John Bailon of Satoshi Citadel Industries (SCI) talks to us about how blockchain technology is faring in the Philippines.
We, at e27, believe in Asia’s startups. As such, we value their insights about the ecosystem, put the spotlight on their contributions to their industries, and celebrate the wins that they have.
This community spotlight is on Satoshi Citadel Industries (SCI), a fintech company building blockchain ecosystems in the Philippines. We sat down with CEO and Co-Founder John Bailon and talked about blockchain technology, what we can get from it, and what is behind SCI’s decision to focus on the Philippine market.
Also read: How Bitcoin works, and why its invention is one of the most revolutionary in tech innovation
On why companies should take advantage of the blockchain technology
Startups, especially fintech companies, should take advantage of this technology not only because it’s new but because it is currently the best way to keep track of transactions.
And as a currency, it is an added way for you to receive payments. In general, in any business, you should always be open to any sale whether through peso, dollar, or bitcoin.
On how the blockchain technology can evolve
It will definitely evolve in so many ways. You will always hear this: the monetary function of the blockchain technology is just the first step. There are tons others that you can create.
What blockchain technology gave us is the ability to create a unique digital asset. It doesn’t matter if it is valued as money or document or media. It is a unique asset that cannot be duplicated. So what applications can we make use of this? Voting systems. If I vote once, I cannot vote anymore. Identity that you and you alone can have and use. Land titles. Any title that represents ownership, you can digitise. And if I send it to you, it’s as good as me giving you ownership of that title. Tons more. Anything that has to do with the movement of value – not just monetary.
On what blockchain technology means for governments
We all hope that eventually our governments can be as transparent as they can be. Simple things like what is the government is paying for, if it happens through a blockchain, then anyone can peer into it. So can land titles, national identification systems – anything can be done through blockchain technology.
The Republic of Georgia, for example, implemented securing land titles on blockchain. Estonia has a national identity system using blockchain and they’re looking into transferring medical records of citizens into the technology. The state of Delaware in the United States is close to allowing company shares to be issued via blockchain.
Government worldwide are slowly adapting to the technology and exploring how they can use it for better governance.
On how bitcoin is used in the Philippines
Most of the users of bitcoin in PH are speculators. A lot of people that are getting into bitcoin are those who intend to buy low and sell high, to make money out of it. In a broader perspective, it is still early. If we go outside now and ask a random person what bitcoin is, it’s likely they don’t know it yet.
Having said that, our company actually takes advantage of the technology more than the currency. We created a remittance platform wherein we connect with other bitcoin platforms outside of the Philippines, who talk to overseas Filipino workers (OFWs). What they do is take their currency, convert it to bitcoin, send it to us, then we convert it into peso, which we give to the OFW families here. So, the clients never touch bitcoin but they make use of it through our system. We eliminated the need for people to understand or worry about what bitcoin is.
On educating the market
Part of the company’s focus is community. We focus on always educating the community, not just about the technology, but more about financial literacy. Before, we actively pursued speaking engagements to be able to discuss and engage with the community. But it’s becoming more apparent that it has to come from the people. You have to have that curiosity first before you can listen to what we have to say. Especially with bitcoin because it’s a lot to take in. We always make sure to sufficiently answer the questions of anyone who comes to us. At the end of the day, if that person walks out of here with a knowledge of what bitcoin is, and even just a vague interest in it’s use, then we are okay with that.
On the likelihood of the Philippine government adopting the blockchain technology
There is a lot of work to be done in the Philippine government and I feel like this is sort of a next step after that. Having said that, one of the current administration’s priorities is financial inclusion. Of note right now is that the BSP [the Philippines’ Central bank] is one of two central banks in the world to have regulations that allow bitcoin to be used in its jurisdiction. The other is Japan.
On the speed of adoption of blockchain technology for corporations
It would take a while. And by a while I mean a year or two because in the tech world a year is already a long time. Blockchain in the country is at its infancy stage, but I would imagine there is going to be a rapid growth of companies that offer tools that make use of blockchain behind the scenes to offer to other businesses. It would happen but there has to be layer that needs to be set up.
Similar to how every company has an email system but most don’t really set up their own servers for that. In that way, the TCP/IP and bitcoin are at par: the currency level is the same as the server level, and then there are going to be apps on top of that that would allow the technology to be used.
On what SCI does
We have an array of products that allow you to use financial services, all using bitcoin and blockchain technology. We have been doing this since 2014 and we have a team that is dedicated in studying, creating, and developing products that would take advantage of this technology. We are the only blockchain tech company in the country right now that is flexible enough to create customised solutions for companies.
