The state of Bitcoin in Southeast Asia

Wayne is an analyst with Venture Scanner, a Silicon Valley-based firm that helps corporate innovation arms and investors identify innovation trends and opportunities, using a combination of big data and analyst insights.

Bitcoin holds great promise in regions where banking and payment systems are not as developed, including Southeast Asia. A look at global venture capital flows into Bitcoin startups indicates that the majority of investments are being made into basic infrastructural projects like Bitcoin exchanges, which have received US$106 million in total global funding so far.

I recently did research for a venture capital firm seeking to invest in Bitcoin startups in Southeast Asia (excluding Singapore), with a focus on exchanges given the stage of the industry in this region. Here’s what I found out.

Bitcoin adoption in Southeast Asia is speculative in nature

Current Bitcoin adoption is low and mainly driven by speculation in small amounts. Oscar Darmawan, CEO of Indonesian bitcoin exchange, Bitcoin Indonesia, observes that most of his users only buy between 0.01  to  0.005 BTC per transaction because of media attention. Many exchanges in the region do not operate open order books due to the low trading volume. They function as brokers instead.

There is a limited number of merchants accepting Bitcoin. While Southeast Asia’s population is twice as large as that of the US, brick-and-mortar merchant acceptance is an order-of-magnitude lower, as indicated by Coinmap (below).

Comparison between US and Southeast Asia — number of physical merchants that accept bitcoin (May 2014)

Nonetheless, the regional landscape is evolving rapidly. In March 2014, an Indonesian exchange switched to an open order book system while the second most visited ecommerce site in the Philippines recently announced acceptance of Bitcoin as payment.

Philippines

There are a number of bitcoin exchanges in the Philippines like Bitcoin Pinoy, Coins.ph, BuyBitcoin.ph, and mBTC.ph. These sites, however, act as brokers and not open exchanges. With cash being the main payment medium in the country, users typically purchase Bitcoin by depositing money at branches belonging to Bank of the Philippine Islands (BPI) or BDO Unibank (BDO).

BuyBitcoin.ph’s typical users are males aged between 25 to 34, mostly working in a technical field such as engineering or computer science. Merchant adoption has been relatively more significant in the Philippines than in other Southeast Asian countries. Two large Filipino online merchants (both daily deal sites) announced in March 2014 that they would be accepting Bitcoin through Coins.ph’s payment processing solution. They are: MetroDeal, with 1.2 million unique monthly shoppers, and also the number two ecommerce site in the Philippines, as well as CashCashPinoy, with 575,000 monthly unique visits.

The central bank has decided not to regulate Bitcoin exchanges while it watches the space. It also issued an advisory to consumers on the risks of Bitcoin.

Indonesia

Bitcoin adoption in Indonesia has been growing quickly. The largest exchange is Bitcoin Indonesia, which recently switched to an open order book in March 2014 as daily trading volumes increased from 5 BTC in December 2013 to 30 BTC over three months. At 1,500 users, the exchange accepts bank transfers from large Indonesian banks like Bank Central Asia (BCA) and Bank Mandiri. Other Indonesian Bitcoin exchanges like Artabit, Tuker.in, and Tukarcash.com do not appear to operate open order books but instead act as brokers.

In addition to these centralized exchanges, LocalBitcoins is a popular means of obtaining Bitcoin among enthusiasts. Tukarkoin.com is another marketplace in the country for Bitcoin buyers and sellers. While no bitcoin ATMs exist in Indonesia, Bitcoin Indonesia has plans to bring them into the country.

Vietnam

Malaysia

Thailand

Cambodia

Brunei, Laos, Myanmar

Conclusion