The Kimchi Premium, Why Does Bitcoin Cost More in South Korea?

[wry]

One of the things that I always thought Bitcoin would be good for was cross border transactions.  As anyone who's tried to send money internationally will tell you, there are huge fees, foreign exchange fees, wire fees, you name it.  So it is a mystery to me why there is a Kimchi premium for buyers in South Korea, after all, it should be easy just to ship them more BTC to meet demand, it's not like they are isolated from the international financial system or anything.  (e.g. I could understand a premium in countries like Iran or even Russia that are somewhat isolated for the international payments system.)

The "kimchi" premium was quite large in the Dec. 2017 run up and as the article linked below points out, it's back!

The article really doesn't offer any insight on why this happens.  So I thought I would ask the collective wisdom of Stake Forums two questions, especially if anyone here is from Korea: a. Why?  and b. Is this good for Bitcoin price, e.g. is it a leading indicator of where price will go, or bad, it's a sign people are engaging in speculative frenzy?

Link:  https://www.coindesk.com/bitcoins-kimchi-premium-returns-with-1k-price-spreads-on-crypto-exchanges

[williamshennie9]

Hmm, I never knew there was such a premium on purchasing bitcoins in South Korea. I think it is a good thing, especially if people are willing to pay a bit extra for it, then it shows how much they actually value it.

[wry]

UPDATE!!!

While this topic didn't get a lot of attention, I thought this was a great update to the story, apparently after six weeks the kimchi premium has abated!

The news story credits this to a big decline in the Korean Won.  Since their currency dropped versus the US dollar analysts think that helped to eliminate the premium.  Not sure I totally agree, but seems as plausable as anything I can think up.

Other explanations center on transfer costs, e.g. regulation has increased on exchanges in Korea which makes it harder to move coins between markets, now that makes sense!

I'd welcome your own theories!

Link:  https://www.coindesk.com/bitcoins-kimchi-premium-vanishes-again-as-trading-range-tightens

[nuuuitsjdragon]

I wasn't aware of South Korean residents having to pay a small fee/levy on their Bitcoins prior to reading the article. 

Upon further analysis, I'm going to say that this is actually a small price to pay for the High-in-Demand Bitcoin.

Agencies and other official bodies that collect this payment will help to increase confidence in such digital products as well as lowering the chances of scams and unfair treatment to the mainstream crowd.

Regulation will definitely assist in the adoption by the mainstream crowd. Looking at the benefits in the long term, a small tax/service fee is a minor barrier! 😀

[mhasandx]

What kimchi in the first place. can you explain?

[chankhoreID]

I just found out there is premium kimchi using bitcoin in Korea. I do not understand and do not know but I will see the description of the site link so that my more insight might be a reference for me later. thank you for the info and hopefully useful what has been shared in this thread.