Why Bitcoin is Important

Most have now heard of Bitcoin because there is so much coverage of people getting ‘rich’ from Bitcoin. But the more I research, the more I realize: Not that many people know exactly what it is, how it applies to them, and why ‘Bitcoin’ is so valuable.

I put Bitcoin in quotes because Bitcoin only represents a sliver of the possibilities behind the fundamental reason Bitcoin, or cryptocurrency, digital assets, alt coins, and blockchain are so important. That said, disclaimer: If you’re here to learn how to instantly make money from ICOs, this post isn’t for you.

Let me back up a bit.

The rapid growth of the middle-class is the reason I choose to live in SEA but it also should be worrisome to the world for one reason: by 2030, it is projected that 2/3 of the world’s middle class population will be living in Asia. I use the term Asia broadly, but these countries include, but not limited to: Asia-Pacific (Southeast Asia ie: Indonesia, Malaysia, Thailand, Vietnam, Singapore, Philippines, Myanmar, Cambodia, Laos, Brunei), and of course, China, and India. (Sources: 1, 2, 3, 4)

What this implies is if 2/3 of the middle class population is based in Asia, the economic power will start shifting, new problems and solutions for these problems come alive. Or, as we commonly hear: disruption and innovation.

My interest in Bitcoin (or crypotcurrency and blockchain technology) simply started as a curious, technologically savvy person residing in this region, as crypoto is only one of the ‘disruptive’ or ‘innovative’ technologies deriving from quick change. Within the short 4.5 years I’ve moved from the States to ‘Asia’, I’ve seen with my own eyes, massive advances.

What does this mean?

I’ve been obsessed with messaging apps, anything mobile, and SEA — specifically how technology is changing economies in high-growth nations, driving innovation from need, reducing socio-economic inequalities, and the failures of first world nations to keep up. (This sounds like a bunch of jargon but whatever. Deal with it.)

Messaging apps that started as communication utilities are now full-blown ecosystems where billions of micro-transactions from communication (messaging), payments (cashless), to things that make daily life easier (food delivery, share economy, etc.) take place on a daily basis. And this is just the beginning.

In a region where things change on close to a daily basis, conversations about currency are naturally floating about because

  1. according to the World Bank’s Global Financial Inclusion Database, over 2.5B adults in developing economies do not own bank accounts
  2. and only 20% of those living in extreme poverty own bank accounts

Source

And by 2020, there will be 1 billion new smartphone subscribers only in SEA. (source)

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With the mobile penetration changes, our daily lives are impacted, as daily necessities are physically met through mobile technology. If you live in a first world, it may be hard to imagine a world where getting from point A to point B can take an entire day, since city infrastructures in developing nations aren’t designed to handle traffic and congestion. Imagine taking a day off to run simple errands, such as shopping, banking, and paying bills. Now, imagine not having a bank account because you can’t afford to pay banking fees or you don’t have a valid I.D., or worse: the nearest bank to your home requires a day trip.

Enter Bitcoin.

In regions with pain points such as the above, the notion of currency that doesn’t require the middleman (banks) is the reason investors, bankers, and smart people in fin-tech find Bitcoin so alluring.

Put it this way: If we can make free calls between San Francisco and Beijing, why do we have to pay to transfer money from San Francisco to Beijing? If it takes all day to take out cash from my bank account, why won’t I leave it in a safe under my bed unless there’s a better option? In a world where middlemen can potentially take six paychecks worth of fees, why wouldn’t I find a way to cut out the middleman and directly transact?

These are only a few problems ‘Bitcoin’ or more accurately, cryptocurrency and blockchain technology can solve.

Stay tuned for Part II: An Explanation of Blockchain for Non-Tech People
Edit: published! You can read it here.

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Why Are We Still Carrying Wallets in 2017?

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The food court inside one of the biggest malls in Bangkok — Paragon — has digital menu boards and is cashless. This food court in this ‘third world country’ Bangkok is more advanced than Japan or America. This digitization not just aesthetically pleasing, it actually works and here is why:

  • efficient — because cash is not exchanged, there is barely a line and even the most popular spots the transaction is really fast
  • effective for SMBs — zero cash transactions with profit reconciliation at end of day, the number of mistakes are limited to erroneous input vs erroneous input + too little/less change

In Bangkok, the public transportation system is called BTS. And each BTS station also have similar methods where all the tiny stalls take zero cash and only these pre-paid cards.

