Opportunities for Bitcoin in Indonesia

In 2005 I spent three months in Jakarta, Indonesia, teaching at a school for disadvantaged children. The school, established by the Dilts Foundation, provided among other things, education to street kids and other children who did have access to a traditional educational system.

The program I participated in was called “Children of Tomorrow.” Besides teaching the children English, our mission was to provide them the opportunity to develop their entrepreneurial and leadership skills. This enabled them to instill positive change and advancement in their lives.

Teaching through the program was a truly unique and life-changing experience. I was overwhelmed by the happiness of the local people. Although their lives were so challenging and difficult, I was touched by their generosity despite the limited resources they had. I realized that by growing up in a developed country I took for granted things like running water, toilets, and three meals a day.

These children and their families, like almost 80% of the population in Indonesia, had never been to a bank or had access to a bank account. Banking and other financial services are not readily available to the majority of the population. There are various reasons for the high percentage of under-banked in Indonesia.

First, Indonesia is a cash-economy. In Indonesia, they live by the mantra “Cash is King.” It is very much a part of the culture to receive, spend, and save money in cash. In Indonesia, most restaurants, stores, and institutions only accept cash as a form of payment. Even if you have a credit card, many places will not take it.

Another significant reason why people rely heavily on cash is that for many people, financial services are too expensive. With an average monthly income of $200, disposable resources are limited and financial services are not a large priority. Indonesia is an archipelago of more than 13,000 islands; on most islands the banking infrastructure is barely developed. For most banks, it is not profitable for them to establish branches, ATMs, and other services. This leave a significant part of the population without access to banks and other financial services.

A statement often made is that bitcoin can change and improve lives of the under banked. These people have a need for a service that facilitates small transactions in a cost effective manner. Additionally, bitcoin acts as a solution to hold value safely through a provider they trust.

Although the vast majority of the under banked are not very tech savvy and do not have easy access to internet, many have mobile phones. In Indonesia, 84% of the population owns a mobile phone; by developing mobile solutions using the bitcoin protocol, financial services can suddenly become very accessible for these people.

In the past few months, bitcoin has slowly, but steadily gained traction in Indonesia. In December 2013, the first bitcoin exchange opened, bitcoin.co.id. There are several entrepreneurs developing bitcoin applications and services for merchants that have started accepting bitcoin.

BTCJam has seen a tremendous growth of users from Indonesia: more than 1000% in the last three months! Most users from Indonesia on BTCJam are borrowers who take out loans for business activities. Some of these busiesses are even bitcoin related! Borrowers can use loans to buy mining hardware or to trade on LocalBitcoins. These BTCJam users are contributing to the bitcoin ecosystem in Indonesia and they provide liquidity to the local market.

The opportunities for bitcoin in Indonesia are immense: with a population of 240 million, where 80% is under banked, bitcoin can have a significant impact on the lives of at least 190 million people. The “Children of Tomorrow” at the Dilts Foundation and their families showed me how the banking system in Indonesia does not serve the needs of the majority of the population. I believe that bitcoin can increase the opportunities of Indonesians and people in other developing countries by satisfying their financing needs and necessities.

image – Isabelle de Clercq