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A Comprehensive Study on the Feasibility and Suitability of Bitcoin in the Philippine Setting
Marian Ricci N. Ariaga1*, Ryan Kevin T. Koa1, Francis Lawrence N. Lim1, Jersey Jaclyn K. To1, and Katrina Ysabel C. Solomon2
1 De La Salle University Integrated School - Manila Campus
2 College of Computer Studies, De La Salle University
*corresponding author: [email protected]
Abstract: Cryptocurrencies, which use blockchain technology, are a type of decentralized algorithm that solves the issue of trust on the Internet and has recently garnered increasing levels of interest. Using different types of cryptographic technologies, cryptocurrencies have become a medium of exchange online that does not require an intermediary and is difficult to counterfeit.
Among these, the cryptocurrency with the highest market capitalization is currently Bitcoin. Thus, this comprehensive study on the feasibility and suitability of Bitcoin in the Philippine setting will investigate whether the cryptocurrency is suitable and compatible for adoption in the Philippines.
To achieve this, the study aims to explore the social aspects of adopting Bitcoin in the local setting by conducting a survey and interview among Filipinos. Alongside this, a consultation from financial and cryptocurrency experts was conducted to aid in the formulation of survey questions.
The survey results showed that more than 87% of Filipinos in the NCR are aware of cryptocurrencies, and 64% can interact with and use cryptocurrencies. However, the average score of the respondents’ general cryptocurrency knowledge is only about 57%. Furthermore, when asked about their knowledge on Bitcoin, they only had an average of 24%. While Bitcoin may be feasible in the Philippines, it is certainly not suitable yet due to the inadequacies of the population in terms of cryptocurrency knowledge, financial literacy, and willingness to adopt it.
Keywords: Bitcoin; blockchain; cryptocurrencies; cryptocurrency adoption; cryptocurrency awareness
1. INTRODUCTION
A novel technology that emerged in 2008, cryptocurrency has gained much traction and momentum in the present-day media, with Bitcoin taking center stage as not only the first but also one of the most popular cryptocurrencies today. Cryptocurrencies are a form of currency that can be quickly used online in non-reversible transactions without the involvement of any central authorities or middlemen (Thomas, 2017). These key features
are enabled by its use of cryptography, hashing, and proof-of- work. From when it was first introduced by the pseudonymous Satoshi Nakamoto, Bitcoin was the first of its kind, and its price skyrocketed along with its mainstream popularity across the globe. Thus, many have set out to explore and research the fields of this technology in order to be able to maximize its potential. However, most tend to focus particularly on larger countries that are cryptocurrency hotspots, leaving very little research that applies to the local circumstances of the Philippines despite the growing interest
2 among the Filipinos. In light of this, the current research aims to analyze whether Bitcoin, one of the top cryptocurrencies, is feasible and suitable for adoption in the Philippine setting.
To do so, the financial literacy of Filipinos, as well as their level of knowledge, perceived ease of use, and willingness to adopt Bitcoin, were determined by conducting a survey.
2. METHODOLOGY
2.1. Consultation of Cryptocurrency and Financial Experts
The data collection procedure began with the consultation of experts in the field of cryptocurrency and finance, partnered with a review of related literature, in order to properly formulate the questions to be asked in the survey.
The cryptocurrency expert interviewed in this study is Michael Reyes, a Community Manager for Blockdevs Asia, an organization comprised of blockchain developers. On the other hand, a financial expert named Elmer Lamasan from Sun Life Philippines was interviewed to gain insights on the benefits and disadvantages of Bitcoin if adopted into the current financial system of the Philippines. The two individuals shared their professional opinion about the feasibility and suitability of Bitcoin in the Philippine setting and gave recommendations and suggestions as to what discussion points can be included in the survey in order to obtain the best results from the respondents.
2.2. Survey Formulation and Dissemination
Based on the answers in the expert interviews and the related literature found, the survey was created to address a few objectives that were recommended to be tackled on.
