"Hard Work Alone Can't Escape Poverty" Struggling Youth Flock to Stocks and Coins

25% of University Students Have Experience Investing in Coins
Youth Coin Craze... 6 out of 10 New Accounts Are 2030 Generation
Last Year's 'Donghak Ant Movement' Similar to 'Debt Investment'
"Fear of Falling Behind," "Coin Investment Seen as Healthy"
Future Anxiety Due to Low Wages and High Housing Prices... Seeking Alternatives in Coins and Stocks

On the afternoon of the 24th, the Bitcoin price is displayed on the electronic billboard at the Upbit Lounge in Gangnam-gu, Seoul. [Image source=Yonhap News]

[Asia Economy Reporter Lim Juhyung] #Kim, a company employee in his 20s, has been busy studying investments recently. Last year, he tried stock investment, and from this year, he has been interested in cryptocurrencies such as Bitcoin and Ethereum. Dreaming of a prosperous life through financial income, Kim said, "After hearing that relying solely on earned income cannot help me escape poverty for life, I decided to invest," adding, "Although my 'seed money' is currently small, I plan to steadily increase it going forward."

A cryptocurrency investment craze is sweeping among young people. There is a view that this is similar to last year's so-called 'Donghak Ant Movement' and 'debt investment (debt-to-invest)' when the 20s and 30s generation massively entered the stock market. Experts point out that the continuous enthusiasm for investment among young people is due to anxiety about the future caused by high housing prices, low wages, and job insecurity. The anxiety that labor alone cannot escape poverty leads them to 'high-risk investments.' Experts analyze that although cryptocurrencies are high-risk investment tools, young generations who find it difficult to secure stable jobs regard them as substitutes for earned income.

◆6 out of 10 new coin investors are in their 20s and 30s

According to a survey conducted by the job site 'Alba Heaven' from the 17th to the 19th among 1,750 university student members, 25% (about 437 people) responded that they recently invested in cryptocurrencies. This means that 1 in 4 young people have experienced joining the so-called 'coin craze.'

The reasons they invest in cryptocurrencies are reported to be high returns (33%), low entry barriers (31%), and opportunities for social mobility (15.1%).

The youth are active as major players in cryptocurrency investment. According to the status of investors at Korea's four major cryptocurrency exchanges (Bithumb, Upbit, Korbit, Coinone) disclosed by Kwon Eunhee, a member of the People Power Party, on the 21st of last month, among 2,495,289 newly established real-name accounts in the first quarter of this year (January to March), the proportion of people in their 20s and 30s was 32.7% (816,039 people) and 30.8% (768,775 people), respectively. This means that 6 out of 10 new cryptocurrency investors are in their 20s and 30s.

Eun Sung-soo, Chairman of the Financial Services Commission, recently stated, "The government cannot fully protect cryptocurrency investors," which drew strong criticism from some investors in their 20s and 30s. / Photo by Yonhap News

As a result, cryptocurrencies have become a major political issue of interest for the 20s and 30s generation. On the 22nd of last month, when Eun Sungsoo, Chairman of the Financial Services Commission, mentioned at the National Assembly's Finance and Economy Committee plenary session that "the government cannot protect all cryptocurrency investors," investors in their 20s and 30s strongly protested.

The day after Chairman Eun's remarks, on the 23rd of the same month, a petition titled "Urging the voluntary resignation of the Financial Services Commission Chairman" was posted on the Blue House's public petition board.

The petitioner, who identified themselves as an "ordinary person in their 30s," criticized, "What I learned from the 40s and 50s seniors is hypocrisy. The common trait of the older generation that ruins Korea is their attitude of trying to teach the younger generation," adding, "The seniors accumulated assets by riding the wave of rising real estate prices, but now various regulations are being poured out to prevent the 20s and 30s from even having opportunities." The petition has currently surpassed 200,000 signatures, the threshold for a Blue House response.

◆Resemblance to last year's 'Donghak Ant Movement'

There is a view that the coin craze among the 20s and 30s generation reminds people of the so-called 'Donghak Ant Movement.' The Donghak Ant Movement refers to the phenomenon where some young people in their 20s and 30s massively entered the stock market as a buying opportunity when the Korea Composite Stock Price Index (KOSPI) fell to the 1600 level in March last year due to the impact of the COVID-19 pandemic on the stock market.

Netizens described the situation where individual investors buy stocks after foreigners and foreign investors exit the stock market as the "Donghak Ant Movement." / Photo by Internet Community Capture

The situation where individual investors bought KOSPI stocks abandoned by foreigners was likened to the 'Donghak Peasant Movement,' where commoners resisted foreign invasion, hence the name 'Donghak Ant Movement.' One year after the Donghak Ant Movement, the KOSPI index has recovered to the 3140 level as of the 24th.

During the Donghak Ant Movement, some new investors even opened overdraft accounts and recklessly invested, known as 'debt investment (debt-to-invest).'

According to statistics from the Korea Financial Investment Association, the balance of credit transactions (the amount investors borrowed from securities firms to buy stocks) was 9.2133 trillion won at the end of 2019 and increased by more than 1 trillion won to 10.3726 trillion won in about two months.

◆"I'm afraid of falling behind" 20s and 30s flock to stocks and coins

The 20s and 30s generation answered that the reason they invest in stocks and coins even by borrowing money is "because of anxiety."

A 29-year-old office worker A said, "These days, whether at work or meeting friends, all we talk about is stocks and coins," adding, "I wasn't interested in investing before, but since everyone around me is doing it, I felt anxious that I might be the only one falling behind, so I opened a new stock account."

Another office worker B (32) said, "I heard from a senior at work that since an era of rapidly rising prices for everything like inflation and housing is coming, I shouldn't just hold cash but invest somewhere," explaining, "Honestly, after paying monthly rent and living expenses with my meager salary, nothing is left. If I rely only on labor, I think I can never escape poverty, so I'm looking for investment options."

C (29), who has experience investing in Bitcoin, said, "Since the price fluctuations are steep and the investment is risky, I am scared, but I put money into coins within a range that does not burden my life," adding, "The greater the risk, the greater the returns. Some people criticize coin investors, but considering that there are many speculators buying houses with borrowed money, investing in coins seems rather sound."

On the morning of the 28th of last month, the Bitcoin price was displayed on the Bithumb Gangnam Center price board in Gangnam-gu, Seoul. / Photo by Yonhap News

Meanwhile, experts have a negative outlook on cryptocurrencies as investment targets but analyze that young people invest in cryptocurrencies as substitutes because it is difficult for them to earn stable labor income.

Paul Krugman, a Nobel laureate in economics and professor at Stanford University, recently wrote in the US media 'The New York Times' that "cryptocurrencies like Bitcoin still do not function as normal currency," criticizing them as "essentially a pyramid scheme." He explained that only those who invested early make huge profits, while most later investors suffer losses.

He added, "If Bitcoin, which is 12 years old, had any real presence, it should have either penetrated daily life or disappeared by now," and "Whether cryptocurrencies survive or not doesn't really matter. Since they have not found meaningful utility, even if something happens later, it will not significantly affect the lives of people who do not participate in speculation."

Professor Kim Taegie of Dankook University's Department of Economics pointed out, "Cryptocurrencies are high-risk means, but since young people find it difficult to obtain labor income through stable jobs due to job shortages, they inevitably become interested in cryptocurrencies."

This content was produced with the assistance of AI translation services.