How does a developing nation figure it out before the rest of the first world???

iPhone in Jakarta starring Reza

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One of my favorite things to do while traveling is talk to locals. This is Reza. He is 22 years old from Solo, a region in the Central Java region of Indonesia. Java, by the way, is stunning. Google the images and prepare for your minds to be blown. But I digress.

Reza moved to Jakarta for university, and attends school during the day, works in a restaurant until midnight every day. He has been saving for an iPhone and is planning to purchase one some time soon. Not the 6. Not the 5s even. He is excited for the iPhone 5. Right now, I don’t even know the kind of phone he has.

I didn’t want to ask him how much he makes, but according to Salary Explorer, average restaurant worker salary in Jakarta is 7,400,000 IDR a month (appx: $600 USD).

Reza is only one of the many people I have talked with, to further understand the Indonesian — well Jakartan — market.

We all know the population is high. The GDP is through the roof. I’ve questioned people’s excitement about Indonesia in the past, but after experiencing Jakarta, I must admit, I am now a believer in this market too.

Indonesian people rapidly adapt to new technologies and have a willingness to learn — even, if they cannot currently afford to own devices and such to get them online or make their day to days easier with technology. I am thrilled to be here and look forward to sharing more on the ground stories of Indonesia.

Global Mobile Payment Market

To further reinforce the previous post on the mobile payment market, I came across a BI deck on the The Future of Mobile Payments.

1. Might be difficult for people in developed nations to digest, but in emerging nations, billions of people don’t have access to banks.  Southeast Asia is leading the pack:

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2. Global share of payment opportunities in these emerging markets are beyond ridiculous. YoY of MENA is the steadiest, while Southeast Asia and Latin America are predicted to steadily grow as well (granted, these numbers seem to be pulled from Cap Gemini — would be interesting to see Merrill Lynch, Morgan Stanley and GS’ predictions)
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3. And of course, global numbers of mobiles — billions of handsets, most still feature (flip phones or the ancient Nokias). What this means, is, citizens of emerging markets are reliant on capabilities away from smartphone apps we in developed markets are used to. Ex: M-Pesa is the first that comes to mind. Their major market share is Kenya, Tanzania and they are increasing efforts into Middle East (Afghanistan, South Africa, India and Eastern Europe, respectively).

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Neat tid-bits I’m digesting with a grain of salt. The market can rapidly change, especially with the amount of funding going into Bitcoin ventures, the payment sector in developed nations is unpredictable. The question lies, would the trend trickle over to emerging markets? Distribution of wealth amongst emerging markets is also a factor (ex: even if Indonesia has highest GDP, population of <1% of the population are the only ones with purchasing power, would it make more sense for a startup to look at Thailand first, where spend per population is more evenly distributed?) And so on and so forth, there are still many, many questions.

Biggest takeaway though is how Southeast Asia is still up for grabs for payments. I really want to see young entrepreneurs beat Rocket Internet and SMART’s initiative in Southeast Asia. Exciting time to be in APAC and especially, SEA as technology is still very much in its infancy.

See the entire slide deck on BI’s site here.

Mobile Money

Leaving the US has opened my eyes to a lot of things, especially how the world outside of America operates. Because the iPhone isn’t as adopted in other parts of the world, there are many solutions to make communication between iOS and Android possible — which is why I became so fascinated with chat apps.

Then, I fell into the chat app rabbit hole and became obsessed with learning, using and following the big players outside of the US: WeChat, LINE, Kakao and WhatsApp. Which lead to learning about the different use cases and the reason I keep piping on about how SnapChat, WhatsApp, FB Messenger are not like WeChat, Line and Kakao. I also argue WeChat is in a league of its own. (If you’re interested, my messaging app series is here). Living in Asia, it’s easier to appreciate various ways people and cultures use their mobiles as I am an actual user vs. reading about use cases.

