SUMMARY
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MANILA, Philippines – Experts often predict that the “cryptocurrency” known as Bitcoin will become hugely popular in the Philippines. Still, Bitcoin remains largely unknown to the average Filipino, which shows that its adoption will come down to the quality of the companies that introduce it to the Philippine market.
BuyBitcoin.ph is one such company, headed by balikbayan co-founder and CEO Sam Kaddoura, along with founders Lasse Birk Olesen (CPO), Daniel Walton (CTO), and James Florentino (UI / UX Designer). Kaddoura describes the platform as “a peso to bitcoin ‘over-the-counter’ exchange allowing Filipinos direct access to buying and selling bitcoins.”
Kaddoura continued, “As the popularity of bitcoin increases and it becomes more widely accepted as a currency, the bitcoin exchange model will play a crucial role in providing a foundation for both individuals and local businesses in the Philippines bitcoin economy to flourish.”
In other words, such exchanges are important for they work both ways. They allow individuals and merchants to buy Bitcoin when necessary. On the flipside, they also allow them to “cash out” their Bitcoin for fiat money – the Philippine peso.
Adoption
Of course, with a technology as exotic as Bitcoin, individuals and merchants first have to buy into the concept before they actually buy the cryptocurrency. At the moment, the current profile of the average user on BuyBitcoin.ph is what you would expect: They’re tech-savvy, cryptocurrency enthusiasts.
Kaddoura describes the individuals that trade on his exchange as having this profile. He said, “Based off information from our customer database, our average user is male, between the age of 25 to 34, mostly working in a technical field such as engineering or computer science.”
Kaddoura and his team want to aggressively move beyond these early adopters to include other demographics. Kaddoura said, “We’d like to reach out to everyone outside of this group as well! We have some plans to target new markets, such as hosting local information sessions and promoting through the blogosphere and social media.”
Before getting people on board with the BuyBitcoin.ph platform in particular, Kaddoura must first get them on board with Bitcoin in general. To this end, he has two pitches – one for merchants and one for individual consumers, each tailored to their own particular needs and wants.
Kaddoura tells merchants that Bitcoin “would allow them to tap into a new customer demographic, those being bitcoin enthusiast who seek more places to spend their bitcoin. The security features built into the bitcoin protocol also help reduce fraud, as it is much harder to steal someones bitcoin wallet vs. snatching a credit card.”
Kaddoura continued, “Additionally, lower processing fees and faster settlement of transactions are some attractive reasons to have your business accept bitcoin.” The benefits of using Bitcoin for individual consumers are similar, but more unique to the Philippine context.
“From the consumer perspective, not everyone in the Philippines can get approved for a credit card,” Kaddoura said. “In many instances, consumers will just run to the bank to physically make the deposit if they are purchasing something online. However, if you’ve bitcoin in your wallet, you would never have to leave your house to make payment. A few clicks and confirmations and the transaction is done.”
Thus, Bitcoin evens out the playing field – it allows consumers to more conveniently participate in ecommerce, even if they may not meet the financial requirements necessary to obtain a credit card. Yet even in these cases, security would be a concern, especially given that many exchanges, such as the infamous Mt. Gox, have had their users’ coins stolen. (READ: MtGox bitcoin exchange files for US bankruptcy protection)
As such, Kaddoura makes it a point to be readily transparent about security to all potential BuyBitcoin.ph users, who may have legitimate fears about cryptocurrency exchanges. “We’re taking all precautions that we feel are necessary with our exchange,” he said. “Before we roll out new features, we do extensive testing to make sure there are no loopholes that could be abused by scammers. Currently, BuyBitcoin.ph isn’t exposed to the same technical requirements that an exchange such as Mt. Gox would be exposed to.”
Kaddoura went on, “We currently don’t hold deposits of our customers peso or bitcoin, but it isn’t out of the scope of possibility that one day we do begin hosting online wallets. If or when that day arrives, there will be rigorous testing of our system to ensure that all funds are backed up 100% by btc/peso held on reserve. Bitcoin audits are already being conducted on some of the worlds largest exchanges. Security is now the name of the game in hosting bitcoin exchanges.”
Bitcoin’s future
As hinted at in the discussion of security above, the challenges of operating as a Bitcoin exchange tend to be universal. Kaddoura elaborated, “The biggest technical roadblock for widespread Bitcoin adoption in the Philippines are the same roadblocks for widespread adoption elsewhere. Bitcoin is still a volatile asset, fluctuating in value, which can turn a lot of people off.”
Yet Kaddoura believes Bitcoin will eventually achieve stability – based in part on how past commodities have performed. He said, “There is still much speculation, but if you view bitcoin as a commodity, and compare it to petroleum in its’ early days (before its widespread use), you can find similarities. The price of petroleum eventually leveled off.”
The technical requirements to buy and trade in Bitcoin are incredibly simple. Kaddoura said, “As far as getting bitcoin in the hands of the average Filipino, its quite easy. Simply having access to a computer or mobile phone with internet is all you need.” The real challenge comes down to the cultural education that must go along with promoting Bitcoin and BuyBitcoin.ph.
Kaddoura said, “The cultural roadblock will be in educating the population. If people don’t realize the benefits of the technology or that there is a use for it (i.e. a place to spend it), why would they ever consider adopting it? This is why it will be important that the bitcoin economy grows proportionally in both consumers and merchants.”
Kaddoura and his team hope to distinguish themselves from other Bitcoin players in the Philippine market in how they address all of the above, along with their user-friendly approach. Kaddoura wants BuyBitcoin.ph to be known for “solid customer service and fast order processing,” in addition to new features they will roll out for their users in the coming months.
Balikbayan
What’s interesting about Kaddoura’s vision for Bitcoin and BuyBitcoin.ph’s place within it, is that the entrepreneur is originally from Orlando, Florida. His return as a balikbayan in April 2013 is part of a growing trend of Filipino-Americans who see the Philippines as a place where business opportunity is ripe.
Yet rather than simply set up any kind of business, Kaddoura and others like him are determined to innovate and uplift the Philippines through tech entrepreneurship. Kaddoura, in particular, brings with him a unique constellation of skills that will benefit both BuyBitcoin.ph and the country as a whole.
He worked in banking and corporate finance for four years, before joining the software as a service (“SaaS”) company, Ariba. He led corporate finance and strategy for them until the company was acquired by SAP in mid-2012, at which point Kaddoura began to think about Bitcoin and the Philippines in earnest.
Based on his experiences, Kaddoura is keen on pitching the Philippines itself to would-be entrepreneurs from other countries. He said, “It’s a great time to be an entrepreneur in the Philippines because of the blossoming startup scene. I’ve been preaching to a lot of my friends back home to move out here because of the opportunities. A good plan and hard work can really pay off.” – Rappler.com
Rappler business columnist Ezra Ferraz graduated from UC Berkeley and the University of Southern California, where he taught writing for 3 years. He now consults full-time for educational companies in the United States. He brings you Philippine business leaders, their insights, and their secrets via Executive Edge. Follow him on Twitter: @EzraFerraz
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