Where the Future of Crypto Payments Is Being Built

Leah Callon-Butler is the co-founder of Intimate.io, a token project aiming to bring payments, privacy and reputation to the adult industry.

The following is an exclusive contribution to CoinDesk’s 2018 Year in Review. 

“The stars have aligned,” he said, the room hanging on his every word.

“In the same way that the industrial revolution created the economic prosperity that’s made the U.S. what it is today; in the same way that Africa leapfrogged wired telecommunications and went straight to wireless; the Philippines has the potential to be the biggest beneficiary of this technology now. Manila could be the next New York. The next London. The next Hong Kong. The next Tokyo.”

The audience at Manila Private House was silent, wholly captivated by Brock Pierce’s speech as he told the story of a nation primed for a technological revolution. The Philippines is a collection of over 7,000 islands, where only 31 percent of its 100 million people are banked, and just 4 percent of transactions happen online, but nearly 60 percent of people own a smartphone.

Add to this the identity issue, with thousands undocumented and disenfranchised due to poor access to government services, and you can start to see how the Philippines is attracting the attention of some of the world’s most forward-thinking blockchain entrepreneurs and investors.

The government and central bank have jumped onboard, too, recognizing the potential for this technology to introduce unprecedented efficiencies and interconnectivity to the local economy, supporting the movement with special economic zones to promote development and attract investment – particularly in fintech, of which 16 percent of the current industry is in blockchain or crypto.

“There has been great movement from the government side, to learn and do more with blockchain technology,” says John ‘Jem’ Milburn, an EOS enthusiast who is based in Seoul while building business in the Cagayan Special Economic Zone (CEZA), continuing:

“Banks and business are getting interested, too, to make real, sincere pushes to learn and provide services. The move to encourage and allow exchanges in CEZA is huge, and will lead, I think, to big growth in Philippines involvement in international blockchain projects.”

One of the Philippines’ incumbent financial institutions, UnionBank, is leading the way in blockchain experimentation, applying the technology to everything from internal distribution of operating manuals to digitizing the badly fragmented rural banking system, effectively bringing costly processes that previously took a few days into real-time.

For the rural banks, of which there are only 400 left in the Philippines today, compared to 1,400 just 30 years ago, UnionBank plans to partner with at least 100 of them to help build blockchain-based connections to the main national and international banking networks.

Buoyed by early successes, and with 30 ConsenSys-certified blockchain developers already in-house, UnionBank says they will add 20,000 more programmers to the team over the next few years.

Active startups

But it isn’t just incumbents that are hard at work in the Philippines.

With financial inclusion heralded as the next big wave of cryptocurrency adoption, startup Coins.ph is capitalizing on the opportunity to deliver secure, reliable and convenient payments services to the unbanked and unidentified.

Founded by Silicon Valley entrepreneurs Ron Hose and Runar Petursson, Coins.ph is a blockchain-enabled digital wallet that can be used to pay bills, buy credit for your mobile phone and process peer-to-peer transactions – all with minimal KYC and without needing a bank account.

With super-easy onboarding and a multitude of methods to top up your account, from sending bitcoin or ethereum to depositing Filipino Pesos at a 7-Eleven store, this offers some insight to how Coins.ph have managed to build a user base of more than 5 percent of the local population when the company is little more than four years old.

Coins.ph are also using blockchain to lower the typical cost of cross-border remittances, a critical service for Overseas Filipino Workers (known as OFW) and their families.

Money sent home by OFW is the Philippines’ second largest export, accounting for 10 percent GDP. In February this year, the Bangko Sentral ng Pilipinas reported that remittances had grown 5.3 percent in 2017 to bring in a total $33 billion.

This was an all-time high for the Philippines, smashing government targets and positioning the Philippines as the third-highest global remittance recipient, only topped by the whopping diaspora of India and China.

But on average, migrant workers lose more than 10 percent in international transaction fees when sending cash home. This is significantly higher than the average cost reported by the World Bank at 7.1 percent and has a devastating effect for the families that rely on those funds, not to mention the people that work so hard to earn it in the first place. Global Overseas Worker, or GOW, is a crypto exchange licensed by the Philippines Central Bank and Philippines SEC that is delivering up to 98 percent savings on the usual remittance fees copped by Filipinos.

“Every little bit helps, and that saving is potentially the difference that puts a smile on someone’s face this Christmas,” says William Sung, COO of GOW. “However, it’s more than that. It’s about being included in the new digital economy and blockchain services are gateways into that inclusion.”

Like Coins.ph and GOW, other local ventures such as Satoshi Citadel Industries (SCI) and Bloom Solutions are tackling the remittance problem too.

Brian Calma Sales, a Filipino who works in Dubai as an office coordinator at a construction company, and has a side hustle offering hair and makeup services, says the extra money would go a long way.

“Most OFW work abroad for their family – part of Filipino culture is helping our family, it’s our responsibility,” he says. “If we didn’t have to pay the fee, it could be used to pay off some bills, or save for a vacation. Also, Filipinos mostly work two jobs. So, instead of working extra hours to get the money needed to send home, maybe we could have taken the day off.”