One is to evaluate the knowledge of Filipinos on Bitcoin and cryptocurrency in general. It is necessary to assess the population’s general knowledge of Bitcoin and cryptocurrency as this will confirm whether or not there will be a big learning curve for Filipinos if Bitcoin were truly integrated into the country. Besides the general knowledge of cryptocurrencies, the financial literacy of Filipinos was suggested to be evaluated as well. Since Bitcoin is still a financial asset, it is important to note the knowledge of Filipinos when it comes to handling finances. This will give an idea of how Bitcoin will be handled by the majority, if integrated into the Philippines’ economic system. And lastly, the general sentiments of Filipinos were also asked. The favorability and suitability of Bitcoin in the everyday lives of Filipinos should also be accounted for since the population is
going to be the ones who will utilize the currency, if it is widely implemented.
The target population for this study are Filipinos living in NCR, aged 16 – 65. Being the economic center of the Philippines, NCR and its residents will be the most likely first adopters of Bitcoin in the country. Thus, NCR serves as an optimal geographic location to gather a sample population from. The survey was disseminated online through a platform called Google Forms where the link was shared and spread through messaging apps and online posts.
2.3. Data Analysis
The number of respondents that answered the same insights was quantified to find the percentage of that specific answer compared to the total number of respondents. These results were then tabulated and graphed in order to easily see the trends in the responses.
3. RESULTS AND DISCUSSION
Figures 1 to 3 below describe the demographics of the 89 survey respondents. Through Figure 1, it can be seen that a large majority, or 86% of the respondents are aged 16 to 20 years old. Figure 2 then shows the statistics of the occupations of the respondents. It shows that 90% of the sample is comprised of students with 48% being senior high school students, and 42% being college students. Lastly, Figure 3 details the socioeconomic status of the sample size.
It shows that most of the respondents can be classified as being in the middle, upper-middle, and lower-middle class, with these comprising 27%, 21%, and 17% of the sample respectively. Through this, it can be seen that, on average, the sample surveyed for this study can be classified as being 16 to 20 years old students who belong to the Philippine middle class. The demographics of this sample however are not representative of the demographics of the Philippines, in general, as only 9.28% of Filipinos in 2020 were projected to be aged from 15 to 19 years old (PSA, 2014). Similarly, roughly 36.24% of Filipinos were employed in 2020 (PSA, 2021; PSA, 2014). Furthermore, based on the average monthly income of Filipinos in 2018, Filipino families are, on average, part of the Philippine lower middle class (PSA, 2020).
3 Figure 1
Age ranges of the Sample
Figure 2
Occupation of the Sample
Figure 3
Socioeconomic Status of the Sample
Figure 4 then summarizes data regarding the sample’s knowledge, and ownership of cryptocurrencies, and
Bitcoin. Through it, it can be seen that 87.64% of the sample have heard of cryptocurrencies. A study conducted by the OECD in 2019 found a similarly high percentage of cryptocurrency among Filipinos but yielded a lower number.
Their results discovered that 74% of Filipino respondents at the time had heard of some form of crypto asset (OECD, 2019). This trend of increased cryptocurrency awareness is also echoed by a survey conducted by the Pew Research Center in the U.S, which found that the number of Americans who have heard of cryptocurrencies increased by 38% from 2015 to 2021 (Fowler, 2021).
Based on Figure 5, this increased awareness of cryptocurrencies may have partially come from information being shared on social media by friends. This is because, as seen in Figure 5, which lists the top five sources of information for cryptocurrencies, 86.52% and 85.39% of respondents said that they have heard of cryptocurrencies from social media and friends, respectively. These sources of information have a roughly 40% lead over the next two most common sources of cryptocurrency information, which are family, and online news articles. This is in line with the current influence of social media on cryptocurrencies as stories of financial success in cryptocurrencies have gained traction in social media and caused an increased interest in cryptocurrencies (Partington, 2021; Stieg, 2021). Moreover, there are communities on social media sites that are engaged with cryptocurrencies like Bitcoin and tend to create content to increase the popularity and knowledge regarding cryptocurrencies (Hyder, 2020; Stieg, 2021). The connection between social media content regarding cryptocurrencies and interest in them can be seen in the recent rise in the popularity of Axie Infinity in the Philippines (The Manila Times, 2021).
In 2021, the number of posts regarding profitable opportunities in Axie Infinity gradually increased and with this, players and transactions in Axie Infinity increased dramatically (Elliott, 2021).