When I visited various Southeast Asian countries with Dave McClure’s Geeks on a Plane tour, my mind was blown. In countries still considered emerging nations ex: Malaysia, Thailand, Philippines, Indonesia, the way phones are used are so different. Actually, everything is different. Most mobiles are pre-paid. Mobile internet connection is mostly 3G and the majority of the population still uses flip phones. I even saw old Nokia phones with the green, pixelated screens. Remember those? I was really good at Snake. Reading and researching about mobile, I was aware of the numbers but to actually see how low smartphone penetration actually was, is a moment I will never forget.

The biggest opportunity I see in emerging nations is how technology is solving dual objectives: social problems and monetization. And the biggest opportunity I see is in mobile payments. I’ve said it once and will probably keep repeating, that because WhatsApp has capabilities on flip phones and older phones, their biggest missed opportunity is moving from a communication utility into a full fledged platform.

I really wish I knew more about payments or was passionate about the topic enough to jump into creating a product. But I am, super excited to see who will be the first to solve across SE Asia.

qz really sums it up best:

At the end of April, nine mobile operators with 582 mobile connections across 48 countries in Africa and the Middle East committed to make their mobile money offerings work across their networks. With interoperability comes greater cohesion and opportunity for new services.

And the kicker:

If it’s done right, it could form the foundation of a whole new global financial-services industry. And the US and Europe will be far behind.

Read the entire post here

Southeast Asia

Quickly: I joined Dave and Geeks on a Plane in Manila last minute. Justin Hall of GG Ventures best sums up my take away of Manila:

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…which further enforces what I’ve been thinking about since coming back from Singapore and Bangkok. “Is a country’s GDP an accurate indicator of potential when it comes to startups from emerging nations?”

Manila particularly stands out to me, as the community is healthy and enthusiastic. Founders work together, there is a pay it forward type culture I haven’t seen elsewhere. This type of camaraderie is reminiscent of Silicon Valley around 2006-07ish, before the startup ecosystem blew-up.

Potential capital is of course, first and foremost the thing investors look at. But as someone who believes in the power of mentorship and how entrepreneurs nurturing other entrepreneurs is one of the main reasons why Silicon Valley is Silicon Valley, GDP shouldn’t be the only thing people focus on when it comes to building products. This is why to me, the Philippines is the country I am the most excited about in Southeast Asia.

Either which way, now is the best time to be in Southeast Asia, as the ecosystem is still in its infancy.

Added: just came across the blog of Oliver Segovia, founder of an eCommerce company AVA.
Aside from building a great platform, turns out he is an author of several books and blogs as well. He has an essay on the Philippines’ ecosystem and his vision of the innovation economy there. If you are the slightest bit interested in SEA, this insightful piece lays out the Philippines: “A Vision for the Philippines’ Innovation Economy, & a 4-Point Plan to Achieve It (and why it does NOT include Venture Capital)

Indonesia 101

Indonesia 101

A huge part of me is kicking myself for not participating in the Jakarta leg of GOAP SEA 2014 — what a fascinating market.

Quick rundown:
– Indonesia is the number one GDP country in Southeast Asia
GDP (PPP): $878 billion USD
Thailand is second in SEA with GDP of $643 billion USD

– Indonesia is the fourth country with highest GDP in Asia
China is first in APAC with $8.2 trillion USD
Japan is second with $6 trillion USD
South Korea is third with $1.2 trillion USD
Indonesia $878 billion USD

– Indonesia is the 4th most populated country in the world
population: 252 million people
the US has a population of 318 million people

– Indonesians spend a lot of time on the Internet, mainly on desktop / laptops. Mobile is still at its infancy.

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– eCommerce transactions are completed by bank transfers. No cash is exchanged. The interbank transfers are free because of the Bank Indonesia Act (BI Act) *if you’re interested, there is a legal document here explaining detailed legalities.

– GS predicts eCommerce will grow the most in SEA in the upcoming years

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– Under a revised law, Indonesia just increased foreign VC money allowed from 80% to 85% source

I was at first a little puzzled by Justin’s assessment that Singapore and Indonesia is where a majority of the VC funds in SEA would be focused, but I think I get it now. There are parts of me that wonders if Indonesia’s market could still be premature, with such low Internet / mobile penetration rates. And Singapore is too small but I still have so much to learn. Wishing I discovered this region sooner and I can’t wait to see Indonesia for myself.

*above sources not linked in post: 1, 2, 3, 4, 5