If cryptocurrency has been steadily creeping into your consciousness, it’s because its popularity among Filipinos has skyrocketed in recent years. Year 2021 data from cryptocurrency payments provider TripleA show that over 4.3 million people or 4% of the Philippine population now own cryptocurrency.
Bangko Sentral ng Pilipinas (BSP) governor Benjamin Diokno himself noted this remarkable phenomenon December of last year when he said that cryptocurrency transactions in the Philippines rose by 362% during the first half of 2021. “These transactions were worth P105.93 billion in June, up 71% over the same period [in 2020],” he said.
Mike Calma, country manager of Advance.AI, an artificial intelligence company based in Singapore, attributes crypto’s growth in the Philippines to the rising acceptance of the play-to-earn community. Not everyone has the capacity to become traders and investors but to be a play-to-earn player, all one needs is time and willingness to play the blockchain games (video games that utilize blockchain technology).
“I think it’s a nice proof of concept where you could gain exposure to the crypto market without having capital,” says Calma. Gaming guilds like YGG could finance one’s initial investment into that blockchain game. Then they just arrange for a revenue share. Players usually get 70%, managers get 20%, and the guild gets 10%. Eventually when the investors have saved up enough capital, they could utilize this to invest in a game or a currency itself, or in non-fungible tokens (NFTs).
Calma thinks a big come-on to cryptocurrency is that it advocates anonymity thereby partially addressing financial inclusion. Whereas in banks one will need government IDs or collaterals to transact, in cryptocurrency all one needs is a device, an internet connection, and cash to spare to be converted into crypto.
The Filipino tech expert says the concept of cryptocurrency may still seem esoteric to some because of all the technical jargon. But he says all one needs is the curiosity to learn it. Calma first got exposed to cryptocurrency four years ago. He has over 20 years of experience in software development, social enterprises and IT education, information technology, among others, before he caught the crypto bug.
Calma says the digital currency appealed to him as an alternative investment outside the typical stocks and bonds. “Wearing my tech hat, it’s a nice implementation of cryptography and math towards a currency. Fiat currency (government-issued currency) is based on your trust in the government and the central bank, as opposed to cryptocurrency, which depends on your trust in math and cryptography,” he says.
Amid the rising popularity of crypto trading in the Philippines, security becomes a critical issue of concern. Hence, the public is advised to exercise vigilance, says Calma. The transaction chain is composed of different elements or levels which could possibly be compromised if caution is not observed: the person initiating the transaction; the app or browser used; the device; the network (WiFi connection); and the crypto platform used.
Across these areas, one that’s most exposed to fraudulent practices would be the person engaged in crypto. The budol may take the form of a giveaway. “For example, someone will impersonate Elon Musk and say if you give me one Ethereum, deposit it to my address, I will give you 2 Ethereum back. The method and the channels are new. But these scams have been prevalent since we were kids,” Calma says.
Another common fraudulent practice is phishing. If you receive an email from reputable companies asking to reveal any personal information such as username, passwords or credit card numbers—beware. The bad actor (someone who tries to access private data, networks and apps thru shady means) usually imposes a false sense of urgency, such that if you don’t provide what’s being asked, you won’t be able to access your account. But once you input the needed information, the bad actor would have gotten your credentials and be able to access your account.
A person may also be directed to a fake but authentic looking website, which would require personal information. “No bank, financial institution, or crypto exchange will solicit your username, password or even OTP. No one will do that. If you want to reset your account, you’ll have to be the one to initiate that request,” says Calma.
The security of cryptocurrency trading platforms (e.g., Coins.ph, PDAX, Binance) may also be compromised and that’s where companies like Advance.AI comes in. “We’re an AI company that focuses on financial institutions to make sure that the customer journey with financial institutions is secure (meaning, scams, fraudulent or bad actors are prevented from coming into that ecosystem) and frictionless (verification can easily be done via a web browser),” the Pinoy crypto expert asserts.
How to detect fraud
Advance.AI’s system, according to Calma, has a transaction and fraud-detecting capability that can infer anomalous patterns—frequently siphoning small amounts of cash to different accounts, for instance. The company also has a technology called self-sovereign identity (SSI), where a person would be able to prove his identity through cryptography.
To protect one’s self from possible fraud, Calma provides these tips:
• If you observe any red flags (e.g., false sense of urgency, possible phishing) or any suspicious activities, do not engage with the said party. “If they are rushing you, tinataranta ka nila, most likely it’s a scam,” says Calma.
• Make sure your passwords are stored in the right place.
• Engage only with reputable institutions. “Pick those that care enough to use their biometrics. It’s the most secure form of security,” he says. “Not a lot of people could spoof facial recognition especially if it’s coupled with password protection.”
• When doing a large transaction, it would be best to employ a multi-factor authentication that requires two or more verification factors to gain access to an account.
Calma believes cryptocurrency is just going to be more pervasive and is here to stay. “It’s trusting math and cryptography vs. trusting the government alone,” says Calma. “And those two are not mutually exclusive—they could combine forces.”
Crypto, like many asset classes, are on the downturn due to different factors. But looking at the five to ten year horizon, the tendency is for it to grow, says Calma. “There is a general long-term trend towards it increasing in terms of value, and that is driven by greater adoption,” he adds. “The more people that believe in cryptocurrency, the more its value increases.”