Figure 4
Summary of the Number of Respondents Who can Financially use Cryptocurrencies, Know What Cryptocurrencies are, Have a Cryptocurrency Wallet, own Bitcoin, and Think Bitcoin Will Grow
4 Figure 5
Sources of the Participants’ Information Regarding Cryptocurrencies
Figure 4 also shows that there is a high rate of positivity regarding Bitcoin, with 97.75% of the sample believing that it will continue to grow. Additionally, 64.04%
of the sample stated that they have the financial ability to use cryptocurrencies. However, only around half of them, or 37.08% of the sample, stated that they have a cryptocurrency wallet. The number of respondents who do own Bitcoin is also only a little less than half of this, with only 17.98% of the sample actually owning Bitcoin. This shows that the rate
Riskier Investment Percent
Cryptocurrencies 73.03%
Stocks 16.85%
They are equally risky 4.49%
No opinion/not sufficiently informed to form
an opinion 5.62%
Table 2
Sample’s Thoughts on Which between Cryptocurrencies and Stocks are More Profitable
More Profitable Percent
Cryptocurrencies 57.30%
Stocks 26.97%
They are equally profitable 11.24%
No opinion/not sufficiently informed to form an
opinion 4.49%
Table 3
Sample’s Thoughts on Which Between Cryptocurrencies and Stocks They would Prefer to Hold for Five or More Years
More Likely to Hold for a Long Time Percent
Cryptocurrencies 32.58%
Stocks 57.30%
Both of them 6.74%
of Bitcoin ownership is still relatively low. No opinion/not sufficiently informed to form an 3.37%
This hesitance to own Bitcoin may be largely connected to the respondents' thoughts on cryptocurrencies which are summarized in Tables 1 to 3 below. These three tables summarize the sample’s thoughts on whether cryptocurrencies or stocks are riskier, more profitable, and are better to hold for a longer period of time. The explanations provided by the respondents for these opinions are also summarized in these tables.
Table 1
Sample’s Thoughts on Which Between Cryptocurrencies and Stocks are a Riskier Investment
opinion
Based on these tables, the sample generally believes that cryptocurrencies are riskier, and more profitable than stocks, but are less ideal to hold for more than five years.
These opinions were given by 73.03%, 57.30%, and 57.30%
of the respondents, respectively. This is despite the predominant belief that stocks are already too risky to invest in (SoFi Learn, 2022). When asked to provide reasoning for these opinions, the volatility of cryptocurrency prices, the novelty of cryptocurrencies, and the difficulty of understanding cryptocurrencies are some of the recurring
5 reasons provided. These findings generally agree with current existing literature regarding opinions on cryptocurrencies, which note that people find them to be too risky due to its high volatility and are skeptical that it will become widely adopted (Wright, 2021; Gunter, 2021). Existing literature also agrees that people generally perceive cryptocurrencies to be difficult to understand and this has deterred them from investing in them (Reyes, 2021; Gunter, 2021).
These opinions, however, are substantiated given the current situation of cryptocurrencies. Cryptocurrencies are a relatively new type of financial asset, whose market is much younger than other asset classes (Woebbeking, 2021).
Partly due to its novelty, the cryptocurrency market has remained unregulated, speculative, and more volatile than traditional assets (Sigalos, 2021; Wright, 2021; Woebbeking, 2021). Bitcoin, the oldest cryptocurrency, itself is also rated to be much more volatile than assets such as stocks in the S&P 500, gold, and Treasury Bonds (Doumenis et al., 2021).
Skepticism regarding the wide-scale adoption of Bitcoin are also substantiated as, presently, the only country that has adopted Bitcoin is El Salvador, while nine other countries have banned cryptocurrencies (NDTV Business Desk, 2021; Quiroz-Gutierrez, 2022). Moreover, El Salvador’s implementation of Bitcoin as a form of legal tender was controversial with it receiving various criticism from outside authorities, citizens, and local businesses (Tidy, 2021; Frankel, 2021). World monetary authorities, such the IMF and World Bank, were also concerned with the environmental, transparency, financial, and legal implications of making Bitcoin a legal tender (Arslanian et al., 2021;
Farzan, 2021). Aside from this lack of support, the implementation was also rushed and had a lot of regulatory shortcomings (Arslanian et al., 2021; Gerard, 2021).
