South Korea is one of the most vibrant centers for cryptocurrencies and blockchain technology worldwide although it does have one of the more stringent regulations of any countries in the world/ Even so, it is not impossible to be an investor in cryptocurrencies in South Korea.
South Korea is a place where the government has also banned all ICO’s (Initial Coin Offerings) and is concerned about the security and financial risks of cryptocurrencies, the South Korean central bank is unphased.
BOK reported that 2 million won of cash in the local crypto industry poses no threat to the 26 trillion Won deposits in the country’s brokerage houses, so there are no worries if you wish to make investments into cryptocurrencies in South Korea.
Cryptocurrencies such as Bitcoin and Ethereum are totally digital currencies that could be used as online versions of payments for goods and services. Transactions through cryptocurrencies are very secure and can’t be easily closed down by governments.
What makes cryptocurrencies so secure and transparent is because the details of the transactions are made public. Although everyone can see that someone sent, let’s say KRW$10,000 worth of Bitcoin in South Korea to someone else-the identities of the seller and recipient still remain anonymous.
The main use of purchasing Bitcoin is as a means of sending money around the world cheaply, unanimously and securely. Due to the rise of E-transfer options and the whole economy slowly turning into a virtual base, cryptocurrency transactions come with very low fees compared to other payment methods such as wire or bank transfers
Examples of some uses would be to trade for narcotics anonymously online while others gamble them on the volatile market with hopes of getting lucky and earning cash. However please note that there is always a risk involved when making or losing money when trading Bitcoin as they are not backed byu fiat currency and their value is totally based on investor speculation.
When you buy Bitcoin and other cryptocurrencies, it means that all the transactions worldwide are recorded and stored on the blockchain, which is a public ledger that is found on all computers within the network and they are synchronized with no master ledger.
There is a verification and updating process for all the Bitcoin transactions and this is known as mining. Mining is an independent process where the respective miners are selected randomly to verify transactions over a given period of time and once this is complete the information of the transaction is compiled into a block and then is linked to a blockchain.
A bitcoin will be sent to the miner as a reward for support in the verification process.
Choosing a Cryptocurrency Exchange
The first step to purchasing crypto in Korea is to select a cryptocurrency exchange. Since there are hundreds of different types of crypto exchanges out there to select, you should take into account several factors before making your decision. As a start there are three main types of crypto exchange that we may receive Bitcoin from.
Brokers offer the simplest way to purchase Bitcoin by allowing you a way to purchase Bitcoin using fiat currency such as KRW to USD. These brokers offer beginner friendly platforms by using familiar payment methods such as bank transfer, credit card or debit card.
One main downside of brokers is that their fees would be higher than other options to purchase bitcoin. Coinmama and Kraken are two of the best cryptocurrency brokers you could opt for
Cryptocurrency trading platforms.
Trading platforms are one of the ways to purchase Bitcoin using other cryptocurrencies. Exchanges such as Binance and Kraken tend to offer lower fees than other brokers.
Peer-to-peer (P2P) exchanges
Peer-to-peer exchanges remove the middlemen when buying Bitcoin and allow users to trade directly with one another. A seller will have the freedom to specify the price they want to sell their Bitcoin for and their accepted payment methods.
This method also allows you to trade with increased privacy but you may want to settle for a price that is higher than the market exchange rate. LocalBitcoins and Paxful are great examples of peer-to-peer exchanges.
Buying Bitcoin in Korea
After you have selected your chosen cryptocurrency exchange, you will then just have to submit an order for your chosen coin. For novices, the most convenient way is to actually use Bitcoin brokers first. The advantage of easy to use methods will definitely outweigh the higher fees from a Bitcoin broker.
Whichever cryptocurrency exchange you have chosen to get started with, an account is required to be registered with the platform first. There is a level of regulatory requirements that you are subject to depending on the platform especially in Korea. Levels of private information required would include your full name, contact information and proof of ID before being allowed to trade.
After verifying your account, you will get started by selecting how much BTC you want to buy and the way to buy Bitcoin either using Debit card or credit card,etc and review the fees and total cost of the transaction before finalising your purchase of bitcoins.
