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Despite Inflation Crisis, Most Filipinos Reject Bitcoin. Here's Why

Despite Inflation Crisis, Most Filipinos Reject Bitcoin. Here's Why
Bitcoin / Breaking News
The Philippines is experiencing an inflation crisis. Yet virtually its entire population of 106 million people are unaware of and reject the notion that Bitcoin (BTC) and cryptocurrencies give them a payment solution and store of value. The archipelago is the 13th most populous country and it's a case study that shows why crypto adoption is difficult where education is lacking and the local culture resists change. The government claims inflation is 6.4% year-over-year but bureaucrats are eager to protect President Rodrigo Duterte by padding official stats. The 6.4% rate is the second highest among ASEAN countries (Association of Southeast Asian Nations) behind Myanmar's 7.56%. But observers on the ground believe the real inflation rate is much higher, especially in Manila, Cebu City and surrounding areas where some commodity prices have risen to alarming, hyperinflationary levels. To deflect criticism, Pres. Duterte blames U.S. President Donald Trump and America's trade war with China for the crisis. "Who started it? America!" said Duterte, per South China Morning Post. "When America raised [tariff] rates and interest rates, everything went up." Resistance To Cryptos Cryptocurrency prices have likely bottomed with Bitcoin hovering around $6,700 and total market capitalization for cryptos at $220 billion. While cryptocurrencies can shield Filipinos from the harms of inflation, and even improve their purchasing power through higher valuations, the vast majority cling to the peso. They want prices to go down; and not have to seek alternatives — like Bitcoin — that can rescue them from the economic abyss. In non-urban areas, the country lacks educational, banking and technology infrastructure: For instance, internet speeds is considered among the worst in Asia behind only Afghanistan. "Why adopt fintech when tech so often fails in the country?" The resistance to change shows that education and trust are crucial if people are to use Bitcoin and other digital coins in their daily lives. First, there's a lack of awareness. And secondly, there's mistrust of (mediocre) tech providers that somehow spill over to cryptos. When it rains, the internet can grind to a halt due to faulty connections or busy networks. People understandably want 24/7 access to their funds. It's better to hold pesos even if it's devaluing significantly year-over-year. "In the past, there was some interest among Chinese-Filipinos in buying Bitcoin but that has vanished given this year's slump," says a high-net-worth investor from Cebu. "Locals perceive it as a losing and risky investment." It's virtually impossible to find a business establishment that accepts Bitcoin. And many educated Filipinos who understand blockchain and fintech have moved to Singapore, Hong Kong and other cities to find a business environment where they can thrive. "There's a chance that cryptos will go to zero in the future," says a wealthy appliances distributor from Cebu. "Regulation could kill the technology." "Bitcoin and cryptos are extremely risky," says an American who lives in the Philippines. "I don't want to lose money given the economic situation here." Hyperinflation In Basic Goods Locals are feeling the pinch in their stomachs as one-in-five Filipinos (21%) live below the poverty line, which the government defines as living off $1.90 USD per day. Restaurants are raising bills upwards of 10% while prices for alcohol and drinks have risen nearly 21% from a year ago. And due to rice shortage, the food staple has risen nearly 20%. The sovereign currency has dropped to 54 pesos to the U.S. dollar and projected to sink further to 58 pesos in the near-future. However, national debt has risen 7.9% as of April 2018 to $127 billion USD — much of which is dollar-denominated. At 10% interest, the debt level could balloon to $452 billion in 10 years, according to analysis by Forbes columnist Anders Corr. The problem with having debt in U.S. dollars is that when the peso devalues, the government has to pay more: It has to buy expensive USD to pay off the debt. The government has also been obtaining expensive, predatory loans from China. Most Filipinos view cryptos as nothing more than a speculative investment not at all applicable to coping with painful daily expenses. Local markets and groceries accept pesos and that's all that counts. Articles by Marvin Dumont: Bitcoin To Jump 30% Says Billionaire Mike Novogratz Bitcoin Is Replacing Bolivar As Venezuelan Economy Crashes U.S. Regulators Move Towards Guidance On Cryptos Ripple, Stellar Gain Huge In Latest 15% Market Rally New Crypto Backed By Gold Bullion Makes Debut

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