Crypto in Indonesia

Indonesia is a country often overlooked, despite the fact that it’s the 4th most populous country in the entire world with its approximately 270 million inhabitants, most of whom are young, and many of whom speak English. With an annual population increase of 3.7%, the growing number of young, digitally literate and partially English-speaking Indonesians have huge potential in the tech and IT industry. Although corruption and bureaucracy are still issues in the country, the government has taken steps to make Indonesia more attractive to IT investors. 

Some statistics 

Although the use of cryptocurrencies as a form of payment is technically illegal, transactions related to crypto investments are not. Locals are free to buy and sell crypto for fiat, as long as it constitutes a form of investment only. Of course, these rules are hard to enforce, especially in a country where paperwork is not necessarily the best administered, so in reality, very little stops locals from using cryptocurrencies for online purchases as well. 

As per the latest reliable data from 2022, there are 12 million crypto investors in the country, up from 7.2 million in 2021. This means that the number of crypto users nearly quadrupled in a mere 1 year. Cryptocurrency investors now represent more than 4.5 percent of the total population. For comparison, this is pretty much the same as in Germany, but a lot less than the almost 1 in 5 adults who are said to be holding crypto assets currently in the United States. 

In India, the same number is over 10 percent. Alternative forms of investment that have a low cost of entry, such as crypto are generally popular in developing countries, where inflation is high and other traditional forms of investment such as stocks, bonds or even real estate are less secure, less accessible and less stable. 

More than 50% of cryptocurrency users are men, and 49% are women. The age groups are separated into two sections: 78% of 18-44 years old and just 4% are 45+ years old. Thus, crypto is more loved by the millennial generation of Indonesia. 

Plans to Launch a State-Backed Crypto Exchange

To capitalize on the opportunity, Indonesia’s Ministry of Trade plans to form a national Indonesian crypto exchange by the summer of 2023. Originally the project’s anticipated date of completion was 2022 December, meaning that it is already in a 6 months long delay, signaling potential difficulties around the project. 

The delay may be caused by an inability to decide which private companies will be allowed to play a part in operating the exchange. This might hint at signs of corruption, but of course might also hint at a decision taken seriously that requires more time. This February, the ministry also organized an event called “Crypto Literacy Month”, where they were aiming to inform anyone interested about the opportunities and risks lying in the crypto industry. 

Crypto Projects From Indonesia

The state-run crypto exchange will not be the first noteworthy blockchain project in the Asian country. 

PundiX, a local crypto transaction services provider has been operating successfully since 2018, focusing on giving the rural unbanked population access to digital financial services. The small scale services that these people often need, such as transactions with very small amounts are typically inconvenient or costly through the traditional banking system. 

Blocksphere, a local blockchain and crypto technology company is another great example of a successful Indonesian crypto company. Blocksphere provides consultancy services, development assistance and technical services to 3Ps to implement blockchain and crypto technologies. Amongst many foreign customers, it has more and more local customers as well.

EMURGO, yet another Indonesian blockchain consultancy firm, offers similar services, but also has an emphasis on teaching blockchain technology to adults and kids alike. The EMURGO Academy is a top-quality blockchain learning solution getting attention in Indonesia, Singapore, India and recently even in New York.

Conclusion

Indonesia is a rapidly developing country with huge IT potential and a young and partially English speaking population. The high number of unbanked individuals offer great potential for growth to any crypto companies with digital financial solutions that are viable alternatives of the traditional banking system. 

If blockchain and crypto technology continues to be implemented right, there is a high chance that Indonesia will make the same jump that China has already did and the unbanked population will jump straight to digital financial solutions, completely skipping the traditional banking system, which is still dominant in countries, where financial development has started a longer time ago and was slower and more consolidated. How much crypto will be able to participate in the digital financial revolution in the long term, is yet to be seen of course.