Exact steps would depend on the payment method and type of cryptocurrency exchange you so follow below for how to pay for Bitcoin.
Other factors to take into account when selecting a Bitcoin exchange
With so many platforms to choose for, selecting the best exchange that suits your needs would be rather challenging to buy BTC .You should take into account the below factors when comparing the different type of exchanges.
Where the South Korean exchange is based and how it is regulated: Regulations that apply to exchanges in South Korea may not apply to some oversea exchanges. As such, some research is required on the regulatory requirements when you are dealing with exchanges from overseas countries as this will help you decide if you are dealing with a reputable platform.
- Security: You would want a secure exchange that helps keep your assets safe and secured. Good crypto exchanges would feature security protocols such as SSL web encryption, PGP encryption emails, prompts of 2-Factor Authentication when you log in to the account, insurance on its assets that the exchange is holding and a physical cold wallet storage to prevent online theft and hacking.
- Fees: You should check out the fees section of each exchange which are usually displayed for you and decide how much your transactions are going to cost you. Do note that some higher fees for some exchanges means that they provide a faster and more premium service so it is up to you to select which exchange is the most suitable one for you.
- Transaction Limits: Some exchanges place transaction limits on how much BTC can be deposited or withdrawn from your account, depending on how verified your account is or how much volume for a certain amount of time you are trading. Does the exchange limit how much you can withdraw in one transaction or within a 24-hour span from your account?
- Supported digital currencies: Although Bitcoin is available on almost every single crypto exchange out there, you should check out if the exchange supports any other digital currencies that you may want to trade in.
- Customer support: This is a very important feature, because if you ever encounter a transaction issue, you will be able to contact the members of the exchange easily. By prioritizing a telephone call or online chat, which should be the quickest way to reach help, check what contact methods are available.
- Reputation: You can search the exchange’s name or Bitcoin forums to find out what other user’s experiences are on this platform.
How can I pay for my Bitcoin?
There are many different ways you can buy Bitcoin with each having its own pros and cons.
Buying Bitcoin with Cash
If you want to buy Bitcoin with Cash directly, you can look for a seller on a peer-to-peer exchange that accepts purchases of Bitcoin using Cash. Another option is also to reload into a prepaid card with cash and then use it on a platform which accepts prepaid cards, suc
Buying Bitcoin with Bitcoin ATM
A Bitcoin ATM could also be used by depositing cash into the ATM which can then be converted into Bitcoin. However, there are currently no Bitcoin ATMs available in Korea due to its stringent regulations.
Buy digital currency with a credit card or debit card
Most exchanges allow a credit card or debit card as payment methods so this way will be your best bet if you are in South Korea. These types of platforms like Coinbase and Coinmama allow you to make quick, easy to use and convenient purchases.
Credit card or debit card transactions however would tend to have higher fees when you buy Bitcoin in South Korea and some banks do not even allow customers from buying crypto with plastic. Credit cards are more widely used than debit cards but some platforms still allow you to purchase digital currency with debit cards.
Buy Bitcoin with Paypal
If you prefer to buy Bitcoin in South Korea using Paypal, you are in luck as it is definitely a way to purchase cryptocurrency, however there are not a lot of platforms that accept Paypal.
The biggest advantage of buying Bitcoin with Paypal is that it is easy to use. However you may need to look around for the right platform as although some exchanges would accept Paypal, they might not accept the Korean Won so you need to be aware of the fees that apply. VirWox and Paxful are two of the platforms which accept PayPal.
Buy Bitcoin with your bank account
Another way to buy Bitcoin in South Korea will be to choose a platform that accepts bank transfer deposits such as Coinbase, Coinhako and Luno.
Depositing funds using a bank account does not attract any fees but it does take a bit of time until the funds are cleared into your exchange account.
Things to consider before making a bank account transfer is to take into account any transaction limits that might apply. Take note of any fees that are charged by the cryptocurrency exchange or broker and also how long it will take for funds to arrive.
Buy Bitcoin with another crypto
If you wish to trade another crypto for Bitcoin, you would need to find something called trading pairs such as BTC/ETH or BTC/DASH. What this means is that you can either trade ethereum for Bitcoin (BTC/ETH) or Dash for Bitcoin (BTC/DASH) Bitcoin is listed on a huge range of trading pairs on many crypto exchanges so this should not be hard to find.
