Bali’s crypto summer comes to an end
The Indonesian island has become a base for crypto entrepreneurs, but little price in the crypto winter
Steps from a cluster of Balinese beach clubs, a group of blockchain professionals mingle poolside at a villa owned by a swimwear entrepreneur. Millennial enthusiasts and more seasoned financial professionals take turns betting chips on village fête-style games set up in the garden around frangipani trees and an open bar.
The May event was hosted by a Singapore-based financial firm in Bali to mark the launch of its ESG – environmental, social and governance “legacy token”. The company, which holds concession rights to approximately 150,000 troy ounces of gold under a forest in Ontario, Canada, offered the token as an innovative mechanism to leave the gold unmined.
Energetic ideas based on blockchain technology have quickly sprung up around Canggu, Seminyak and other districts in Bali, flush with remote workers as pandemic restrictions eased midway through 2022.
Energetic ideas based on blockchain technology have quickly sprung up in Bali, flush with remote workers as pandemic restrictions have eased.
“You can have the quality of life in Bali while earning a western country’s salary,” said Paul, 19, a self-taught developer, who arrived in Bali to spend a month remotely coding a blockchain platform for a retailer in Paris.
Many cryptocurrency speculators with an arbitrage instinct have been drawn to the possibilities of Bali’s crypto summer, with top-of-the-line equipment at a cost far below that of San Francisco or Singapore.
Few seemed to have factored in the onset of a crypto winter — bitcoin fell from an all-time high above $68,000 in November 2021 to below $20,000 in June, as some exchanges suspended withdrawals and alternative assets collapsed.
Like Paul, many newcomers find a network a stone’s throw from the beach at T-Hub, a coworking space operated by Tokocrypto, an Indonesian subsidiary of Binance, the world’s largest crypto exchange.
“There are people who are not in the mood to talk about crypto,” said Antria Pansy, who leads community engagement for Tokocrypto in Bali. “But there have been winters in the past.”
Tokocrypto claims to have tens of thousands of registered users in Bali, an increase of an order of magnitude in just one year. Pansy said the skyrocketing growth could be the result of tens of thousands of newly unemployed tourism workers seeking income during the pandemic and the media coverage of cryptocurrencies in Indonesia that began a few years ago.
During focus groups in July, attendees reflected on the emergence of “Silicon Bali” for crypto and blockchain and pondered how best to connect foreign visitors with Indonesian talent.
An event that month brought together about 30 people in T-Hub. Aaron Penalba arrived in a T-shirt embossed with a Nike Swoosh and the words “Just HODL It” – Hold on for Dear Life – a mantra among those who believe that the usefulness and finite stock of Bitcoin herald wealth.
A young crowd listened as Penalba explained the basics of minting and staking and the nuances of royalties for those who want to start trading non-fungible tokens (NFTs), forms of digital data stored on a blockchain ledger.
Penalba, who describes himself as a full-time NFT trader, was an early adopter of what has become a frenzied trade in digital art collections such as Bored Ape Kennel Club. (“Basically, they’re dogs,” he explains.)
Digital artist Mike Winkelmann sold his NFT artwork through Christie’s auction house for $69 million in May 2021, as NFT transactions soared to around $17 billion this year -the.
“At first it was just being there – arriving early,” Penalba said.
But sales of digital art, music and other NFTs plummeted by around 92% from January to May 2022 as sentiment changed, according to NonFungible, a blockchain data company founded in 2018.
Data from the statistics agency shows Indonesia’s top tourist destination is still finding its feet after a devastating two-year blackout caused by the pandemic. Tens of thousands of tourism workers have seen their working hours cut or lost their jobs altogether as the travel industry crumbles around them.
In April 2019, almost half a million people arrived at Bali’s Ngurah Rai International Airport. This year in April, with restrictions starting to ease, the total was just a tenth (although there were signs of a stronger recovery in May and June).
Young professionals newly freed from lockdowns in Europe and elsewhere seem keen to choose Bali as a base, although some say paperwork challenges have dampened enthusiasm for longer stays.
“I think it’s very nomadic here,” said Gabrielle, who hosts crypto networking events in Dubai and Singapore.
In 2021, Thailand announced that it would issue 10-year work permits to foreign nationals earning more than $80,000 per year. This year, Indonesian Tourism Minister Sandiaga Uno unveiled similar plans for a five-year visa for Bali targeting increased numbers of remote workers.
Scam stories are common among Bali crypto traders and are a new priority for regulators keen to curb the influence of advertising and irresponsible social media influencers.
The Commodity Futures Trading Regulatory Agency, which is part of the Indonesian Ministry of Commerce, assumed oversight of cryptocurrencies in 2018. It currently allows 229 assets to be traded.
The volume of cryptocurrency transactions in Indonesia has increased from 64.9 trillion rupees in 2020 to 859.4 trillion rupees in 2021, the agency chief said during a parliamentary hearing in March. By February this year, the number of participants transacting cryptocurrencies in Indonesia had more than doubled to 12.4 million from just 10 months earlier.
Blockchain developer Paul assumes that most members of Bali’s cryptocurrency community are simply speculating on rising prices, with only a fraction working on technology that proponents say will lower costs for everything. , from agriculture to remittances from migrant workers.
“You can make a lot of money,” Penalba said during his presentation. “If you’re lucky.”
Opinions expressed in articles and other materials are those of the authors; they do not necessarily reflect IMF policy.