Image credit: Ron Hose / Coins.ph
Coins.ph is Southeast Asia’s — and specifically the Philippines’ — latest answer to a free mobile Bitcoin wallet, with a mobile app currently available on Google Play (the company says an iOS version is on the way). It is now the largest Bitcoin exchange operating in the country.
Headquartered in the Philippines, and with plans to expand throughout Asia, Coins.ph differentiates itself from other Bitcoin wallet providers (Coinbase, Circle) by allowing its users to receive or make payment in Bitcoin without having to tie in a bank account. Users do not even require an account with Coins.ph to receive payment; all they need is an email address.
The company says that the Philippines is an ideal starting market for its service, which allows customers to “send cash to family and friends, top up prepaid phones, pay bills, and shop at more than 63,000 online merchants around the world”, as well as at over 5,000 retail locations, because 75 per cent of Filipinos do not have bank accounts.
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Coins.ph official release last week shared a mind-blowing statistic: More than half of Southeast Asia’s 620 million people and over 2.5 billion adults globally are unbanked. Clearly, it has identified a market with huge growth potential.
Remittances (sending money as a gift) into the Philippines is a US$25 billion per year market, usually requiring eight per cent fees on transfers (i.e. PayPal). Using Coins.ph means the transfers can be done for free in Bitcoin and then cashed out in the Philippines.
Meanwhile, Coins.co.th, which launched earlier this year, has become the second legal exchange to operate in Thailand. It is now eyeing markets including Indonesia, Vietnam and Malaysia.
To get some deeper insight into this emerging market, e27 spoke with Ron Hose, Co-founder and CEO, Coins.ph.
Introduce yourself and give us some background as to how Coins.ph came about?
I was in New York first, then San Francisco for my education. I spent a good amount of time in Silicon Valley, then moved to Asia about two years ago.
I moved out here because I saw a general market trend that I thought was interesting. I didn’t know exactly what business I was going to set up, but I saw large growth coming out of Asia for the next two or three decades. At the same time, there is a large population that doesn’t have access to very basic services like healthcare, education, finance, and commerce.
I saw an opportunity to deliver those products over technology. One of my observations before coming here was that usually when you go to really remote regions there’s no electricity or running water — maybe only for a few hours a day — but people still have cellphones, and actually almost everybody has Facebook.
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This is very different from even five years ago. In the Philippines, you can now reach people with products that you couldn’t reach before, and that’s a great chance to make an impact and change people’s lives. In all these sectors, you can now drive services over mobile devices.
But so many people doing innovation in Europe and the US are not necessarily thinking about how to solve these problems (in Southeast Asia). They’re thinking about how to do Amazon deliveries in less than 24 hours. So I wanted to take the skills I’d built up creating services in Silicon Valley, and come here to bridge that gap.
Bitcoin came along as the perfect disruptive technology because it allows us to drive financial services to people who are not reachable by traditional banking.
Do you feel at any disadvantage not being a local to the country/region?
I don’t think so. If you look across the board, there are a lot of outside products that have been successful here. There are certain issues that are unique to every country and geography, but we are all human, right? So we all have the same needs, and I think we all deserve access to the same types of services.
Take upward mobility, for example. That’s as important to someone in the Philippines or Indonesia as it is to someone in the US. Being able to improve your life, educate your kids, access to proper healthcare, etc. Those are universal.
Have you seen an improvement in funding opportunities for startups in the region?
For sure. When I first moved here about two years ago, I spent a lot of time learning the local markets and understanding the dynamics. Then I put together a report called The Philippines Startup Report, which covers everything I learned during my first three to six months in 30 slide presentations so that other people looking at investing in this market can understand it.
Looking back a year and a half later, I can tell you that there’s been tremendous growth here. Whether it’s outside investment, angel activity, entrepreneurs, conferences, it’s definitely on a trajectory. And not just that, but even when you talk to people who are in more traditional lines of business — retail, insurance, banking — all those people are now thinking about how to use technology to uplift their business.
What do you see as the current setbacks of Bitcoin?
Bitcoin has it’s own challenges obviously. The technology is still very difficult to use, and we are only just productising it now so that it’s useable by mainstream customers. There are strengths and weaknesses to the protocol, but overall it’s a significant step up from what’s there, especially when you look at the developing world.
For 75 per cent of the population in the Philippines, having a bank account is not an option. If they want to send or receive money to relatives, they have to pay eight per cent on average. So the step up to this is actually more of a leapfrog.
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In the US, if you’re buying something online, you’re comparing Bitcoin to your credit card. Obviously, my credit card is already on file with Amazon, so why bother? But if you’re in Indonesia or the Philippines, your option for payment is basically getting on public transport for 45 minutes, standing in line at the bank for one hour, and then getting back on public transport for another 45 minutes. Bitcoin presents a significant step up.
Here there is a use case, and that’s what makes digital currency so interesting. It’s replacing an infrastructure that is not capable of catering to most of the population. Early adopters are always the ones that have the strongest need right now. When the technology becomes more efficient, it will be a viable alternative for people in more developed countries.
Who are your main competitors in the space right now?
We’re not actually going into a market where there is existing competition. It’s unserved.
Banks, in order to serve customers, need to have branches, and armoured trucks to move money around. If you look at a country like the Philippines or Indonesia, they’re really spread out. The Philippines is 7,107 islands. That’s very expensive (for banks to cover). The cost per customer is high, and those customers earn very little. They don’t have much savings, so banks can’t make their money back on deposits. Basically, they just can’t serve everyone.
If you walk into any bank in the Philippines and you try to deposit money, most of the time you’re going to have to wait in line for 45 minutes — on a good day. That’s because there are so many customers per branch.
What we’re doing is giving the banks a way to serve those customers in a way that doesn’t cost them as much.
The average person still doesn’t know what Bitcoin is or how to use it. How do you deal with this problem?
Whenever I give talks, there are a few questions people always ask me. One of them is: How do you educate more people about Bitcoin? My answer is always: We don’t. We should not be focussed on educating more people about Bitcoin. We should be making Bitcoin so easy to use that it doesn’t require more education.
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Bitcoin is an underlying protocol. When you use Facebook, you’re not thinking about TCP/IP, you’re thinking about sending messages to your friends. So, I don’t think in the long run that people will be thinking they’re using Bitcoin to send money to a relative in the Philippines. They’ll just be thinking of it as a faster way to get money across without losing money.
The second question I get a lot is: Whether people should be buying Bitcoin, which is when they get a second answer they don’t anticipate. I actually tell people not to buy Bitcoin. I don’t think people should see Bitcoin as a value store or speculate on its ups and downs.
The exciting point about digital currency and Bitcoin is actually the ability to transact. I see it as a transactional protocol, a way to exchange value between parties. It’s about getting value from person A to person B without a lot of friction. But long term I don’t think people should be speculating on the value of the currency itself, or gambling with their money.