what is the kimchi premium 
the kimchi premium is the gap in cryptocurrency prices in south korean exchanges compared to other exchanges located globally the kimchi premium is predominantly seen in the price of the cryptocurrency bitcoin btc in other words bitcoin s price might be listed at a higher price on a south korean exchange than on an exchange located in the united states or europe creating an arbitrage opportunity the term kimchi refers to the fermented cabbage dish that is a staple in south korean cuisine understanding the kimchi premiumbitcoin prices can be higher in south korea than on other international exchanges cryptocurrencies like bitcoin are decentralized assets meaning they don t trade on a central exchange unlike equities this means a cryptocurrency can be traded at different prices around the world the price difference becomes a premium when one exchange s prices are higher than another if caught by a trader at the right moment this opportunity is called arbitrage buying and selling an asset on different exchanges to take advantage of price differences when prices on one exchange are consistently higher it becomes known for its premium prices the term kimchi comes from the popular south korean pickled cabbage dish of that name so because bitcoin has generally traded higher on south korean exchanges the arbitrage opportunity became known as the kimchi premium history of the kimchi premiumthe kimchi premium in the cryptocurrency market first appeared in 2016 according to a report by the university of calgary the findings show that between early 2016 and early 2018 the kimchi premium averaged nearly 4 80 and nearly reached 55 in january 2018 1south korea is a popular market for trading cryptocurrencies the popularity could be due to the country s interest in technology and gambling which may have led to open mindedness and early digital currency adoption also leading to the popularity of cryptos is the potential security issues or threats south koreans face from north korea and its leader kim jong un bitcoin and cryptocurrencies tend to be favored in countries or regions that face political uncertainty and geopolitical risks the appeal centers around the decentralized nature of cryptos meaning they re not owned or controlled by a government entity bitcoin s popularity has led in part to price premiums for the cryptocurrency in south korea when compared to the price in other countries a rise in the kimchi premium can indicate increased investment in bitcoin by korean retail investors kimchi premium arbitragesome investors attempt to profit by trading the price differences on different exchanges a process called arbitrage arbitrage is often attempted by currency traders who look for mismatches in exchange rates when identifying arbitrage opportunities 