There’s a movement happening in Boracay
Right smack at the center of the beautiful island of Boracay, just behind D’Mall in station 2 is the office of Pouch.ph, a Bitcoin lightning wallet that’s gaining some traction and online popularity on Twitter. Since the time I visited a few weeks ago, they’ve had over 200 merchants now accepting Bitcoin as payment. These range from hotels, bars, restaurants, and even very small businesses like neighborhood sari-sari stores.
I bought a few bottles of soda, chips, and, as mentioned in the title of this article, even got a haircut in a small salon. And since the wallet was using the Lightning Network, a layer 2 solution meant to scale Bitcoin, it all happened in a few seconds and close to zero fees.
“Kunin mo yung cellphone, Bitcoin daw,” (get the mobile phone, this guy wants to pay with Bitcoin), shouted the kid who was manning the sari-sari store I bought from.You can imagine the joy in my face to witness a small kid be exposed and have some knowledge with this technology.
“Pambili ng load,” (I use it to buy telco prepaid credits), says the guy who gave me a haircut when I asked him what they do with their bitcoins (you can buy prepaid credits directly from the Pouch wallet).
You can see a “Bitcoin accepted here” sign almost every few blocks and even some tricycles you ride will have it. Surely, there’s a movement happening here.
History of using Bitcoin as payments in the Philippines
The use of Bitcoin as a mode of payment isn’t really new in the Philippines. One of the first use cases for Bitcoin in the Philippines, even ahead of remittance, was payments. In 2014, Bitmarket.ph, a product created by some of my Stanible co-founders now, facilitated payments for over 200 merchants such as coffee shops, restaurants, and other small to medium enterprises.
Even Coins.ph had several merchants that accepted Bitcoin as payment, including online deal websites like MetroDeal or CashCashPinoy, if you still remember them.
Several reasons seem to have halted the momentum of adoption happening during this time, including the first few major crashes in the price of $BTC, the not-so-government-friendly reputation, etc. but the biggest would probably be how slow confirmations got along with the big rise in transaction fees. As you know, the Bitcoin blockchain is not built to be able to facilitate thousands of transactions per second (and that’s what the Lightning Network wants to change)
The Block Size Debate
Around a year later, in 2015, even $ETH, which was just starting to gain popularity, was positioned to be a faster and cheaper chain to do transactions (which we now know isn’t the case).
Eventually, many years later, this is the whole issue that would create “the block size debate” (a debate to increase Bitcoin’s block size to accommodate more transactions) and resulted in one of the most controversial hard forks in crypto history giving birth to Bitcoin Cash ($BCH) – a fork of Bitcoin that promises to stay true to the mission of keeping it a “peer-to-peer electronic cash system” as stated in Satoshi’s white paper.
And so if the Bitcoin chain has a Lightning Network movement happening in Boracay, a Filipino startup called Paytaca that recently launched is also starting a movement in another province south of the Philippines, in Tacloban.
When I talked to Joemar Taganna (who I actually met in the BitPinas telegram channel), although he has nothing against the Lightning Network and is even considering supporting more cryptocurrencies in the future, he mentioned that Lightning is still far from being able to support non-custodial solutions that will be user-friendly. Paytaca, their wallet that supports Bitcoin Cash, is a non-custodial wallet and that means you have direct access and ownership of your crypto.
We both agreed that the Block Size Debate was very heavy and is a very touchy subject and we didn’t want to revive any tension. Even I, who tend to favor the main $BTC chain and the Lightning Network, prefer to be very level-headed and not be a fanatic for just one solution.
(I briefly talked about my position on Bitcoin maximalism in this other Bitpinas op-ed I wrote: Is Ethereum Decentralized?)
Bitcoin or other cryptocurrencies as a payment method?
Nowadays, given the popularity of Bitcoin Pizza Day, people say it’s not ideal for you to use Bitcoin as a payment method. People like me don’t think much of it, given that if you intend to spend anyway, there’s no difference in letting that transaction pass on-chain. The opportunity cost won’t matter so much, especially if you’re just spending Php 100 worth on a haircut. https://www.facebook.com/plugins/post.php?href=https%3A%2F%2Fwww.facebook.com%2FBitPinas%2Fposts%2Fpfbid036APNPmujm8pYmwvv9HdxJEb6bTcUizVu7SvbpHXr2U4xg4tgpsbkkYafSEMukWdSl&show_text=true&width=500
What’s clear to me is that the reason these movements are happening in provinces far from our capital is still very much reflective of the Filipinos that continue to be underserved by financial services despite the meteoric rise in e-wallet usage.
And there’s still much work to be done, and definitely a lot of regulatory hurdles these startups would face. For instance, will Pouch.ph be required to have an EMI license by the BSP in the future? What are the legal implications of using cryptocurrency as legal tender or as a means to settle contracts?
I’m no legal or regulatory expert and so for now, I’ll just have to enjoy the haircut that I got and will definitely go back to have one again soon!