The Koreas

A Closer Look at North Korea’s Virtual Currency Ambitions

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The Koreas

A Closer Look at North Korea’s Virtual Currency Ambitions

North Korea is signalling increased interest in digital currencies, possibly as a way to help avoid sanctions.

North Korea held a conference for blockchain and cryptocurrency for the first time in Pyongyang.

The host, a Spain-based Korean Friendship Association, said about 100 people from across the world participated in the Pyongyang Blockchain and Cryptocurrency Conference, which was held in the North Korean capital between April 18 and 25.

The organization said it plans on holding a “much bigger” second conference in the near future based on the feedback of participants and the huge interest it received from professionals and companies worldwide.

When the news about the North’s plan to hold the conference first came out, it appeared to have come as a shock to many North Korea observers. Pyongyang had been secretive about its interests and ambitions in blockchain technology as well as virtual currencies.

But there had been some early clues that North Korea’s government was interested in this field. In 2017, an article posted on the website of Kim Il Sung University, for instance, gave a glimpse into what Pyongyang’s view on virtual currencies. In the report, titled “Virtual currencies and important issues when using them,” the university noted that it is important to have a deep understanding of virtual currencies, including cryptocurrencies, to advance North Korea’s monetary system.

It explained that virtual currencies are widely used in many parts of the world thanks to their convenience, speed, and safety combined with the ability to fulfill the functions of traditional currencies.

“In other words, means of financial transactions are moving away from traditional currencies to electronic transactions with virtual currencies,” the university noted.

It added that the public in the North should be aware of the “superiority” of virtual currencies so that they can be more accepted across the country.

The overall contents of the report indicate that North Korea is positive about introducing virtual currencies and believes that its people should be widely informed of their utility. Given the fact that universities across North Korea are controlled and overseen by the government, it is fair to say that this reflects Pyongyang’s interest and ambition in virtual currencies, including cryptocurrencies.

However, advancing the country’s monetary system might not be the only motivation behind Pyongyang’s interest and ambition in such currencies.

According to one of the latest reports by the Royal United Services Institute, North Korea is actively gathering virtual currencies in a move to fund the development of its weapons of mass destruction.

The report, published on April 22, noted that a large amount of virtual currencies can be obtained regardless of location; this would allow North Korea to be able to trade with many countries in the world by bypassing international sanctions.

According to a separate report published by the United Nations Security Council in March, it is estimated that North Korea had gathered, through mining and hacking activities, different types of virtual currencies, including Bitcoin, worth about $6.7 million.

Although North Korea is eager to gather such currencies, they still accounts for a small part of North Korea’s economy, which is struggling due to international sanctions, as pointed out by The Diplomat in early April. Certainly, Pyongyang cannot depend upon virtual currencies to allow it to totally ignore the sanctions.

However, it appears that North Korea still has a strong belief in the potential of digital currencies.

That’s according to several Seoul-based North Korean experts, who believe the latest cryptocurrency conference in Pyongyang was designed to send out a warning message to the United States and the international community that it can overcome sanctions by utilizing digital currencies.

Choi Hwa-in, head of Blockchain Campus, an educational institution, said the latest blockchain and cryptocurrency conference is Pyongyang’s move to show the United States that it already has enough capabilities to gather and use virtual currencies, hinting it can make international sanctions less effective.

She added that North Korea wants to send out a message to the United States and the international community that it can use cryptocurrencies to bypass UN sanctions.

Kwon Hun-young, a professor at Korea University’s Graduate School of Information Security, also believes that North Korea is beefing up efforts to develop its experience and knowledge in virtual currencies, since their transactions are almost impossible to track, which can be useful from Pyongyang’s point of view.

Kim Ki-hyung, a professor at Aju University’s Department of Cybersecurity, even hinted that there is a possibility that Pyongyang will introduce concrete policies to develop its skills in obtaining and using virtual currencies in the near future.