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⚡The Rise of the 'Kimchi Premium'🇰🇷

Croxroad

06 Apr 2024 — 4 min read

☕️ GM Dear Plebs!

Here is Crox Road, your daily dose of orange pill that will turn you into a Bitcoin Maxi.

The menu for today:

🍲 From Stocks to Crypto

The "kimchi premium," named after the beloved Korean dish, highlights the price difference in cryptocurrencies, notably Bitcoin, between South Korean exchanges and those in the US or Europe. Despite being viewed as an arbitrage opportunity, capitalising on this premium isn't as simple as it seems.

With Bitcoin soaring to record highs in mid-March, surpassing $73,000, the kimchi premium also spiked. On March 16, the Korea Premium Index reached 10.88%, indicating a significant price difference between South Korean exchanges and the global spot price. This discrepancy has historically attracted attention, with figures like FTX founder Sam Bankman-Fried noting price gaps of up to 60% back in 2017.

The high demand for cryptocurrencies in South Korea, coupled with regulatory factors like the "real name" policy implemented by the Financial Services Commission to combat money laundering, contribute to the kimchi premium. This policy restricts full-fledged bank account access to South Korean nationals or foreigners with resident registration cards, limiting overseas participation in domestic crypto exchanges. Consequently, Bitcoin prices in South Korea are often elevated compared to global markets, primarily driven by retail investors due to barriers preventing institutional and foreign investor involvement.

While the kimchi premium presents an apparent arbitrage opportunity, navigating South Korea's capital controls and currency regulations poses significant challenges for international investors. With the Won tightly regulated and limited remittance allowances, exploiting the price difference becomes intricate, showcasing the complexities and nuances of cryptocurrency trading across different regions.

🇿🇦 Teaching Surf , Bitcoin and Healthy lifestyles

Hermann's nonprofit organisation, Bitcoin Ekasi, embodies a unique blend of surfing, Bitcoin education, and community development to uplift disadvantaged communities in South Africa. Through innovative programming, Bitcoin Ekasi aims to empower children with opportunities for growth, education, and financial independence. By integrating surfing as a tool for personal development and Bitcoin education for financial literacy, Hermann's organisation seeks to break cycles of poverty and nurture future leaders. Bitcoin Ekasi's inclusive approach engages community members, local businesses, and volunteers, creating a network of support and opportunity for all involved, thereby embodying the transformative potential of combining sports, education, and social entrepreneurship for lasting change.

The genesis of Bitcoin Ekasi represents a pivotal moment in Hermann's journey toward positive change in South Africa's underserved communities. Inspired by the transformative potential of Bitcoin and a desire for financial inclusion, Hermann merged surfing and Bitcoin education to create a multifaceted organization dedicated to bridging gaps in financial literacy and community development. Through strategic partnerships and grassroots advocacy, Bitcoin Ekasi gained momentum, drawing support from local residents, businesses, and volunteers. The genesis of Bitcoin Ekasi symbolizes a shift in philanthropy and social entrepreneurship, where innovation and inclusivity converge to create meaningful and sustainable change, with a commitment to empowering individuals and building a more equitable society.

The Bitcoin Beach project in El Salvador serves as a pioneering example of community-driven empowerment through cryptocurrency adoption. Spearheaded by Mike Peterson, the project introduced Bitcoin as an alternative to traditional banking systems in the coastal town of El Zonte. By providing residents access to digital wallets and educational resources, Bitcoin Beach empowered individuals to take control of their financial futures and participate in the global economy. Beyond economic impact, the project fostered community pride and resilience, inspiring conversations about the transformative potential of cryptocurrency in addressing global economic challenges. The success of the Bitcoin Beach project highlights the power of innovation, collaboration, and grassroots activism in driving positive change, offering a glimpse into a more inclusive and equitable future where financial services are accessible to all.

🌗 Converting One Crypto To Another

When you use Bitcoin to purchase another cryptocurrency like Ether, you're essentially selling your Bitcoin for the new asset. According to the IRS, this transaction is taxable, meaning if you sold your Bitcoin for a profit, you'll owe taxes on the gains.