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Korean Province to Replace Local Currencies With Crypto

August 31, 2018 |

Korean Province to Replace Local Currencies With Crypto

An eastern South Korean province plans to issue its own cryptocurrency to replace the local currencies of its nine cities, according to local media. An exchange will be established for the new crypto. The coins can be used for payments within the province and merchants can accept them using smartphone QR codes.

Also read: Yahoo! Japan Confirms Entrance Into the Crypto Space

Korean Province to Issue Own Crypto

Korean Province to Replace Local Currencies With Crypto
Gyeongsangbuk-do.

The South Korean province of Gyeongsangbuk-do has revealed that the effort to replace local currencies with a cryptocurrency has begun, Joongang Ilbo reported this week.

Also known as Gyeongbuk, the eastern South Korean province has been attempting to replace city-issued gift certificates with a cryptocurrency. Currently, nine cities of Gyeongsangbuk-do separately issue their own gift certificates, which are local currencies that can be used in selected areas of the province, the publication explained.

According to Naver, 60 municipalities nationwide, including nine cities in Gyeongsangbuk-do, currently use gift certificates as local currencies aimed at revitalizing local economies and preventing capital flight.

Korean Province to Replace Local Currencies With CryptoPohang, one of the largest cities in the province with over half a million inhabitants, is the nation’s largest issuer of these gift certificates, according to Kyongbuk daily newspaper. In May, the news outlet reported that the city had sold 100 billion won (~US$ 90 million) worth of the Pohang gift certificates since January last year.

According to Joongang Ilbo, the province’s Science and Technology Policy Department announced on August 27:

10 banks, mobile communication companies, a university research team and government officials of Gyeongsangbuk-do will gather for the first time for the issuance of the cryptocurrency.

Gyeongbuk Coin

Korean Province to Replace Local Currencies With CryptoThe tentative name of the cryptocurrency that Gyeongsangbuk-do is planning to issue is Gyeongbuk coin, the publication noted, adding that the first of the 100 billion won (~$ 90 million) annual issuance is expected in the first half of next year.

The province plans to create an exchange where Gyeongbuk coins can be purchased and sold. The coins can be used for payments and merchants can accept them using smartphone QR codes, the news outlet detailed.

Chung Sung-hyun, head of the province’s Science and Technology Policy Department, was quoted saying:

There are still many issues to be resolved…[such as] notifying merchants of the way they can use [the] coins, creating separate programs and issuing [the] coins (cryptocurrencies).

Korean Province to Replace Local Currencies With Crypto
Canton of Zug, Switzerland.

Gyeongsangbuk-do recently sent a benchmarking team to the canton of Zug in Switzerland, which is home to many crypto startups such as Shapeshift, Xapo, and the Ethereum Foundation. The team, consisting of 10 members including some outside experts, met with a number of government officials and local businesses.

Following a series of meetings, a Gyeongsangbuk-do official was quoted by Sedaily saying “I think we can utilize the experience gained through benchmarking by making the identity cards for 5,000 Gyeongbuk provincial government employees like Zug as blockchain-based digital ID cards.”

What do you think of this Korean province planning to replace local currencies with its own crypto? Let us know in the comments section below.


Images courtesy of Shutterstock, Gyeonggi News Communication, Wikipedia, and Yonhap News Agency.


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The post Korean Province to Replace Local Currencies With Crypto appeared first on Bitcoin News.

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Bitmex to VIPs: Bitcoin Won’t Replace Fiat, Just a ‘Useful Niche,’ Enthusiasts ‘Naive’

June 11, 2018 |

Bitmex to VIPs: Bitcoin Won’t Replace Fiat, Just a ‘Useful Niche,’ Enthusiasts 'Naive'

Bitcoin Mercantile Exchange (Bitmex) released proprietary research reportedly geared toward their VIPs. Researchers find bitcoin core’s (BTC) deflationary aspects interesting for speculation and as a “payment system,” but predict it will ultimately not usurp government paper, describing the BTC phenomenon as simply a “useful niche,” and those who “think Bitcoin would result in a more prosperous economic system” as “naive.” It’s a strange position to take as a bitcoin exchange. 

Also read: Philippines’ Crypto Wallet Reaches 5 Million Users, Adds More Coins

Before Weirdly Turning, Bitmex Praises BTC’s Deflationary Aspects

In conclusion, Bitmex researchers lukewarmly laud bitcoin core’s merits, arguing how “to many, Bitcoin’s ability to decouple debt from money and thereby result in a deflationary climate without the deflationary debt spiral problem is the point, rather than a bug.” Still, Bitcoin Economics – Deflationary Debt Spiral, published recently by the exchange for its VIPs, refers to those who believe bitcoin “would result in a more prosperous economic system” as being “naive.” Piling on in this manner, they continue, “Bitcoin is a new and unique system, which is likely to cause more economic problems, perhaps unexpected or new ones.”

Bitcoin Economics – Deflationary Debt Spiral, is the final in a three part series by the Hong Kong-based Bitcoin Mercantile Exchange (Bitmex). Hot shot, risk enticed futures traders are emboldened by the exchange’s shorting ability and 100x leveraged contracts. Contracts can only be purchased and settled in bitcoin core (BTC), all without the bother of holding actual coins. Bitcoin cash, bitcoin core, ripple, ether, litecoin, cardano round out possible contract choices.

