Financial Technology, or “fintech”, has been at the forefront of Southeast Asia’s growing digital adoption. In 2015 and the first half of 2016, a total of $345 million was invested in fintech startups in the region alone because market maturation and ecommerce adoption have been stagnated by payments.
In recent years, there has been an array of mobile wallets and government initiatives in the region, like PromptPay in Thailand, or Wave Money in Myanmar. Not many initiatives have involved a less explored and more popular technology in the West – blockchain and bitcoin.
eIQ speaks with Philip Lim, the founder of SKYBIT, a bitcoin startup that encourages cross border payments to a frontier market – Myanmar.
He explains the concept behind blockchain, how SKYBIT could possibly change the lives of the Burmese and why he decided to launch his startup in one of Southeast Asia’s less developed countries.
What is blockchain technology and bitcoin?
“A blockchain is a ledger of transactions which are grouped into blocks and tied together one after the other by encryption,” explains Philip.
The bitcoin blockchain is the largest and most active one, it is the token of monetary value that flows in the network.
“A blockchain is immutable, which means you can’t change its history, as the system would reject it,” says Philip. “Immutability also means that the record is seen as permanent. A good non-payments application would be for transfer of assets like land.”
“The number of bitcoin transactions per day around the world has continued to increase and has recently almost reached 370,000. Such increase in transactions could be attributed to media attention, especially of bitcoin’s steep rise in price recently but the technology has actually been around since 2009,” says Philip.
How does SKYBIT utilize blockchain technology?
Philip developed SKYBIT to create significant social impact in Myanmar by solving difficulties in transferring money to Myanmar as it was one of the factors impeding the country’s and the peoples’ development.
The SKYBIT payment processor helps Burmese businesses and aid organisations receive payments from abroad. A number of charity organisations have already signed up to accept donations from anywhere in the world.
A customer who wishes to make a payment clicks on the “Pay with bitcoin” button on the sales page, enters details such as email address and bitcoin address (used in case of refund), and is taken to an invoice page, where they can simply scan the uniquely generated QR code using any bitcoin app such as Copay, Coinbase and Bitcoin Wallet.
Payment is detected instantly and the entire process is done in a matter of minutes.
Behind the scenes, the bitcoin is received by SKYBIT, and SKYBIT deposits Myanmar Kyat into the organization’s SKYBIT account. The organization doesn’t need to handle or even understand bitcoin at all.
In case of a refund, SKYBIT can send bitcoin back to the bitcoin address provided by the customer and there is a limited amount of time to report a problem related to an invoice or request a refund, during which the merchant cannot withdraw the amount earned from the sale from their SKYBIT account.
“Signing up to use SKYBIT is far easier than applying for a merchant account to accept credit cards, as banks only want to deal with large businesses. This may encourage small merchants and even individuals to use SKYBIT and access a global market,” comments Philip.
“Credit cards also still have many problems, especially fraud and chargebacks, which can cause losses to merchants. With bitcoin, which was designed especially for the internet, transactions are detected immediately and irreversibly settled within minutes, and cryptographic checks prevent fraud,” says Philip.
“Traditional forms of payment are outdated and not entirely secure as they were designed before the internet was even invented,” says Philip.
Cryptocurrency adoption within Myanmar
Bitcoin can be purchased from SKYBIT via its exchange to effectively open up a whole new world of online shopping for the more affluent Burmese.
Myanmar banks have only recently released cards that are accepted internationally, but most locals would not qualify for one or the process takes too long.
“Traditionally, Myanmar is a very cash based society. People have stacks of money kept at home, and most understand it’s not practical,” says Philip.
To address this issue, mobile wallets like Wave Money have been introduced in Myanmar to allow locals to send local currency via smartphone, even in rural areas.
“Since Wave Money can only be used to send Myanmar Kyat, it cannot be used for international payments so Wave Money and bitcoin can actually complement each other,” says Philip.
“It makes a lot more sense to replace USD as the de-facto currency of the internet with bitcoin, as there is too much friction when dealing with traditional fiat currencies on the internet.”
“Businesses also aren’t allowed to display prices in any currency other than Myanmar Kyat. Within the past two years, many businesses in Myanmar, including Swensens and The Pizza Company, began openly quoting prices in USD. Authorities ordered them to stop because of the weakening value of the Myanmar Kyat relative to USD at the time,” says Philip. “They are afraid it will devalue the local currency.”
A social enterprise
“There have been, and still are, so many big problems that need to be solved in Southeast Asia, especially in Myanmar. Poverty is the normal mainstream thing there,” says Philip. “Most people around the world have been oblivious to Myanmar’s problems.”
“I was learning about bitcoin and could really connect with all the things that prominent bitcoin evangelist Andreas Antonopoulos was saying. For example, 5 or 6 billion people have not been cared for by traditional financial systems. He also mentioned that one of the common uses of bitcoin was for donations.”
The sky’s the limit for SKYBIT
Philip, together with a new co-founder, plan to push offline marketing in order to meet organizations face-to-face in Myanmar.
“This is not the kind of thing I can create a Facebook ad for because the technology, even just web pages and email, is so foreign to much of the Burmese,” he says.
Despite currently being one of Southeast Asia’s most underdeveloped markets, Euromonitor predicts the country will become one of the 20 ‘markets of the future’ to offer the most opportunities for consumer goods companies globally.
But opening up Myanmar to the world takes investment and finding such is currently SKYBIT’s highest priority.
“The platform is ready, and ideally will flourish once I have enough funds to open an office in Myanmar filled with a strong marketing and sales team,” says Philip. “The country is full of potential and I’d like to take the next steps in introducing Myanmar’s goods and services to global shoppers, whilst simultaneously helping the people of Myanmar at all levels of society.”