What is Kimchi Premium?
Let's find out Kimchi Premium meaning, definition in crypto, what is Kimchi Premium, and all other detailed facts.
Kimchi Premium is a phenomenon that occurs in South Korean cryptocurrency exchanges, causing the value of specific tokens to be greater than on other international exchanges. How does it work? A trader from South Korea needs to buy a token, let’s say Bitcoin, from an exchange that is outside of South Korea, and then sell it on one of the South Korean exchanges, let’s say Bithumb. This way, the trader buys a token for a smaller price elsewhere but sells it for a higher price in South Korea.
The Kimchi Premium was identified as a phenomenon at the beginning of 2016. The token value differences due to the Kimchi Premium were highest between 2016 and 2018. In January of 2018, the difference between Bitcoin values in South Korean exchanges and other international exchanges was about 55%. However, normally, it is about 4.5%.
The difference between token values all over the world happens for a reason. What is the reason? Well, cryptocurrency trading is a decentralized process. Therefore, when blockchain technology evolves and new crypto tokens emerge, it is hard for exchanges all over the world to keep up with the constant waves of changes and adapt to them at the same time. Thus, it results in phenomena like Kimchi Premium.
However, taking advantage of these differences in token values is not a new practice in the cryptocurrency world. The Kimchi Premium phenomenon only happens in South Korea but smaller token value differences occur all over the world. Therefore, when traders notice it, they start trading between different exchanges to gain more profit.
Though taking advantage of the Kimchi Premium is technically a form of arbitrage. Therefore, the South Korean government has imposed strict capital control restrictions to prevent traders from making a profit from this phenomenon. Besides, other financial regulations and Anti Money Laundering legislation prevent the traders from manipulating the market through the Kimchi Premium even more.
This danger is readily addressed by utilizing a hardware wallet and enabling the <a href=https://www.bitdegree.org/"//crypto//learn//crypto-terms//what-is-two-factor-authentication-2fa/">two-factor authentication (2FA)<\/strong><\/strong><\/a> option in exchange accounts. The two-factor authentication is supported by the vast majority of the biggest cryptocurrency exchanges.<\/p>\n<p>Additionally, the simplest technique to discover a software keylogger is to examine the system functions. If you see anything unusual, you must look it up online to check if it is from legal software or a known keylogger. <\/p>\n<p>Checking your computer's data flow would also be a wise decision.<\/p>","definition":"is a tool utilized by hackers to document keystrokes that were made by users, either through a software program or a hardware device.","status":"published","meta_title":"What is Keylogger? Definition & Meaning | Crypto Wiki","meta_description":"Keylogger meaning: Keylogger - is a tool utilized by hackers to document keystrokes that were made by users, either through a software program or a hardware device.","meta_keywords":null}" :model="{"id":432,"wikipedia_url":"https:\/\/en.wikipedia.org\/wiki\/Cryptocurrency_exchange","level":"medium","author_id":1,"created_at":"2023-06-19T06:58:59.000000Z","updated_at":"2024-01-04T03:39:02.000000Z","slug":"what-is-kimchi-premium","title":"What is Kimchi Premium?","section":"K","keyword":"Kimchi Premium","content":"<p>Kimchi Premium is a phenomenon that occurs in South Korean <a href=https://www.bitdegree.org/"//crypto//learn//crypto-terms//what-is-exchange/">cryptocurrency exchanges<\/strong><\/a>, causing the value of specific <a href=https://www.bitdegree.org/"//crypto//learn//crypto-terms//what-is-token/">tokens/strong>/a> to be greater than on <strong>other international exchanges<\/strong>. <em>How does it work? <\/em>A trader from South Korea needs to buy a token, let’s say <a href=https://www.bitdegree.org/"https:////www.bitdegree.org//crypto//buy-bitcoin-btc/">Bitcoin/strong>/a>, from an exchange that is outside of South Korea, and then sell it on one of the South Korean exchanges, let’s say Bithumb. This way, the trader <strong>buys a token for a smaller price<\/strong> elsewhere but sells it for a higher price in South Korea.<\/p>\n<p>The Kimchi Premium was identified as a phenomenon at the beginning of 2016. The token value differences due to the Kimchi Premium were highest between 2016 and 2018. In January of 2018, the difference between <strong>Bitcoin<\/strong> values in South Korean exchanges and other international exchanges was about 55%. However, normally, it is about 4.5%.<\/p>\n<p>The difference between token values all over the world <strong>happens for a reason<\/strong>. <em>What is the reason? <\/em>Well, <a href=https://www.bitdegree.org/"//crypto//learn//crypto-terms//what-is-cryptocurrency/">cryptocurrency/strong>/a> trading is a decentralized process. Therefore, when <a href=https://www.bitdegree.org/"//crypto//learn//crypto-terms//what-is-blockchain/">blockchain technology<\/strong><\/a> evolves and new crypto tokens emerge, it is hard for exchanges all over the world<strong> to keep up <\/strong>with the constant waves of changes and adapt to them at the same time. Thus, it results in phenomena like Kimchi Premium.