If North America has a ‘Bitcoin valley’ in Honduras and ‘Bitcoin beach’ in El Salvador, then the Philippines could soon be following suit with its own version of ‘Bitcoin island’ in Boracay, a small resort town located in Western Visayas.
With a population of 35,000, Boracay has since become part of an experiment where people are expected to use fiat currency more than traditional money while purchasing goods and services on the island.
Over the past four months, cryptocurrency wallet provider Pouch has been actively promoting the use of Bitcoin on the island that is famous for its white sands and palm trees. The Bangko Sentral ng Pilipinas (BSP) has given Pouch a license to facilitate financial transactions in Philippine pesos as well as in Bitcoin.
According to Bill Hill, vice president of Pouch, there are already about 120 businesses in Boracay, big and small, who have already signed up with them. “The plan is to establish a micro-economy running entirely on bitcoin while promoting crypto tourism. Right now, we are focused on getting businesses to accept payment so there is somewhere to spend,” said Hill in a press release.
“The ability [for people] to top up their pre-paid phone credits with no fees on any carrier is a surprisingly killer app. The stores love it because it is a no-fuss way of being able to support all carriers at once (sic),” he added.
Of the 120 businesses that have already signed up, most are in the hospitality sector including restaurants and coffee shops. This means people in Boracay can now pay for homemade food ordered from roadside restaurants (locally known as carinderias) using Bitcoin. Fruits, vegetables, meat, and fish can now also be paid in Bitcoin. Many more industries on the island are expected to follow suit.
When this happens, Boracay could soon be transformed into a ‘Bitcoin island,’ pretty much creating a sustainable economic ecosystem similar to the ‘Bitcoin beach’ project in El Salvador, where a majority of the people do not have access to bank accounts.
Bitcoin adoption to help Filipinos save dollars on remittances
Pouch, which was founded in 2021 by American expatriate Ethan Rose, is a bitcoin wallet provider that leverages the Bitcoin payment layer Lightning Network, allowing its users to seamlessly send and receive money across borders.
The company is primarily targeting to tap the multi-billion-dollar Filipino remittance market, the world’s third largest, with faster and cheaper bitcoin transactions. Digital nomads, or BTC lovers who feel at home while being away from home, are also being taken into consideration.
According to Hill, bitcoin adoption will help Filipinos save millions of dollars every year on commissions for remittances while giving access to financial services to those who have no bank accounts.
“The remittance market is starting to happen, and that is the big goal,” said Hill in a statement. “Over $35 billion comes into the country every year, losing about 7% to fees and taking one to three business days. Our goal is to bring that down to around 1% or less, and instantly.”
Last year, Filipinos working abroad were reported to have sent a total of $31.4 billion in remittances to support their families back home.
The money, according to the BSP report, is usually used to pay for education, buy food and clothes, start a business, build a house and cover daily living costs.
It is a vital tool of survival for families in the Philippines. But too much of the money is being taken in transfer fees by financial companies like banks. A World Bank study noted that the global average cost of sending remittances for South Asia is about 7% and over 5%.
This is by far too costly when compared to the Philippine government’s Sustainable Development Goals’ target of cutting financial transfer costs to within 3% of total transaction value by 2030.
Gearing up for the start of tourist season in October
Although Pouch’s immediate focus right now is on Boracay, the company executive is confident that its unique selling point, which includes low transaction fees, will give the company’s products and services national relevance throughout the country.
“We are really trying to gear up for the start of tourist season in October. Already, random users of Bitcoin are here, seeing the businesses and spending sats. The more that happens, the more (it will be) imperative to accept bitcoin,” he explained.
To deal with volatility, Pouch stated on its website that it would allow users to make and receive instant payment in the local peso currency.