Table 4
Average Scores of the Participants in Different Sections of the Survey
Test Average Score
Figure 6
Number of Participants who Believe That it is Worth it to learn More About Cryptocurrencies
El Salvador’s implementation of Bitcoin as a legal tender also shows that knowledge regarding cryptocurrencies is an important concern for potential adopters. This is because a survey in El Salvador found that only 4.8% had a general understanding of Bitcoin, while 68% of respondents were unconfident in the use of Bitcoin as a legal tender (BBC, 2021). The importance of knowledge regarding a product and its potential adoption has also been seen in other studies such as one conducted in 2013 that found that an individual’s increased knowledge regarding a product causes an increased likelihood for them to invest in it (Lim et al., 2013). This association can be observed in Figure and Table 4 above.
Table 4 shows that, on average, the respondents obtained a score of 57.14% in terms of their general knowledge of cryptocurrencies, and an average score of 23.67% in terms of their knowledge of Bitcoin specifically. This shows that the average score obtained by the respondents in terms of Bitcoin Knowledge is less than half of the average score they obtained for general cryptocurrency knowledge, which is similar to the findings summarized in Figure 4. Figure 4 shows that only approximately half of those who have a cryptocurrency wallet own Bitcoin. This finding may be explained by a study conducted by Xi et al. in 2019. Like the findings of Lim et al., a research conducted by Xi et al.
(2019) also found that an increase in an individual’s knowledge regarding cryptocurrencies, has a positive correlation with their likelihood to invest in cryptocurrencies.
Aside from knowledge about cryptocurrency itself, Table 4
General Cryptocurrency Knowledge 57.14%
Specific Knowledge on Bitcoin 23.67%
Financial Literacy 63.35%
Interest in Cryptocurrencies 70.22%
Likelihood to Adopt Cryptocurrencies 64.90%
also shows that an individual’s financial literacy may have an effect on their likelihood to adopt it. Looking at Table 4, it can be seen that the average score for financial literacy, interest in cryptocurrencies, and likelihood to adopt cryptocurrencies are all similarly around the range of 60% to 70%. This could indicate that financial literacy could also be a large factor that affects cryptocurrency and Bitcoin adoption. This finding is in line with other studies that have
6 studied the correlation between financial literacy and cryptocurrency interest and ownership. These studies have found that crypto asset owners tend to be more financially literate, financial literacy makes one more likely to intend to own cryptocurrencies in the future, and that financial literacy is positively associated with one’s likelihood to invest in cryptocurrencies (Fujiki, 2021; Panos & Karkkainen, 2020;
Zhao & Zhang, 2021). Figure 6 above, however, shows that the effect of knowledge on cryptocurrency ownership may still be resolved as 81% of the sample said that they are willing to take the effort to learn more. However, for more widespread adoption and ownership to occur, Bitcoin’s volatility, novelty, and low rate of understanding must first collectively be addressed.
4. CONCLUSIONS
Thorough research and analysis of the survey results have shown that there remains significant hesitance among Filipinos to adopt Bitcoin and other cryptocurrencies. This is largely due to the predominant view of cryptocurrencies being risky due to the volatility of their prices and the novelty of the technology. Trends in the results have also shown that there is a low understanding of Bitcoin, possibly due to its perceived difficulty to comprehend, which may explain the low rate of Bitcoin ownership in the country. However, despite this, the responses have also shown that a large majority of the sample are willing to make the effort to further their knowledge. This can also be supported by other data drawn from the results that show a high average score in cryptocurrency interest and willingness to adopt cryptocurrencies. However, for more widespread adoption and ownership to occur, Bitcoin’s volatility, novelty, and low rate of understanding must first be addressed. As indicated by the results of both the conducted survey and the literature review on societal aspects, deeper, more comprehensive knowledge of Bitcoin will first be required in order for the cryptocurrency to be properly adopted.
Thus, it was ultimately concluded by the researchers that while Bitcoin is indeed currently feasible or technically possible to adopt here in the Philippines, it would not be suitable or recommended yet. Further development and progress is still required before Bitcoin will be able to see widespread adoption in the Philippines and be fully and efficiently maximized for the benefit of the Filipino masses.
5. ACKNOWLEDGMENTS
We would like to thank Ms. Katrina Solomon for her endless support and guidance throughout our entire research process. We would also like to thank Mr. Michael Reyes and Mr. Elmer Lamasan for their knowledge and for allowing us to take their time for this research.
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