CEBU, Philippines - You may have heard about it or may have come across it while surfing the web – the Bitcoin. The term may sound strange to some, but it actually has been creating a buzz and growing in popularity in the global scene being deemed as an intelligent innovation and the money of the new generation.
But what exactly is Bitcoin? Why bitcoins? Virtual currency? So, how does it work and how is it being traded? By whom? How about in the Philippines, is it known?
All those basic questions could go on and on pumping into one’s curious mind, wanting to understand in the simplest terms what this latest breakthrough is all about.
Bitcoin was created five years ago by a developer only known for his pseudonym “Satoshi Nakamoto” whose goal was to make a currency independent of traditional banking or any central authority.
It is both a digital currency and a platform, according to Michelle Varron, the managing director of Bitmarket for the Visayas and Mindanao area.
Bitmarket is a new startup payment processor for Filipino businesses, allowing them to accept digital payments in a fast, risk-free and secure way. It is the first venture under Satoshi Citadel Industries (SCI), Inc., a ventures company that aims to realize the full potential of bitcoin in the Philippines.
“Platform because that is really the bedrock of this phenomenon--the Bitcoin,” Varron explained. “Currency because it is being used to transfer value from one person to another without having to pass a third party like a bank or government.”
Bitcoin is first decentralized digital money that is only traded in the internet and is a new means of paying for things.
Varron noted that it’s like an online version of hard cash, saying it can be used to buy goods and services or even exchanged with cash.
However, not many companies are yet keen on allowing customers to pay their bills using Bitcoin.
With Bitcoin transaction, there is no physical coins but rather these only exist in the cyberspace and are sold through online exchange. Its units are called virtual tokens rather than actual coins.
The activity is neither being regulated nor backed by official authorities such as the government, brokers or banks that supposedly direct the supply of bitcoins.
People can transact freely, safely and securely with no transaction fees, taxes or bank fees and no intervention of a central authority or middle men to verify the operations, Varron said adding that people involved in the process don’t even have to give their real names when doing a transaction.
Varron said people acquire bitcoins in a marketplace called Bitcoin Exchange which lets people “buy and sell bitcoins using different currencies.”
“Sending of Bitcoins can be done through using mobile apps or their computers,” she explained, adding that it’s just like sending cash digitally.
Basically, each bitcoin is a digital file piled up in a “digital wallet” app on a smartphone (iOS and Android) or computer with unique keys. Varron said the bitcoin wallet is similar to that of a bank account that allows users to send or collect the virtual coins.
People create bitcoins through a very complex and decentralized process known as “bitcoin mining” and make their computer process transactions for the system to work.
A network of computers, she said, are designed to work difficult mathematical calculations to process bitcoin transactions.
Every bitcoin transaction is recorded in a public log called the blockchain, which Varron said makes copying bitcoins very hard to do and even faking or spending coins you don’t own.
She added that people can also spend their bitcoins practically by virtue of anonymity. Although transactions are documented, no one would have an idea which wallet account is owned by a certain person.
Basically, bitcoins are traded from one’s digital wallet to another, suggesting a peer-to-peer transaction of the electronic cash.
Phl bitcoin community
Bitmarket Philippines, whose co-founders are Nick Galan, Jardine Gerodias, Miguel Cuneta and John Bailon, is one of the country’s bitcoin companies that is introducing the easier way of paying things, which is the use of the internet currency.
Varron also cited Wingman to be the nation’s first restaurant to accept bitcoins as payment from its customers, adding also that their company is tapping small businesses and provide them with point-of-sale system for easy bitcoin transactions.
“We really decided to focus first on adoption first,” Varron said. “We actually have a grassroots approach in introducing bitcoin to small entrepreneurs first. We want to be able to help small merchants to accept digital payment.”
She shared that with the growing global marketplace, it is timely to help local entrepreneurs and introduce to them the bitcoin payment network to make them competitive.
She added: “It’s still a minority but it’s getting to become something people can’t ignore anymore.”
Although she claimed that the bitcoin community in the Philippines is still small but their objective now is to spur the growth of the bitcoin commerce in the country.
“We have lots of potential in terms of taking bitcoins from a niche adoption into reality. The Philippines is growing and we are emerging, we’re no longer the Sick Man of Asia. In terms of that we have so much potential.”
Believed to be a hotbed of the country’s creative economy, Varron is confident that bitcoin will be welcomed in Cebu although, for now it is deemed understated: “We have very creative people and because of that creativity and resilience, bitcoin can be a good tool.”
She is encouraging the public to understand the whole thing first before judging this seemingly new trend for most of the ordinary “Juan”, calling them to “learn about it, feed your curiosity, keep an open mind, explore and understand how it works.”
Meanwhile, the Bangko Sentral ng Pilipinas has already said it would study how to regulate bitcoins in the country, but Varron has this to say: “We will continue to be proactive in promoting this currency. We’re trying to make Filipinos understand in a very real way that bitcoin can make a difference in their lives.”