• By
• Resty Woro Yuniar

Indonesians are increasingly embracing the digital currency known as bitcoin as a payment solution for online transactions and to send and receive money, despite some known flaws.

The cryptocurrency’s price fluctuate dramatically, for instance, and fears about cyberattack on the software that manage bitcoin holdings have led to questions about whether it’s a safe way to store money.

But in a country where many people don’t have bank accounts or credit cards, and money transfers often involve high transactions fees, more individuals are overlooking the criticisms and focusing on how to use the technology to their benefit.

Most Indonesians currently use bitcoin to pay for services online, such as web hosting. They can also use the digital currency to book hotel rooms through travel websites hosted overseas rather than use credit cards, which only a small percentage of the population currently own.

“Many people think that Bitcoin is unheard of in Indonesia, but the fact is its popularity is soaring now,” said Oscar Darmawan, CEO of PT Bit Coin Indonesia, which owns bitcoin exchange site Bitcoin.co.id.

Indonesia’s central bank doesn’t recognize bitcoin as a legal form of currency and has warned people to use it at their own risk, but a number of startups have formed or are offering bitcoin services to Southeast Asia’s largest economy to take advantage of its growing popularity. Here’s a look at three.

Bitcoin.co.id
Founded in 2013, Bitcoin.co.id exchanges rupiah for bitcoin and vice versa.

It currently trades around 200 bitcoins daily, still well below Singapore’s iTBit, which handles about 2,000 daily bitcoin transactions from Singapore and the U.S. But CEO Mr. Darmawan says the site is growing fast, with registered users increasing seven fold in the past year, from 8,000 to 56,000 users currently.

The site also provides information about the cryptocurrency’s latest valuation (each exchange has its own index), its lowest and highest trading prices each day, trade volume and market cap.

Mr. Darmawan said bitcoin.co.id makes money by charging a 0.3% fee for bitcoin buyers. There is no charge to sell bitcoins on the site.

Blossom
Blossom is a two-month-old startup based in Silicon Valley that focuses on funding small businesses in Indonesia that operate according to Islamic or Sharia principles – meaning they can’t sell certain products, such as alcohol.

The start-up collects money from investors around the world, converts it into bitcoin and uses it to transfer the money to Indonesian microfinance institutions or microfinancing units at national banks that lend it to small, Sharia-based businesses.

Blossom uses bitcoin “as a wire and ledger system,” says founder and CEO Matthew Joseph Martin. And that helps cut down the time and cost that it takes to get money to the businesses that need it.

In keeping with the profit sharing requirement for Sharia-financing, Blossom collects 20% of all profits from the businesses it helps lend to and transfers that cut back to investors every month.

Quoine
Based out of Singapore, this bitcoin exchange is hoping to tap the opportunities offered by Indonesia’s growing ecommerce market.

One of the biggest challenges facing Indonesia’s online marketplaces is a lack of options for payment, which currently include bank transfers and payment on delivery.

Some sites are starting to look to bitcoin as a payment solution, and Quoine’s CEO Mario Gomez Lozada says as they do he sees demand for rupiah to bitcoin exchanges growing.

Indonesian sites that currently accept bitcoin payments including domain provider Republik Host, digital products marketplace Ratakan and Tokobitcoin.com, where users can buy phone credit, and pre-paid electricity by transferring bitcoin from their “wallet” to the vendor. The vendor can then exchange the bitcoin for rupiah.

For now, users in Indonesia are not very active traders, and volumes are higher in Singapore, said Mr. Lozada, but since Quoine launched its Indonesian version last November, the country fast becoming the startup’s biggest market in term of registered users.

Aside from Indonesia, the company’s service is available in Japan, Singapore, and the Philippines.

(Correction: Trading volumes are higher in Singapore, said Quoine CEO Mario Gomez Lozada. An earlier version of this story stated that valuations.) 

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