Cryptocurrency

From Phinvestopedia

Cryptocurrencies (or "Crypto") are digital currencies that operate independently of a central bank. Unlike the Philippine Peso (PHP), which is printed and controlled by the Bangko Sentral ng Pilipinas (BSP), cryptocurrencies run on a decentralized technology called Blockchain—essentially a digital ledger that records transactions across thousands of computers globally.

For the average Filipino, the easiest way to understand crypto is to think of it as "Digital Gold." It is an asset class that you can buy, hold, and sell, but it is not physically tangible. The Philippines is currently one of the top adopters of crypto in the world (Ranked 8th globally in 2024), driven largely by play-to-earn games (like Axie Infinity) and cheaper remittance options for OFWs.

Cryptocurrency is legal but strictly regulated in the Philippines.

  • The Regulator: The BSP does not endorse crypto as legal tender (you cannot pay taxes with Bitcoin), but it regulates the companies that sell it. These companies are called Virtual Asset Service Providers (VASPs).
  • The License: Legitimate apps like Coins.ph, PDAX, and Maya hold a VASP license.
  • The Ban: As of late 2024, the BSP has maintained a "moratorium" (ban) on issuing *new* VASP licenses to prevent overcrowding and protect consumers. This means you should only transact with the established players.

Advantages and Disadvantages

Why are Filipinos switching from traditional banking to crypto?

Feature Advantages Disadvantages
Remittances Cheaper & Faster. sending $100 from the US to PH via Bitcoin/XRP takes minutes and costs pennies, compared to Western Union's days-long process and high fees. Complexity. The receiver needs to know how to convert the crypto back to Pesos.
Investment High Potential Returns. Bitcoin has historically outperformed the stock market over 10-year periods. Extreme Volatility. Prices can drop 50% in a single week. It is not suitable for an Emergency Fund.
Accessibility No Bank Account Needed. Anyone with a smartphone can download a wallet. No "Forgot Password". If you lose your "Private Keys" (password phrase) to a self-custody wallet, your money is gone forever.
Safety Hacker Resistant. The blockchain network itself has never been hacked. No PDIC Insurance. unlike a bank deposit, crypto funds are NOT insured by the government up to ₱500k. If the exchange goes bankrupt, you lose everything.

Is it a Fad or the Future?

The "Fad vs. Future" debate is common among Filipino investors.

  • The "Fad" Argument: Critics point to the crash of 2022 and the collapse of "Play-to-Earn" games as proof that crypto is a bubble. They argue that without intrinsic value (like land or earnings), it is just gambling.
  • The "Future" Argument: Proponents point to Institutional Adoption.
    • UnionBank now offers crypto trading directly in their app.
    • GCash and Maya have integrated it into daily finance.
    • Stablecoins (PHPC): The BSP has allowed the testing of "PHPC," a crypto token pegged 1:1 to the Peso, suggesting a move toward a digitized national currency.

Scams and Red Flags

The Philippines is a hotspot for crypto scams. Because the technology is new, scammers exploit the "fear of missing out" (FOMO).

1. "Pig Butchering" (Romance Scam)
A stranger messages you on WhatsApp/Telegram/Tinder. They build a romantic relationship for weeks ("fattening the pig") and then casually mention they made millions trading crypto. They convince you to deposit money into a fake app. Once you invest, they disappear.
2. The "Double Your Money" Promise
Any entity promising "Guaranteed 20% Monthly Returns" is a scam. In crypto, as in stocks, guaranteed returns do not exist.
3. Fake "Admin" or "Support"
You post a question on a Facebook group. Someone DMs you saying "I am Binance Support, please give me your 12-word seed phrase to fix your wallet." NEVER share your seed phrase.
4. Task Scams
You are hired for a "part-time job" clicking buttons or liking videos, paid in USDT (crypto). Eventually, they ask you to "pay" to unlock higher tasks. This is a Ponzi scheme.

How to Protect Yourself

  • Check the VASP License: Only use apps listed on the BSP Website. If an app is not there, you have no protection.
  • Hardware Wallets: If you own a significant amount (e.g., ₱100,000+), buy a physical device like a Ledger or Trezor. This keeps your crypto offline, away from hackers.
  • The "1-Hour" Rule: If someone pressures you to invest "right now" before a coin goes up, it is a scam. Real investments can wait.

Sources

Educational Resources (Watch on YouTube)

See also

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