking for a way out of their dead-end prospects, has helped turn the country into a capital of the wild world of cryptocurrencies. Now that the market has virtually collapsed, many people young and old are mired in debt and losses. Still, many young South Koreans continue to see digital money as a way break out.

South Korea remains the third-largest market for virtual currency, behind the United States and Japan. A total of $6.8 billion in cryptocurrencies changed hands in January, according to the data provider Messari. South Korea is a major trading hub for Bitcoin, the best-known cryptocurrency, as well as a wide variety of other virtual currencies that exist without the backing of any country’s central bank.

Cryptocurrencies have become a cultural phenomenon in the country.

Coffee shops print their own digital coins. A national television network made a game show called “Block Battle,” in which contestants — one named “Kimchi Powered” — battled to build a company based on cryptotechnology.

On a recent evening in Seoul, a group of women and men in their 60s and 70s gathered at an event lit by strobe lights for the start of a new digital coin.

The winning team and other contestants on the set of “Block Battle,” a television show in which contestants competed to build a business based on blockchain technology.CreditJean Chung for The New York Times

But it was millennials like Mr. Kim who led the charge. Many call themselves “dirt spoons,” a reference in South Korea to economic and social status, with gold and silver spoons being the best off and dirt spoons being the worst.

Cryptocurrencies seemed to be a way to disrupt that social order.

“There is no true opportunity in South Korea for the average young person,” said Kim Han-gyeol, 23, who graduated from a vocational school and became a part-time software developer for an e-book company.

She lives with her parents and works part time at Dunkin’ Donuts, studying English online at night.

At first, she made a lot of money investing in cryptocurrencies. She used a few thousand dollars she made to buy nice clothes for herself and her mother, and dreamed of starting a coffee shop with her loot. Then, she lost nearly all of it.

“I felt a sense of shame when I lost money on my Bitcoin investments, not once but twice because of my greed to make a fortune in one go,” she said. Even still, she added, she’ll stick to digital coins.

“There is nowhere else to go to recover my losses anyway,” she said.

Being young in South Korea can be defeating and stifling. To succeed is to get either a government position or a job at one of a small but powerful group of family-owned conglomerates that control most of the products Koreans use. This requires getting into one of a handful of exclusive universities, a feat that has become so difficult that many young people delay applying for several years.

Income inequality is among the worst in Asia. Youth unemployment is 10.5 percent and has hovered near that figure for the past five years even as overall unemployment is 3.4 percent.

Young Koreans are called the “sampo generation,” a portmanteau referring to the three things they have given up on: courtship, marriage and family.

Adding to their sense of disillusionment are a string of political scandals, including one that led to the impeachment of former President Park Geun-hye, that exposed the deeply entrenched ties between South Korea’s powerful conglomerates and politicians.

When cryptocurrency came along, it set off discussions in chat rooms, weekly hangouts and even intellectual salons created just for digital coins: Could this new system uproot South Korea’s rigid social order?

Buying digital coins was a lot easier than buying stocks or getting a loan to start a business. Kim Ki-won needed to invest only a small amount in the early days. “It was an opportunity for me to make big money,” he said, his eyes wide with excitement even now thinking about the prospect.

For Remy Kim, a 29-year-old who is host to several cryptocurrency channels on the social media app Telegram, digital money could mean nothing short of revolution.

Remy Kim, a 29-year-old cryptocurrency investor, believes he is the youngest person in South Korea to own a Rolls-Royce.CreditJean Chung for The New York Times

Online he goes by “Les Mis,” after “Les Misérables,” the Victor Hugo tale of the poor rising up in revolution. Mr. Kim writes about Cryptopia, a future where everyone is equal and the social constructs that money creates don’t exist.

“Crypto played a role in shifting wealth from one group in society to another,” he said. “It has affected Korean society tremendously.”

Mr. Kim discovered cryptocurrencies after his computer was hacked by a person who demanded Bitcoin in ransom. In the end, he paid the hacker 1.2 Bitcoins — which at the time was worth nearly $800.

Soon he was buying digital coins for himself, riding a Bitcoin bubble that peaked at more than $19,000 for a single Bitcoin.

He made enough to buy himself a half-million-dollar navy blue Rolls-Royce. As far as he knows, “I’m the youngest person in Korea with a Rolls-Royce,” he said.

Mr. Kim said he had since lost much of what he made, but he doesn’t like to dwell on this. (He still has the Rolls.)

Last year, South Korea’s government mulled shutting down virtual currency exchanges where investors buy and sell, saying that it was starting to look a lot like gambling.

At the time, some exchanges were processing transactions worth hundreds of millions of dollars. But the news caused an outcry, and the government merely barred cryptocurrency investors from opening new anonymous accounts linked to banks in an attempt to crack down on money laundering.

Even some former cryptocurrency evangelists warn that the best days are over. They include Kimchi Powered, the contestant on the “Block Battle” television show.

Kimchi Powered, whose real name is Jung Ki-young, made it all the way to the show’s finals, in part by entertaining the judges with silly costumes. On the night of the final round, Mr. Jung, 36, wore a shimmering suit jacket. Jung Ki-young, a one-man team called Kimchi Powered, made it to the finals of “Block Battle.”CreditJean Chung for The New York Times

Jung Ki-young, a one-man team called Kimchi Powered, made it to the finals of “Block Battle.”CreditJean Chung for The New York Times

He still invests in cryptocurrencies, but warns others that there aren’t as many opportunities to make money as before.

“Many people are very depressed these days because the price of Bitcoin has dropped,” he said in an interview. “It was my intention to give people a reason to laugh rather than trying to win the competition.”

Falling prices aren’t the only reason South Koreans can’t make money as they did before.

Big companies increasingly overshadow small investors. Hyundai, a major conglomerate, created a blockchain platform called HDAC and advertised the technology at the World Cup. A unit of Lotte, a conglomerate that became embroiled in a corruption scandal in 2017, has worked with blockchain start-ups.

A number of South Koreans have also been hit by scams.

“Koreans lack knowledge about finance,” said Remy Kim, the investor who goes by Les Mis and who gives tips and information on how cryptocurrencies work. “They are stingy at the store, but then they poured everything into cryptocurrencies.”

Still, many dirt spoons hold on to the hope that cryptocurrencies will turn back around.

Kim Ki-won said he would tell his parents about his cryptocurrency obsession soon. But first, he wants to make enough to start a business. He is sure that the market will turn around.

“I have nothing to lose,” he said. “I always wanted to be rich.”


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