People can now pay for homemade food from roadside restaurants known as ‘carinderias’ using bitcoin in Boracay, the Philippines island famed for its white sands and palm trees.
The small resort town in the central Philippines, along the west coast, is being turned into a “Bitcoin Island.” Over the past four months, cryptocurrency wallet provider Pouch has been on an aggressive drive to increase bitcoin uptake on the island.
Big and small businesses sign up
Some 120 businesses big and small in Boracay have so far signed up to allow users to make payments in BTC, according to Pouch vice president Bill Hill. The plan is to establish a micro-economy running entirely on bitcoin, he said, while promoting crypto tourism.
“Right now, we are focused on getting businesses to accept payment so there is somewhere to spend,” Hill told Be[In]Crypto in an interview.
“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.
Founded by American expatriate Ethan Rose in 2021, Pouch is a bitcoin wallet provider that leverages the Bitcoin payment layer Lightning Network, allowing users “to seamlessly send and receive [money] across borders.” Its website says the wallet is still in beta testing.
The billion-dollar remittance market in the Philippines
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 — the BTC lovers who feel at home away from home — are also being taken into consideration.
Hill, the Pouch VP, said bitcoin adoption will help Filipinos save millions of dollars every year on commissions for remittances while giving access to financial services to those with no bank accounts.
“The remittance market is starting to happen. That is the big goal,” Hill told Be[In]Crypto. “Over $35 billion comes into the country every year, losing about 7% to fees and taking one to three business days. We bring that down to around 1% or less and instantly.”
Filipinos working abroad last year sent $31.4 billion to support their families back home. The money is often 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. According to the World Bank, the global average cost of sending remittances is about 7% and over 5% for South Asia.
This is by far too costly when compared to the Sustainable Development Goals’ target of cutting financial transfer costs to within 3% of total transaction value by 2030.
Pouch is licensed by the Philippines central bank to facilitate transactions in the local peso, as well as in bitcoin. While regulatory compliance in the Philippines has been smooth, it remains “a big hurdle and expensive” in the U.S.
“We would love to get invited into the president of [the] Philippines’ office to discuss this project,” Hill said of “Bitcoin Island.”
He revealed that some of their staff and service providers are already being paid in bitcoin using Pouch, something he believes will be commonplace in Boracay in a few months.
“Something as simple as payroll services is an unsolved problem here,” Hill stated. “We are fighting for every centimeter of adoption forging a circular economy right now.”
Although the immediate focus is on Boracay, Hill is confident that its unique selling point, which includes low transaction fees, will give its product national relevance throughout the whole Philippines.
“We are really trying to gear up for the start of tourist season in October. Already, random bitcoiners are here, seeing the businesses and spending sats. The more that happens, the more the imperative to accept bitcoin,” he explained.
Of the 120 businesses that have already signed up on ‘Bitcoin Island,’ most are in the hospitality sector including restaurants and coffee shops. Fruits, vegetables, meat, and fish can all now be paid for in bitcoin.
Hill expects the broader Philippines economy to see a boost due to bitcoin use.
“If all the remittance market were to switch to bitcoin as rails, it would increase the GDP of the entire country by 1%. This does not even include the gains for internal remittances within the country,” he said.
With a population of 35,000, Boracay becomes part of an experiment of migrating from the traditional fiat currency. However, it will not be the first town in the world that has attempted to run on bitcoin.
El Salvador, the first country to adopt BTC as legal tender in September 2021, has ‘Bitcoin Beach’ and Honduras has ‘Bitcoin Valley.’
El Salvador’s bitcoin bet has been hit hard by the crypto market downturn and the pushback from the IMF and rating agencies. Its publicly disclosed holdings of $107 million are now worth just $46 million.