Cryptocurrency Regains its Reputation in Paradise

The luxurious Hotel Santika, now accepting bitcoin / Photo courtesy of santika.com

Ever since Mt. Gox, once the world’s largest bitcoin exchange, filed for bankruptcy earlier this year, it’s been hard to take big cryptocurrency projects seriously. Once heralded as an independent, universal, and secure utopian currency, many now see bitcoin as one more site of human error, greed, and duplicity. So when two bitcoin entrepreneurs from Indonesia, Oscar Darmawan and William Sutanto, floated a plan this spring to convert an entire island to bitcoin compatibility, even crypto enthusiasts were skeptical. But as they reveal more of their business plan, and the project continues to gain momentum, it seems like they just might have found a recipe for success. They’re calling their venture BitIslands, and tapping the renowned tourist hub of Bali as their, hopefully, first cryptocurrency paradise.

Although transforming the economy of an island that’s the size of Delaware and has about as many people as Kentucky sounds like a lofty undertaking, BitIslands is actually a pretty simple idea. Darmawan and Sutantoplan’s plan is this: They and their partners will set up offices, a bitcoin information center, and a physical exchange on Bali to change bitcoin into hard currencies and vice-versa. Then they’ll systematically approach every business, vendor, and moneychanger on the island, setting them up with existing technologies to equip them for digital currency compatibility. As time goes on, they’ll install bitcoin ATMs for folks to buy or sell currency as needed. In the end, they hope, anyone visiting or living in Bali will have the freedom to travel sans physical cash.

The presumed simplicity of the project did little to alleviate fears when the pair took to the bitcoin forums, soliciting donations and volunteers. Sensing fly-by-night idealism, crypto devotees grilled the duo on the viability of the project: Why hadn’t they been able to raise their entire initial overhead up front? Why were there no videos of Darmawan and Sutantoplan transacting with a Balinese merchant? Had they even explored the legality of the plan with the Indonesian government?

But Darmawan and Sutantoplan weren’t n00bs. They run bitcoin.co.id, aka Bitcoin Indonesia, the country’s largest exchange and crypto lobby. Their project got support from many of Southeast Asia’s major bitcoin players, like Artabit, Bitwyre, CoinPip, Coin of Sale, Quantified, and Tukarcash. Their board featured a lineup of local and expat crypto entrepreneurs and they even relocated to Bali, further reinforcing their commitment to the project. BitIslands’s website launched this past May, providing the documentation the naysayers had requested—pictures of ads in Bali, early-adopter businesses, and the office space they had wanted to purchase before it fell off the market (hence the need for donations). Almost immediately, the skeptics were mollified and the project began generating its own buzz.

Even outside the crypto community, the project has achieved an aura of excitement and possibility, because it actually makes sense for Bali. The island, which is frequented by over three million tourists a year, is accustomed to currency trading, but needs alternatives to credit card charges and predatory moneychangers that drive money out of the local economy. The island already has a native bitcoin culture to foster that transition, with regular crypto meetups that occur in the tech-expat-entrepreneur hub of Ubud. (Back in March, in nearby Seminyak, some techno-savvy buyers purchased a $500,000 villa using bitcoin, demonstrating the preexisting willingness amongst local developers to deal in the currency.) On the vendors’ side, Indonesia is increasingly hooked into cellular and internet communications and is well provisioned with mobile apps that facilitate merchant transactions, transferring bitcoin into the local currency of rupiah. And the current national regulatory framework allows for all the basic transactions involved. So if the project can aid tourism, and it isn’t difficult to adopt—we’ve seen small-scale bitcoin boulevards in other cities, a similar idea—then why not take it on?

Right now, BitIslands hasn’t nearly reached its goal. But a handful of shops, mostly hotels and cafés, have signed on, causing even more buzz to circulate. The project’s initial success and eminent feasibility has even inspired speculation on other islands, like the Jersey in the English Channel, that they too can become bitcoin havens. Granted, Bali is a unique case, and success there won’t restore the world’s starry-eyed view of bitcoin. But it would be convenient and practical, which would be the first step in a rehabilitated and realistic reputation for cryptocurrency.