The cryptocurrency fad led by bitcoin is attracting a growing number of South Korean college students into a dizzyingly volatile investment market, despite (or perhaps because of) its great accessibility and potentially bigger profits. Nevertheless, it is too premature to conclude that Korean college students have fully embraced the get-rich-quick bitcoin fever.

There is no question that cryptocurrency is one of the hottest topics in South Korea, with the volume of local cryptocurrency trade singlehandedly accounting for 20 percent of global trade. Not only salaried workers, but also college students are dabbling in this relatively new cryptocurrency market.

College community websites are teeming with cryptocurrency-related posts. Hundreds of posts are uploaded every hour on websites such as SNULife, an online community for Seoul National University students, Koreapas for Korea University and Ssodam for Sogang University. 

Cryptocurrency exchanges are gaining ground among investment-savvy Korean college students because they are highly accessible. For instance, Kang Soo-hyun, a 24-year-old Sogang University student, said she could create a virtual account on her phone in just a couple of minutes.

The fourth-year student said that although she had always wanted to try investing, stock trading seemed out of reach. But cryptocurrency is different.

“I only had to enter the verification code sent to my phone, my name and identification number to make an account. It’s also easy to keep track of the coins on the phone,” Kang said.   

Another advantage of cryptocurrency has to do with the particularly high profit margin, if everything goes well. Students view bitcoin and other cryptocurrency trading as friendlier to small investors like them. They tend to open new cryptocurrency accounts believing the investment could be highly profitable despite a small amount of seed money.

Another 24-year-old student investor identified by the surname Kwon chose cryptocurrency instead of the main bourse, Kospi, or the tech-heavy Kosdaq. He believed stocks on the Kospi were unaffordable, and those on Kosdaq were too steady to make big profits. Kwon owned coins worth 28 million won ($26,000) in early January this year. At the time, his bottom line was up nearly 1,000 percent from his original investment of 3 million won.

Of nine university students contacted by The Korea Herald, eight said they stepped into cryptocurrency investment with less than 1 million won.

Students said that the coins appear approachable as they are more familiar with novel concepts such as virtual currency, blockchain and cryptocurrency compared to older generations.

However, none saw the investment as an opportunity to turn their lives around. It appears that average college students tend to toy with the cryptocurrency frenzy to earn a little extra cash. Students thought that even though the investment may be highly profitable, there is a limit to what they can obtain with a small investment.

Some local media reports have claimed that student investors are dreaming of fairy tales only a select few can achieve, but the interviewees said they have not seen any of their friends invest and make a fortune or climb up the social ladder.

“The story of rags to riches may hold true for the students who had already invested prior to the cryptocurrency craze from the end of 2017, but it seems inapplicable for the ones who plunged into the pool afterward,” said a 23-year-old student investor Rha Jae-woong, who exited the market following a 400,000 won loss. “All my friends and I invested for a little extra money.”

The turnaround is more relevant to investors in their 30s or 40s, as they are more capable of trading larger sums to realize a long-held dream, or are patient enough to manage the portfolio over the longer term, regardless of dramatic price gyrations on a daily basis.

The best-known digital currency bitcoin had fueled the craze, with its price hitting a record 26 million won per coin locally early last month. The price was just 1.6 million won in January 2017. Following a host of government moves and other factors, bitcoin has suffered crushing setbacks, with its price plunging 75 percent in just a month. As of Wednesday 6 p.m., it was just over 10 million won on local exchanges.

As the overheated cryptocurrency boom revealed its downward viciousness, some of the converts, including those on college campuses, began to exit the market. According to data analysis company Wiseapp, the number of cryptocurrency-related smartphone app users has gone down the past two weeks from 2 million in the third week of January 2018 to 1.86 million in the first week of February. The amount of time spent on apps was also cut in half.

Student investors are becoming more cautious, as more of their friends end up losing money. Kim Nam-wook, a fourth-year student at Konkuk University, said he quit coin investments early this year, and about half of his friends had recently decided to pull out as well.

Kim said that due to new regulations such as the real-name trading system, he lost interest in coins. “The market is no longer appealing because it lacks the convenience it was once famous for,” he said.

By Ahn Sang-yool (koolsangon@heraldcorp.com)