<\/p>\n<p>However, taking advantage of these differences in token values is <strong>not a new practice<\/strong> in the cryptocurrency world. The Kimchi Premium phenomenon only happens in South Korea but smaller token value differences occur all over the world. Therefore, when traders notice it, they start trading between different exchanges to gain more profit.<\/p>\n<p>Though taking advantage of the Kimchi Premium is technically a form of arbitrage. Therefore, the South Korean government has imposed <strong>strict capital control restrictions<\/strong> to prevent traders from making a profit from this phenomenon. Besides, other financial regulations and <a href=https://www.bitdegree.org/"//crypto//learn//crypto-terms//what-is-anti-money-laundering-aml/">Anti Money Laundering legislation<\/strong><\/a> prevent the traders from manipulating the market through the Kimchi Premium even more.<\/p>","definition":"a phenomenon happening in South Korean crypto exchanges that makes the value of certain tokens higher than it is on other international exchanges.","status":"published","meta_title":"What is Kimchi Premium? Definition & Meaning | Crypto Wiki","meta_description":"Kimchi Premium meaning: Kimchi Premium - a phenomenon happening in South Korean crypto exchanges that makes the value of certain tokens higher than it is on other international exchanges.","meta_keywords":null,"author":{"id":1,"user_id":1,"created_at":"2023-05-03T14:30:55.000000Z","updated_at":"2023-05-11T07:18:20.000000Z","title":"Editor-In-Chief","slug":"aaron-s-editor-in-chief","description":"<p>Having completed a Master’s degree on Economics, Politics & Culture for the East Asia region, Aaron has written scientific papers with a comparative analysis of the differences between US’ Western and Japan’s Collective forms of capitalism, 1945-2020.<\/p>\n<p>With close to a decade of experience in the FinTech industry, Aaron understands all of the biggest issues and struggles that crypto enthusiasts face. He’s a passionate analyst who is concerned with data-driven and fact-based content, as well as that which speaks to both Web3 natives and industry newcomers.<\/p>\n<p>Aaron is the go-to person for everything and anything related to digital currencies. With a huge passion for blockchain & Web3 education, Aaron strives to transform the space as we know it, and make it more approachable to complete beginners.<\/p>\n<p>Aaron has been quoted by multiple established outlets, and is a published author himself. Even during his free time, he enjoys researching the market trends, and looking for the next supernova.<\/p>","user":{"id":1,"first_name":"Aaron","last_name":"S.","email":"aaron@bitdegree.org","email_sanitized":"aaron@bitdegree.org","email_verified_at":"2023-12-01T09:40:20.000000Z","must_verify_email":false,"is_registered_with_wallet":false,"status":"active","country":"LT","last_connected_ip":"88.119.132.125","image_id":2641,"referral_token":"05TMu2NysXOCn525","referred_by":null,"created_at":"2023-05-03T14:30:55.000000Z","updated_at":"2024-01-09T15:22:21.000000Z","full_name":"Aaron S."}}}" :chapter-list="[{"id":1,"title":"Blockchain","slug":"blockchain","updated":null,"chapter":"crypto\/assets\/crypto-book\/chapters\/learn-blockchain.jpg","chapter_simple":"crypto\/assets\/crypto-book\/chapters-simple\/blockchain-101.jpg","rating":100,"sections":[{"chapter_id":1,"order":1,"slug":"what-is-blockchain","title":"What is the Blockchain?","status":"published","modified_content":null},{"chapter_id":1,"order":2,"slug":"decentralized-blockchain","title":"Anonymous & Decentralized Blockchains: The Cornerstone of Crypto","status":"published","modified_content":null},{"chapter_id":1,"order":3,"slug":"blockchain-transaction","title":"What is a Blockchain Transaction in Crypto?","status":"published","modified_content":null},{"chapter_id":1,"order":4,"slug":"crypto-fees","title":"The Different Types of Crypto Fees Explained","status":"published","modified_content":null},{"chapter_id":1,"order":5,"slug":"what-is-bridging-in-crypto","title":"The Key Notion Behind the Concept of Bridging in Crypto","status":"published","modified_content":null},{"chapter_id":1,"order":6,"slug":"types-of-blockchains","title":"Different Types of Blockchains: What to Look Out For?","status":"published","modified_content":null}]},{"id":2,"title":"Cryptocurrencies","slug":"cryptocurrencies","updated":null,"chapter":"crypto\/assets\/crypto-book\/chapters\/learn-cryptocurrencies.jpg","chapter_simple":"crypto\/assets\/crypto-book\/chapters-simple\/cryptocurrencies-101.jpg","rating":100,"sections":[{"chapter_id":2,"order":1,"slug":"what-is-a-cryptocurrency","title":"What is a Cryptocurrency?","status":"published","modified_content":null},{"chapter_id":2,"order":2,"slug":"how-does-cryptocurrency-work","title":"How Does Cryptocurrency Work?","status":"published","modified_content":null},{"chapter_id":2,"order":3,"slug":"is-cryptocurrency-a-good-investment","title":"Is Cryptocurrency a Good Investment? 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