Every few years I take a month off to travel Southeast Asia and this year’s destination was the Philippines. In order to maximize the adventure-factor, I generally plan as little as possible (return flight and one night in a hostel) but this time it was different: I was going to try and use Bitcoin to fund my trip!
As a Bitcoin junkie, I am constantly fantasizing about what Andreas Antonopolous refers to as the ‘AOL moment’, the inflection point when Bitcoin usage hits critical mass and we start to see rapid global adoption. International remittance (overseas workers sending money home to family) is lauded as a potential driver of this adoption, and with remittance being a major part of the Filipino culture and economy, I decided to dive in.
To fund my trip, I remitted money to myself using Bitcoin
As a foreigner in the Philippines, there are few ways to get local currency: ATM, bank and through a pawnshop. Unfortunately, none of these options are great: ATM’s rarely work and charge $5 plus FOREX for a maximum withdrawal of 10,000 PHP (~$250 USD). Banks are hard to find outside of the cities, as few people actually have bank accounts, and money changers require some foreign currency unless you want to use Western Union (welcome to fee town, population YOU).
Thankfully, Rebit.ph and Coins.ph are trying to disrupt this space using Bitcoin. I’m please to report that, on 4 occasions, I successfully used these services to convert bitcoin into philippine pesos (PHP), funding my trip in the process.
The genius behind these services is that they currently use the same ‘last mile’ as traditional remittance services: the bank or local pawnshop (eg. Palawan Express). These pawnshops are something to behold: they are everywhere and almost always packed with people sending or receiving money. It is an understatement to say that these businesses are critical to the distribution of money within the Philippines.
Their ubiquity is important as about 80% of Filipinos are unbanked, and equally valuable for scatterbrained tourists who run out of fiat in a small town like Dumuagete, a popular diving town with no ATM, no banks and not a single business that accepts credit cards save a gas station that will give you cash for a modest 6% charge — oh and don’t forget the credit card FOREX on top of that.
I highly recommend this experience to all Bitcoin geeks out there — I can’t think of another country, including Canada, where fiat is this accessible using Bitcoin!
This technology will have huge impacts on the Philippines and on Bitcoin
At this time, using Bitcoin is already less expensive, with fees around 1% vs. 2–10% for traditional remittance services, depending on the transmission corridor. With $25 Billion being sent to the Philippines every year, this lower fee can have a massive impact on the recipients. The business case is clear and I think that in the short term we will see the technology reach more users and gain momentum, however, there are still technological hurdles to jump. Fortunately, most of this is on the side of the remittance transmitter, as the end user can still use the pawn shop. I’ll be shedding more light on this particular subject in the coming months. For now, I leave with this idea:
There are 2.3 Million Filipinos working overseas and 87% of them send money home on a regular basis. Imagine if 1% of them starting using a Bitcoin product (Hint: That would be $2 Billion/year. Today’s Bitcoin market capitalization is $3.7 Billion).