Aspiring entrepreneurs

There’s reason to think this is only the beginning of a major movement.

19-year-old Kyle Acquino found inspiration in those strong Filipino family values to come up with the idea that won the Accenture Choice Award at DISH 2018, the Philippines’ first-ever community-led blockchain hackathon.

“I tapped into that mindset and came up with the idea to provide a platform where communities can grow together like a family,” says Acquino, who is studying Computer Science at the Technological University of the Philippines. His team’s idea, Psycellium, is to build a decentralized cooperatives network that would take the Philippines one step closer to globalization.

A derivative of a DAO, Psycellium would allow cooperatives to merge, invest and join other co-ops without the typical cross-border concerns or restrictions.

DISH 2018 (which stands for Decentralized Innovations Startups Hackathon) was a blockchain-agnostic event held in Makati in November, bringing together Ethereum, EOS and NEM communities and encouraging participants to make objective decisions about which platform would be best-suited to their project.

“Blockchains are not all encompassing in terms of features,” commented Chris Verceles, CTO of decentralized disaster-response startup LifeMesh, developer at ConsenSys Philippines and one of the main organisers of the hackathon. “Each one is best at a certain use case and I believe we should be able to mix and match tools depending on what we need. Additionally,” he said, “a community only grows if it is inclusive.”

Themes of inclusion appear to be top-of-mind for Filipinos, with many leading female-oriented tech communities hosting a local chapter in the capital of Manila, including Women Who Code, Women in Blockchain and Coding Girls. After launching in November 2017, the latter grew from five members to more than 100 in just six months. Their leader, 20-year-old Electrical Engineering student Alenna Dawn Magpantay, says the Philippines’ young population (the average age is 24) makes it “a haven for tech-savvy professionals who are creative and resourceful.”

Michie Ang, a Director of Women Who Code Manila, said she’s looking forward to answering the demand for encouraging further training in blockchain languages in 2019. Her organization represents a network of more than 1700 female devs across the national capital alone.

Bright young minds are plentiful in the Philippines. In fact, that’s what prompted intimate.io to relocate half its executive team here in August, to work more intensively with our existing Pinoy team of four.

Since then, we’ve added another two devs with the help of our business process outsourcing (BPO) partner, Cloudstaff. Established in 2005 by Australian internet pioneer, Mr. Lloyd Ernst, Cloudstaff is an outsourcing company in the Philippines providing skilled workforces to a range of industry verticals.

Today, the company employs more than 2000 staff and contractors across four regions, with plans to double in size over the next year.

Growth data reveals that enterprises are outsourcing talent to companies like Cloudstaff more and more, with 1.3mil people now employed by BPOs in the Philippines. Ernst says the growth is being driven by small and mid-size companies who have moved to the cloud in order to utilize a global workforce. With a background working in China, Vietnam and Thailand, Ernst says that the high level of English language proficiency in the Philippines makes a big difference. Verceles agrees, adding that the Filipinos common exposure to online and western cultures makes local developers very trainable.

“There is a large pool of untapped talent here, since a lot more hiring attention is paid to surrounding areas like Singapore or Hong Kong,” he says. “You can see this in the current scramble for blockchain talent, where companies are increasingly looking into the Philippines for more abundant developer resources.”

Community drive

To say it’s “refreshing” to be immersed within a community that is genuinely focussed on designing and building practical solutions to some of the world’s gnarliest problems… is an understatement.

Milburn agrees, musing that “the Philippines community seems to be focused on the utility of the blockchain, more than the typical speculation and gambling we see in so many markets.”

Another example of this is ODX, or Open Data Exchange, a data marketplace founded by serial entrepreneur, Nix Nolledo, which aims to deliver sponsored internet services to consumers for free via the blockchain. Partnered with industry giants such as Booking.com, ODX will be vital for emerging markets where the right to connect is fast-becoming as critical as the right to transact, and consumers are still offline up to 80% of the time because mobile data is so expensive.

This is particularly vital for emerging markets where consumers are estimated to be offline 80 percent of the time, because data is so prohibitively expensive. Projects like Nolledo’s – and all others mentioned in this article – have no need to tout “blockchain social good” slogan because economic empowerment is simply an inherent byproduct of their operations.

In the short time we’ve been stationed here in the Philippines, the blockchain community has welcomed us with open arms. We’ve found synergies, supported each other’s initiatives and kick-started some fabulous friendships.

In the intimate.io office, our sense of team cohesion has never been stronger and productivity is through the roof! As a result, my co-founders and I have decided to stay for at least 12-months, and come January 2019, we’ll be moving into our new abode in Angeles City.

After a rollercoaster 2018, traversing almost every continent on the planet, we’re all incredibly grateful to be plonking ourselves somewhere that feels way more stable than anything else in crypto right now.

It’s true that something phenomenal happening here – and – I get the sense that the only hot air we’ll have to deal with in the Philippines…is the humidity.

Have a strong take on 2018? Email news [at] coindesk.com to submit an opinion to our Year in Review.

Philippines image via Shutterstock