[Desk Column] Descendants of King Midu

[Asia Economy Reporter Jeon Pil-su] On the last Saturday of May 1921, the most extravagant wedding in Joseon was held at the Chosun Hotel. It was a wedding attended by many influential figures of the time, with the Incheon Mayor (now the Mayor of Incheon) even delivering a congratulatory speech. For this wedding, a special train car was chartered from Incheon, and from Seoul Station to the Chosun Hotel, one-third of Seoul's automobiles at the time were rented to transport guests, creating a spectacular scene.

The groom was 22-year-old Ban Bok-chang, famously known as the "Rice King (米豆王)" at the time. This young man, better known by his Japanese name Ban Jiro (潘次郞), was a prodigy who increased his fortune by 1,000 times within just one year in the Incheon rice gift market. Starting as a messenger in the rice market, he saved 400 won (equivalent to 40 million KRW today) and managed to deposit 400,000 won (40 billion KRW), earning a huge amount of money. With this money, Ban Jiro built a luxurious house on the best land in Incheon and held an ultra-luxurious wedding with Kim Hu-dong, who was considered the most beautiful woman in Joseon at the time. The wedding alone reportedly cost 30,000 won (3 billion KRW). Ban Jiro, who started with nothing, was able to join the ranks of Joseon's wealthiest in a short time because he could trade by paying only 10% of the rice price as a deposit. Thanks to a 10x leverage effect, Ban Jiro once earned 180,000 won (18 billion KRW) from a single transaction.

One hundred years after Ban Jiro's lavish wedding, in 2021, young people in South Korea are engrossed in cryptocurrency investment. Young employees often check cryptocurrency prices on their phones while taking the elevator to lunch. Cryptocurrency is a common topic of conversation. Nowadays, university students even keep cryptocurrency price charts open during class.

The enthusiasm of the younger generation for cryptocurrency investment is also confirmed by statistics. According to data submitted by the Financial Services Commission to the office of Kwon Eun-hee of the People's Party, the number of users of the four major domestic cryptocurrency exchanges (Bithumb, Upbit, Korbit, Coinone) in the first quarter totaled about 3.66 million, of which about 2.23 million were in their 20s and 30s. This means that about two out of three cryptocurrency investors are young people in their 20s and 30s.

Unlike the older generation who have accumulated wealth through real estate and stocks, these young people loudly claim that cryptocurrency is now the only way for them to become rich. As some cryptocurrencies have risen dozens of times in value, the investment fever shows no signs of cooling. The daily trading volume of cryptocurrencies on the four major exchanges exceeds twice the combined trading volume of the KOSPI and KOSDAQ.

The problem is that it is difficult to evaluate the intrinsic value of cryptocurrencies. While stock values can be assessed using price-earnings ratio (PER) or price-to-book ratio (PBR), cryptocurrencies do not generate profits, making it hard to estimate their fair price. Most investors rely on charts or uncertain information like "it will go up several times" when investing.

Ban Jiro, who held the wedding of the century with Kim Hu-dong, suffered consecutive investment failures right after the wedding. The rice prices, which used to rise when he bought and fall when he sold, moved in the opposite direction as if lying. It took less than two years for him, who once dreamed of becoming the richest man in Joseon, to go completely bankrupt to the point of worrying about making a living.

Trading based solely on supply and demand without intrinsic value is not investment but speculation. And the end of speculation is mostly futile.