On how they got started
I learned about bitcoin in 2010, ignored it because I thought it was a scam or something that would crash soon. I regret it now because back then it only costs a few cents. In 2013, I saw it again and it was about US$20. So, I bought some, then joined a Philippine bitcoin Facebook group where I connected with my co-founders.
At first we were only happy with learning about the technology, but as businessmen we realised there is a business that we can create out of this. So, we talked about it and one of our agreements is that if we’re going to set up a business using this technology then we have to focus on the Philippine market. If we were to do something about it, we have to help the Filipinos, first and foremost. That is sort of the mantra of the company: Filipino first and cutting edge technology.
On why having a Philippines-first mindset
In a logical, pragmatic, and business perspective, the setting is almost perfect for financial technology disruption. There are 100 million Filipinos, 10 million outside the country, sending US$27M back to the Philippines every year. Fees are at about 8 per cent on average and 70 per cent are unbanked. There’s a disconnect. It felt like there was something that we can provide using this technology.
And we are all Filipinos. We are homegrown Pinoys and we should be helping Pinoys as well. We are really against brain-drain and building a company here means we can offer jobs to Filipinos. I know it’s a little against what we are doing right now because we are servicing OFWs, but I always tell my team that if we run out of OFWs sending money back to the PH and they’re all back here, that’s fine. Let’s just find another business because there’s a lot of other things we can do.
On the Philippines becoming more technologically advanced
I know it feels like we’re so far away from being developed, but technology is fast. If you think about it, the gaps between the invention of revolutionary technologies keep getting shorter. Eleven years ago, our mobile phones have keypads. The Iphone hasn’t been invented yet. And now we’re at, what, the eleventh variation of it. That’s a huge leap.
I am hopeful that the Philippines will get to that point sometime in the next decade. It has to come from the pillars within the country like the government, the private corporations, and the innovators but I think it would happen soon. But we have to have the right leadership and the right process that would allow that kind of leadership to flourish.
On why there isn’t much noise on Philippine-based tech
I think it’s a cultural thing. Filipinos don’t tend to toot their own horns and sometimes would rather be behind the scenes. It can be a weakness but I see that as an opportunity for Filipinos to improve. Or maybe I don’t know what I’m saying and that’s the best way to do it because there are tons of people here in the country who are very successful and you never really hear about them.
I think it’s also the lack of introspection. They see the successes of other people and not notice their own. Maybe sometimes it’s a matter of looking at what you have.
Also, the highlight is always on tech companies – the software companies. So, for example there’s a farmer who have developed a better way to yield more crop. That’s technology! It’s just something that you don’t read about, but we have tons of that here.
On introspection and motivating the team
As we go through the day-to-day tasks, I always remind them that what we’re doing, the reason why we’re doing this, and the things that we were able to provide, are something for us to be proud of. But at the same time, you don’t want to feel like you’ve already won so you consider everyday as a new challenge to overcome.
On their vision
Our vision is to provide all the financial services available to every Filipino. Financial inclusion at its core, with the use of technology.
On the challenges SCI is facing to achieve their vision
The main challenge was regulatory, which is now sort of fixed because the Philippines has legalised companies like us. The next one is getting people get to a level of understanding in terms of financial literacy. Really, that’s the key. No matter how good your marketing is, if Filipinos will spend more than they’re earning, it’s useless.
Also read: Given all the buzz about blockchains and cryptocurrency, should I start mining Ethereum?
On Ethereum and adapting to the new kid on the block(chain)
Ethereum is an improved version of bitcoin. Just like bitcoin, really, but with a much more robust scripting language behind it. Which means you can build more apps and more logic into the blockchain. So, what does that mean? For example, it is so much easier to create smart contracts. You can create tokens on top of it.
It is part of our research and development goals. We are adding Ethereum to all of our products by the end of the year.
On building presence elsewhere
We are focussing on the Philippines first, but we want to be able to have some sort presence in the top 5 countries that have a sizeable Filipino population. But that’s just presence – we don’t need to be there. We just want to be able to connect to Filipinos outside the country.
Got questions for John or for SCI? Let us know in the comments below.
Thank you, John!
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Satoshi Citadel Industries (SCI) is a financial technology company building the Blockchain ecosystem in the Philippines. SCI has developed products across several financial services including Remittance, Payment Processing, Investments, and Mobile Money.
Featured image courtesy of SCI.
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