You will however need to search for exchanges that provide the trading pair you are looking for.
Buy Bitcoin in South Korea anonymously
Due to how much regulations the South Korean government placed on crypto trading, it is a challenge to buy Bitcoin in South Korea anonymously, however some peer-to-peer exchanges do allow you to trade directly with the seller.
Peer-to-peer platforms like LocalBitcoins will allow you to trade directly with a Bitcoin seller under an anonymous alias.
Another way is to purchase Bitcoin with a prepaid credit card or cash via a platform that does not require a lot of ID- but as mentioned previously it could be hard to find such platforms especially in Korea. Finally you could trade Altcoins for Bitcoin on an exchange that does not require proof of ID.
- You are able to trade for Bitcoin using KRW
- South Korean exchanges support local payment methods such as cash or direct bank transfers.
- Local customer support is easier to access and would not have to take into account any time zone differences
- South Korean exchanges are heavily regulated by the Financial Services Commission (FSC)
- Due to the regulations set in place for Korean exchanges, you will need to provide your personal details and proof of ID which reduces anonymity
- The registration process is longer (some up to a few days) than exchanges that do not require ID verification
- Some international platforms such as Binance and Coinmama based overseas would offer much better liquidity due to their trading volumes..
Buying Bitcoin OTC
Although in South Korea there are many crypto exchanges, only a handful offer crypto-currency OTC brokerage services. With OTC trades, market prices are represented from the public order book of an exchange. Trading parties set their own rates which, whether the seller is trading arbitrage, could be marginally more costly than the worldwide spot price, or cheaper.
OTCs normally operate through some sort of escrow system, which is a mechanism in which the exchanged assets are locked in an electronic waiting wallet, which is monitored at the end of the transaction and releases the funds only after the seller has verified receipt of the negotiated payment. When a payment is made and the seller does not accept that the payment has been paid, the funds remain in the wallet and a lawsuit may be lodged by the buyer. After the exchange confirms that the payment has already been made, the crypto is issued for purchase.
To resolve this issue and mitigate such risks, Over-The-Counter (OTC) brokers could potentially offer better prices with increased transaction limits and a faster processing time for large-volume traders.
Once you have received your Bitcoin, you can either keep it in a wallet until you have your Bitcoin, or actively trade it against other cryptocurrencies. At present, trading on a centralised market is the best solution for this.
It is crucial to make sure it is a trusted exchange when selecting an exchange to trade on. A trustworthy exchange would typically require new users to verify their identity, to ensure that market participants are not sanctioned, and to preserve clean capital flows. Another important element is how secure the exchange is.
Frequently Asked Questions (FAQ)
Q: Is South Korean cryptocurrency taxed?
Yes, any cryptocurrency gains in the country are subject to a 20% tax for any amount of $2,000 or 2.5 million win
Q: Is Bitcoin legal in South Korea?
Yes, however the cryptocurrency trading market in Korea has one of the most stringent crypto regulations so it will be hard to trade Bitcoin anonymously
Q: Can I Buy an amount less than 1 Bitcoin?
Yes. Every single BTC is divisible to 0.00000001 BTC, so it is possible to buy a small fraction of a coin with its value apportioned appropriately.
Q: Can I store my Bitcoin on a South Korean exchange?
While some exchanges do offer storage services for your cryptocurrencies, it is generally not recommended as they are a popular target for hackers and you lose control of your private keys. As such the best way to store your coins are on a secure, private wallet – which some exchanges offer as well.
Q: What is the fastest way to purchase BTC?
There is no quick way in Korea to buy Bitcoin immediately due to the absence of Bitcoin ATM’s and most regulated exchanges using ID verification – you should opt for the exchange with the least hassling process if you want to purchase Bitcoins quickly.
With over 10 years of experience working as a financial analyst, Eric is highly aware of the potential of cryptocurrency, particularly Bitcoin, and the impact it will bring towards the global economy. He is committed to share everything he knows about crypto here at Crypto Digest News.