Bitmex to VIPs: Bitcoin Won’t Replace Fiat, Just a ‘Useful Niche,’ Enthusiasts 'Naive'

The report was initially released by a cranky Twitter polemicist who claimed it to be an exclusive get, designed for Bitmex’s VIPs. Days later, the exchange would publish it on their site for all to see. The report’s focus was to “examine the deflationary nature of Bitcoin and consider why this deflation may be necessary due to some of Bitcoin’s weaknesses.”

Deflation, as a matter of course, occurs when the value of money increases. In the modern West, at least, this concept has largely been only theoretically known. And then crypto. And then bitcoin. Cursory surveys, and perhaps the reader’s own experience, revealed during 2017 the tension many bitcoiners faced. Used to government tickets eventually and methodically losing value through inflation, a bargain cut between court economists and the first to receive newly printed paper meant every incentive in the average person’s experience pointed to spending. Spend those tickets before they lose more value.

Fundamentally Different

The opposite was evident for most of last year. And this third report by Bitmex takes into consideration long held beliefs about money in this respect. “Critics have argued that history has taught us that a finite monetary supply can be a poor economic policy, resulting in or exacerbating, economic crashes. Either because people are unwilling to spend appreciating money or because the real value of debt increases, resulting in a highly indebted economy. Bitcoin proponents are often called ‘economically naive,’ for failing to have learnt these economic lessons of the past,” researchers explain.

Bitmex believes economics, when it comes to bitcoin core, are “fundamentally different” from anything preceding. “There may be unique characteristics about Bitcoin, which make it more suited to a deflationary policy,” they argue. “Alternatively, limitations or weaknesses in Bitcoin could exist, which mean that too much inflation could have negative consequences not applicable to traditional forms of money.” Bitmex to VIPs: Bitcoin Won’t Replace Fiat, Just a ‘Useful Niche,’ Enthusiasts 'Naive'

Deflation’s bad rap in the United States, for example, can be attributed to Irving Fisher’s appraisal of causes and exacerbation of the Great Depression of 1929. And the Bitmex part three meditation presents his arguments well as a chain of consequences where hoarding, or as crypto enthusiasts understand, hodling, only served to severely worsen the problem, according to Fisher. Yet, “maybe Fisher’s view on inflation was correct for the economy in the 20th century, however by 2150 technology may have fundamentally changed to such an extent that another inflation policy may be more appropriate for society,” they contend.

Turning from mere description, Bitmex researchers hit upon a rather novel concept: bitcoin is not a debt based currency, the kind government paper all over the world is. That is a fundamental difference, and it follows economies would behave differently should something like bitcoin core take hold. In a bitcoin based, deflationary economy, an economic downturn’s “impact of increases in the real value of debt could be less significant than one may think. This could make the deflationary debt spiral argument less relevant in a Bitcoin based economy,” they note.  

A Cynical, Dismissive Way to View Bitcoin’s Potential

Given BTC’s deflationary aspects, its being so fundamentally different, and how traditional economic theory is at a loss to grapple with it, Bitmex would seem to hold the coin in high esteem. No, not really. Not at all, in fact. Very near the report’s end, VIPs are given the candid, unvarnished truth as the exchange sees it. Bitcoin core is a speculative plaything, an interesting project to perhaps make some interim profit if one is positioned well.

“Much of this discussion focuses on the economics of Bitcoin, assuming Bitcoin is widely adopted, such that the inflationary dynamics have an impact on society,” the report tantelizes. Curiously, the report doesn’t account for BTC’s notorious problems as a functioning currency in terms of block size, mempool congestion, and transaction fees – a debate lived out along side BTC by bitcoin cash (BCH). Researchers do not believe BTC will be widely adopted.  

Bitmex to VIPs: Bitcoin Won’t Replace Fiat, Just a ‘Useful Niche,’ Enthusiasts 'Naive'

“In our view [wide BTC adoption] is an unlikely outcome and perhaps should be considered even more unlikely by Bitcoin’s critics. In our view, Bitcoin may satisfy a useful niche, that of making both censorship resistant and digital payments, but it’s unlikely to become the main currency in the economy. Therefore the debate about Bitcoin’s deflationary nature should be considered as largely irrelevant anyway. Hence, it is therefore somewhat odd that some critics use this as an argument against Bitcoin,” thereby negating almost the entirety of the previous report findings.

The last thought left with readers is a cynical, just-in-case principle: “if one thinks these economic problems associated with deflation have a remote chance of being relevant, like the critics indirectly imply, that would mean Bitcoin has a significant chance of becoming widely adopted and hugely successful. In that case, perhaps the sensible thing to do is buy and ‘HODL’.”

What do you think about Bitmex’s research? Let us know in the comments. 


Images via the Pixabay, Bitmex.


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This is an Op-ed article. The opinions expressed in this article are the author’s own. Bitcoin.com does not endorse nor support views, opinions or conclusions drawn in this post. Bitcoin.com is not responsible for or liable for any content, accuracy or quality within the Op-ed article. Readers should do their own due diligence before taking any actions related to the content. Bitcoin.com is not responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any information in this Op-ed article.

The post Bitmex to VIPs: Bitcoin Won’t Replace Fiat, Just a ‘Useful Niche,’ Enthusiasts ‘Naive’ appeared first on Bitcoin News.

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