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The rise in cryptocurrency (virtual currency) that started from the end of last year is not very serious. When Bitcoin, a representative cryptocurrency, once rose to 65 million won, the corporate value of Dunamu, which operates Upbit, the number one cryptocurrency exchange in Korea, is also soaring. In three months, the company’s old stock price has nearly tripled. It is analyzed that the two trees that Kakao initially invested, along with Kakao Pay and Kakao Bank, are becoming one of the pillars of the Kakao financial platform.
The world is now facing optimism that cryptocurrency will emerge as’digital gold’ and pessimism that it is just another’tulip bubble’. Upbit’s soaring corporate value is read as a signal that domestic ants have participated in the aggressive bitcoin buying process amid a fierce debate over the value of cryptocurrency as an alternative asset. The Korean capital market’s choice to bet on the dunamu is inclined toward optimism that the rise in the trend of bitcoin will continue.
○Duna valuation soared to 1.7 trillion won
According to the investment banking (IB) industry, the corporate value of Dunamu, which operates Upbit, the number one cryptocurrency exchange in Korea, soared to 1.7 trillion won. Since October of last year, Doonamu is in the process of selling old stocks, including stock options owned by employees, to institutional investors. The corporate value of Dunamu, evaluated for the sale of Europe, soared from 600 billion to 700 billion won in October last year to 900 billion won in December. However, as the upbit transaction volume surged this year, the company’s value increased to 1.7 trillion won, nearly three times higher than last October. An official said, “Upbit profits are increasing rapidly,” and “In the end, whether or not to invest will depend on how you view the future of cryptocurrency.”
Upbit takes 0.05% of the transaction amount as a commission. As the price of cryptocurrency rises and the volume of transactions increases, profits naturally increase. In January of last year, Upbit is known to have collected 50 to 60 billion won in commission. This means that Upbit’s cryptocurrency transaction volume has exceeded 100 trillion won. As of the 22nd, Upbit’s daily trading volume exceeded 9 trillion won. If the current transaction flow continues, it means that it is easy to achieve profits of over 100 billion won per month.
Bitcoin, a representative cryptocurrency, has increased by 850% in a year. At one time, the price of 1 bitcoin exceeded 65 million won, so the upward trend is scary. Domestic institutional investors also have fierce competition for acquiring shares of Douna as the price of cryptocurrency soared. This is another reason why the value of the shares of Dounamu could surge nearly three times in three months. It is analyzed that the domestic venture capital (VC) industry is aiming for the effect of indirectly investing in cryptocurrency by investing in dunamu. This is because when the value of the cryptocurrency rises, the value of the two trees naturally rises. The corporate value of Coinbase, a US cryptocurrency exchange that is about to be listed at the beginning of next month, is estimated at 50 to 85 trillion won. Coinbase has 35 million users, 10 times higher than Upbit, but the daily cryptocurrency transaction volume is only half of Upbit. An official said, “It is true that the valuation has risen so quickly that it is burdensome,” and “However, since it is an opportunity to stably participate in the cryptocurrency rally, the enthusiasm for participation in the investment industry is hot.”
○ Kakao’s Finance Two trees in the big picture
Doonamu is a company that Kakao invested in. Kakao owns 8.1%, and Kakao Youth Fund holds 2.7%. The current representative of Dunamu is also Lee Seok-woo, former co-representative of Kakao. Securities Plus (formerly Kakao Securities) is operated, and Dunamu is in charge of the following securities categories. Kakao is in the process of listing Kakao Pay and Kakao Bank. When Kakao strengthens its financial sector in the future, it is highly likely that it will further expand its connection with Upbit, the number one cryptocurrency company. The investment industry explains that the two trees are an important part of Kakao’s financial platform design that encompasses banks, payments, securities, cryptocurrency exchanges, and blockchain.
Doonamu is also actively investing in the blockchain field. It also provides services so that anyone can use blockchain technology through its platform. Through its subsidiaries, it is also expanding discretionary investment services that can entrust investments to experts or road advisors for a small amount. In particular, Upbit’s global scalability can help to remove the image of a local company, which is considered Kakao’s weakness. As of the 22nd, Upbit cryptocurrency trading volume is ranked 5th in the world.
When the equity transaction is completed, Doonamu is expected to unofficially acquire the unicorn status, which means more than 1 trillion won in corporate value. Employees who sold stock options are also expected to sit on money cushions. In the early days of its founding, Dunamu actively used stock options to attract excellent developers to the company. Chairman Song Chi-hyung, the founder of Doonamu, has a 26.8% stake, exceeding 450 billion won.
○ The cryptocurrency craze reignited in Korea
In the capital market, optimism that cryptocurrency will become a new alternative investment method,’digital gold’, and’pessimism’ that is another version of Tulip Bubble coexist. Investment gurus such as Warren Buffett and Ray Dalio stood on pessimism. On the other hand, Cashwood, called the second Warren Buffet, predicts that the price of bitcoin will reach hundreds of millions of dollars. Elon Musk bought $1.5 billion of Bitcoin through Tesla. The fintech startup Square, founded by Twitter co-founder Jack Dorsey, also owns $1.7 billion in Bitcoin as of the end of last year.
As U.S. companies and institutional investors join the process of buying bitcoin, the price of cryptocurrency fluctuates, so domestic individual investors are also joining the investment craze. It’s not much different from the 2017 frenzy. Looking at the App Store’s popular app rankings, K-Bank and Upbit are struggling for the first or second place. It is pointed out that Upbit has been issuing real name verification accounts only through K-Bank since June of last year, thus reflecting the demand for cryptocurrency purchases. This immediately proves the daily trading volume of Upbit. On average, about 3 trillion won of cryptocurrency was traded per day last month, but as of the 22nd, 9 trillion won, which has tripled, is being traded on Upbit.
○ Why is the price of cryptocurrency rising? What is your prospect in the future?
If the 2017 bitcoin craze was led by individual investors in Asia such as Korea, this is an analysis that US institutions are leading the rise in cryptocurrency value. In October last year, PayPal launched a service to purchase digital assets, including Bitcoin. PayPal’s rival Square also launched a cash app that allows you to buy bitcoins, and Square’s share price is hitting record highs every day thanks to the increase in cash app performance.
Grayscale, a cryptocurrency trust company, is buying Bitcoin every day. Fidelity, an investment company, started a cryptocurrency trust service, and DBS, the largest bank in Southeast Asia, opened a cryptocurrency exchange. Global financial institutions are actively participating in the cryptocurrency business. It is predicted that this year’s global institutional investors’ incorporation into the Bitcoin portfolio will further expand. This is because cryptocurrency is emerging as a new food for institutional financial institutions suffering from deteriorating profitability.
This is deeply related to the continuous supply of liquidity to the market in order to cope with the economic crisis. This meant a decline in the value of money, and the attractiveness of cryptocurrency as a relatively alternative investment method increased. Global investors have also started investing in Bitcoin from the perspective of diversification. In particular, Citi became a hot topic as it predicted that the price of bitcoin will reach 318,000 dollars (about 350 million won) this year.
Whether cryptocurrencies, including bitcoin, will emerge as digital gold or will experience another major crash like in 2017 is too soon. What is clear is that it has joined the cryptocurrency betting procession of domestic and foreign institutional investors, and they are predicting that the short-term rise of Bitcoin will continue. The future says, “Bitcoin is speculative. Bill Gates said, “If there’s an easy way, I’ll sell it short,” said Bill Gates and “I think Bitcoin is a good thing right now. Who would raise the hand of Elon Musk who says I’m a bitcoin supporter?
Reporter Jihoon Lee [email protected]