Abstract: National currencies regulated by state monetary authorities have long been associated with nation-state building and the expansion of state control. The rise of cryptocurrencies—that is, digital currencies outside of state control—has the potential to challenge the dominance of the state in this area and to disrupt state-society relations traditionally mediated through state-issued currencies. However, as recent crises and scandals involving cryptocurrencies demonstrate, cryptocurrencies may—in the absence of regulation—be perceived as too volatile and unsafe to act as a true alternative to state-regulated currencies or to investments that offer some level of government protection. In fact, the failure of cryptocurrencies to provide a safe alternative financial system may lead people to appreciate the role of government in regulating markets more. We test these expectations in the case of South Korea, using a number of different approaches. First, a quantitative content analysis of recent South Korean news media shows that despite public attention to the possibility of “striking it rich” through cryptocurrency investment, public discourse on cryptocurrency has recently become dominated by discussion of the weaknesses of non-state-regulated currencies, particularly after a series of scandals. Second, a nationally representative survey experiment reveals that exposing South Koreans to information about the volatility of cryptocurrencies increases their trust in government, as hypothesized. At the same time, exposure to positive information about cryptocurrencies does not undermine trust in government or support for government regulation. These results point to limitations to the potential of unregulated cryptocurrencies to offer an alternative to state-issued currencies or government-regulated investment vehicles.
Moderator: Federica Genovese