The Philippines: The World’s Newest Tech Sandbox for The Third Web
ConsenSys’ Global Business Development Lead in the Asia-Pacific Region Aiai Garcia on how The Philippines is staking a claim as a blockchain innovator on a global scale…
“Blockchain” was certainly the hottest topic in the room for all of the 30,000 attendees at Singapore FinTech Festival 2017. Every major bank in the region covered it as an element of their digital transformations. As we enter the next generation of internet-based services, one with less human input and intermediaries involved, we believe Ethereum has the potential to serve as the glue of this Web 3.0 ecosystem.
Developing countries tend to struggle with technology adoption due to developmental and regulatory barriers. In that environment, a sandbox approach will provide regulators a chance to test various innovations while getting the policies and user experience right. The Philippines can be this sandbox for greater Asia.
The Current State of Virtual Currencies in the Philippines
The Bangko Sentral ng Pilipinas (BSP) has always had a favorable attitude towards virtual currencies thanks to the pioneering efforts of early Bitcoin companies Coins.ph , Bloom Solutions , & Satoshi Citadel Industries. While most countries have stalled and continue to debate (or ignore) the issue, the BSP has been swift & timely in releasing its positions, in pace with the growth of cryptocurrencies.
Today, the Philippines has one of the most advanced blockchain payments apps in the world (Coins.ph), which provides 1.5 million Filipinos alternative access to their finances and other value-added services. Filipino regulators were also amongst the first to announce the regulation of bitcoin as a security.
Continuing the BSP’s national strategy for financial inclusion, the central banks of Singapore & the Philippines announced at SFF2017 that they would collaborate on financial technology by employing the regulatory sandbox approach. This will provide industry stakeholders with the room & time to experiment before regulators enact potentially restrictive policies that could stifle innovation & growth. As part of the agreement, the central banks will share resources, best practices, research, and collaborate to “elevate financial innovation” in both economies.
What does this mean for FinTech & Blockchain in the Philippines?
Singapore is already a favored destination for FinTech start ups (especially blockchain companies) due to the city-state’s tax-friendly incentives, government funding, and support. I expect the Philippines to soon follow suit and open its doors for companies with new technology to experiment in the country. The ultimate north star of these initiatives: To better address financial inclusion for the 70% of Filipinos who are unbanked & underbanked.
The central bank partnership also moves the country one step closer to seeing a “Peso-backed, cryptographic money issued on smart contracts, living on a shared, permissioned decentralized ledger”, with exposure to the MAS & ABS’ Project Ubin. As Project Ubin moves into the next phase and has opened up its source code for central banks to experiment with, I hope to see the BSP joining in the next round of cohorts building a blockchain-based financial system for international real-time settlement and payments.
But First, Build the Foundations of Decentralization
In order to build an effective, private, & secure system for this data-shared & streamlined world, we must first lay the foundations and build the applications layer by layer. At the Singapore Fintech Festival, ConsenSys met with the BSP to lay out the systems we are developing (such as Balanc3 ,OpenLaw , & uPort) that address the social & institutional obstacles blockchain technology faces on the road to mass adoption.
The BSP took interest in the subject of “digital identity” as ConsenSys founder Joseph Lubin described this as the first application layer to tackle and a critical pain-point for FinTech innovation. Whereas KYC-AML rules can exclude people from accessing basic financial services, blockchain-facilitated attestations allow for alternative & nontraditional trusted sources to prove a person’s identity — and not have to repeat the process. As we’re seeing in uPort’s latest pilot program (registering the citizens of Zug on the Ethereum blockchain), having a verifiable & trackable digital identity can vastly decrease friction changing the way people, the market, and governments interact with each other. Governor Nestor Espenilla commented that the BSP aimed to align with the methodical approach ConsenSys is taking in building the foundations of the blockchain ecosystem. The BSP understands that the country’s regulations must keep pace with how the world works today; to do otherwise would leave FinTech as just a daydream.
A Changing Tide in the Philippine Seas
In the beginning, innovation in the blockchain space was the equivalent of garage start-ups playing with the technology and developing in silos. For the last 3 years, ConsenSys has been building decentralized applications (dApps) for a multitude of industries in anticipation that these industries would one day wake up and learn to adopt…or perish. As a part of the Ethereum Enterprise Alliance (EEA), ConsenSys has had the opportunity to work on use cases with Fortune 500 companies, academics, and technology vendors and to define enterprise-grade software capable of handling the most complex and demanding applications. That work expands further into Asia as the EEA welcomes its first Filipino enterprise applicant, the UnionBank of the Philippines (UBP).
While ConsenSys is still at its core one of those startups-building-cool-shit inside-the-silos-of-our-graffitied-hipster-Brooklyn(and now Shoreditch)-walls, partnerships with companies that are well-integrated into the local ecosystem of developing countries allow us to bring this technology closer to the people who could benefit the most from it. Every day we come closer to fulfilling one of the greatest promises of blockchain technology: To provide financial access to communities that have been traditionally excluded from participating in the national & global market economy.
Although it’s taken some time, we’re now seeing piqued interest & an appetite for experimentation in the Philippines not only from the banking sector, but from the music industry, government, educational institutions, and utility companies (but that’s for another post).
I believe that the Philippines & its 100 million people will soon play an integral part in leading the charge in mass market blockchain integration & adoption, at a significantly faster rate than its first world counterparts. This puts the country in a unique position to help define global regulatory and protocol development standards.
Leaders in the country are starting to embrace these disruptive technologies, signaling to the world that the Philippines is ready to innovate and help build this transparent & decentralized future.
Filipinas, Mabuhay! And welcome to the beginnings of Web 3.0
To end, I’d like to leave you all a quote from our Chief Happiness Officer:
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This article was written by Aiai Garcia, who runs global business development, operations, and special projects for ConsenSys in the Philippines, the wider APAC region, and the decentralized Mesh.
DISCLAIMER: The views expressed by the author above do not necessarily represent the views of ConsenSys AG. ConsenSys is a decentralized community with ConsenSys Media being a platform for members to freely express their diverse ideas and perspectives. To learn more about ConsenSys and Ethereum,please visit our website.
