The Philippines is Nearing Peak Crypto
As Gcash’s new GCrypto feature gets rolled out to more Pinoys, the Philippines now finds itself at a point where crypto can be instantly available to *literally* anyone who wants it. It’s a true landmark moment: once GCrypto has been enabled for all 60 million Gcash customers, we’ll essentially be at full market saturation (87%), as there are only 68 million Filipino adults. Just to give you an idea of how significant that is, only 58% of Americans have Paypal accounts, which rolled out its own crypto trading tools 3 years ago. With GCrypto, the Philippines has a higher potential crypto wallet penetration rate than the US. I wanted to acknowledge how much effort it’s taken to get to this moment and embark on a short trip down memory lane with all of you.
The first Bitcoin traders started operating here in the Philippines in 2012, over 10 years ago, but it was in late 2013 that the first Bitcoin businesses started operating. I got to observe the infantile crypto community thrash around for the years following Mt.Gox’s implosion, during which I’m not ashamed to admit that I seriously questioned my career choices. Bitcoin was $800 when I started working in the industry, and over the course of my first year, it would drop all the way down to $180. This was the second crypto winter, and it lasted from 2014 to 2016.
Then, seemingly out of nowhere, the 2017 bull market happened. In the space of 11 months, a single Bitcoin went from being the same value as your average laptop to being the same value as your average car. Every coin was in the green, even ones issued by people who didn’t know how crypto worked. This was the year of the ICO, where newbie investors were hitting 1000x jackpots on token offerings that would fade into obscurity just as quickly as they were listed. Names like Bancor ($153M), Sirin ($157M), and EOS ($4.2B) were massive fundraising successes that never delivered on their promises, much to the chagrin of their respective Twitter armies. Everyone from the World Bank to the Philippine SEC to a million self-appointed crypto “gurus” pontificated on this new crowdfunding mechanism, either praising it for being egalitarian or questioning its legality.
The second half of 2017 was the first time the global crypto market cap broke $500B, albeit briefly, fueled by scads of fresh money from institutions and retail customers. Coins.ph announced that they had reached 5M customers nationwide, and the first version of the Virtual Currency Exchange (VCE) license was launched by the BSP. By mid-2018, half a dozen companies had secured their licenses; we were well on the way to regulatory acceptance. But crypto’s third winter was approaching, and newbies everywhere were about to learn their first lesson: no matter how clever you are, crypto eventually humbles everyone.
After hitting its $20,000 ATH, Bitcoin would find itself digging past the basement throughout most of 2018, eventually hitting subterranean levels in November at $3,120. I remember this period being a time of personal depression. I learned that I hadn’t saved up nearly enough money during the 2017 bull run, and was now helplessly watching the value of my holdings evaporate day by day. And then in 2020, a couple of things happened from opposite ends of the creative spectrum. First, DeFi projects — new-age financial instruments with arcane methodologies —became virtual money printers for anyone brave enough to entrust their deposits to a master-less protocol. Second, digital art became the principal use case for the ERC721 non-fungible token standard, and their unexpected popularity would eventually allow “NFTs” to position themselves as this cycle’s ICOs. Once the country’s most important crypto brand, Coins.ph would miss both of these waves as it refocused on the mobile money wars. For a long time, none of the local businesses would touch either DeFi or NFTs, and thus, the 2021 bull market was formed on the backs of non-custodial platforms like Uniswap, Sushi, and Metamask.
No one has ever published solid numbers for this, but I estimate that around 4M Filipinos began their crypto journeys between 2020 and 2021, with about a third of those from Axie Infinity. Metamask indicated that they had 3.6 million installs from the Philippines, and combined with the roaring popularity of Binance, Solana, and Tezos at the time, that 4M estimate actually seems somewhat conservative. In 2021, we saw a massive reshuffling of the top 10 biggest coins by marketcap, with Solana, Terra, Cardano, and Avalanche replacing Bitcoin Cash, Litecoin, EOS, and Tezos from the year before. Bitcoin’s own marketcap surpassed the $1T mark for the first time in October of that year. With the pandemic now in its second year, more and more P2E games entered the Philippines in the hopes of recreating Axie Infinity’s lightning-in-a-bottle. (Two years later and it’s starting to look like even Axie itself can’t rekindle the magic of that period.) It was the first time I’ve ever had crypto conversations with tricycle drivers or cafeteria staff, a testament to how pervasive P2E was back then.
That brings us back to 2023. You probably don’t need me to recap the last 12 months’ collapses — Terra/Luna, Celsius, 3AC, FTX, BlockFi, Genesis, and now Silvergate. On the bright side, Coins.ph has returned to its crypto roots, and it is no small irony that it has reentered the arena only to compete against both of its mobile wallet rivals, Maya and GCash. Other than social networks (FB, Tiktok) and e-commerce apps (Shopee, Lazada), mobile wallets are the single most popular apps on the average Pinoy’s phone. This convenience can’t be understated: it eliminates the hurdle of having to install a new app or uploading your IDs again for verification. It’s a massive step forward for crypto adoption in this country, and although I wish it had happened during a more optimistic part of the cycle, the good news is that at least all of these first-timers will be buying at the bottom.
Stay safe out there, cryptofam!