How Bitcoin Transformed Industries In North Korea
There are more than 1 million users of bitcoin in North Korea. Previously, the country had no exposure to cryptocurrencies, but since 2016, there has been a surge in bitcoin popularity in both urban and rural areas. Many users even do not know what its actual value is.
The number of entrepreneurs who use bitcoins in North Korea:
Coins: Up to 100,000 won (US$90) for 1 BTC;
Mining machines: 800,000 to 1 million won (US$700-900) for 1 unit of “Avalon Miner”;
Mobile phones available with the Android operating system are used to receive bitcoins.
Why is Bitcoin Popular in North Korea?
- Bitcoin is famous as a means of payment and settlement with foreign customers. Each coin can be broken up into 100 million units (Satoshi); it’s easy to send small amounts of money without dealing with traditional currency denominations.
- At first, North Koreans stored and invested bitcoins, but they began to use them as a means of payment and settlement as time passed.
How does Bitcoin help North Korea grow?
- There are more than 15,000 computers for mining bitcoin in North Korea. The coins mined at home can buy other currencies on the black market or even other goods and products.
- Many bitcoins received by North Koreans are sent overseas to Chinese exchanges then converted into U.S. dollars or South Korean won before being stored in accounts. This is to make them less vulnerable to the increasing strict international sanctions.
- Bitcoins mining and trading also help counter the “mining ban” imposed by China on North Korea’s Musan Mine, which used to produce up to 50% of all iron ore in North Korea. In addition, mining bitcoin can help sustain some of the machines previously used to mine coal at Musan Mine.
- Chinese exchanges are believed to account for over 90% of North Koreans’ bitcoin transactions. Most North Korean hackers who hack into foreign currencies on the internet use China as their base.
- Mining bitcoins is not an easy task as the North’s electricity supply is unreliable and expensive, making bitcoin mining difficult unless it is subsidized by the government or a group of people pool their resources together to mine for bitcoin. The electricity supply is precarious, but mining machines such as Avalon require a fixed and relatively low voltage (110v). Due to this, you can easily conclude that the North Korean government has been providing subsidies to its people to trade in bitcoins.
What Is The Relation Of Bitcoin With North Korea?
A South Korean think-tank (Institute for National Security Strategy) reported that North Korea is estimated to have earned around US$15.6 million through bitcoin mining and has accumulated a total of 5,000 units of bitcoins as of May 2017. Of course, it is tough to know how much money is exchanged between international currencies in North Korea, but you can conclude that bitcoin is one of the possible choices for North Koreans.
The biggest problem with using cryptocurrency in North Korea: getting caught by authorities. The anonymous and unregulated nature of cryptocurrencies like bitcoins makes it hard for financial authorities to catch users who break laws or rules. Still, trading and mining bitcoins could lead to arrest as each transaction is recorded on a public ledger known as a blockchain.
Cryptocurrency anonymity provides North Koreans with a new way to evade sanctions and the authorities’ watchful eyes. Still, it could also lead to further isolation from the financial sector. So far, all of this is speculation. Nobody knows how much money is being exchanged in bitcoins in North Korea if any at all.
The North Korean authorities’ policy on cryptocurrency is ambiguous, too. The government has banned its people from accessing foreign websites like Google and Twitter but does not outlaw cryptocurrencies. As a result, Bitcoin could become the new medium through which North Koreans can access the free flow of information and ideas outside their country with minimum government interference.
The South Korean government wants to use blockchain to help bring North Korea into the international financial system. There is already an application developed for this sole purpose. It was implemented on June 14th, 2017, at the Blockchain Open Forum hosted by The National Information Society Agency and Financial Supervisory Service (FSS).