Dynamics of Crypto Asset Exchange in Indonesia

At the end of 2018 the price of cryptocurrency or cryptocurrency continues to have a downward trend. Former Paypal CEO Bill Harris to CNBC argues that the value of bitcoin will continue to fall because there is no "value" in it.

Bitcoin was up more than 1.300% in 2017 to nearly $20.000, then lost nearly half its value in the first three months of 2018. Bitcoin slumped below $6.000 in November 2018.

"There has to be something to back it up. Bitcoin doesn't generate revenue, there's no profitability," Harris said.

According to a number of industry players in Indonesia, cryptocurrency such as bitcoin is a technology that is still relatively new and life cycle New technologies are not always linear or always ascending.

"We can all see that the price sometimes goes up, sometimes it goes down. With such rapid price changes, this is actually the attraction of cryptocurrency alone. The price drops so the momentum to buy bitcoin. Then, bitcoin is stored for the long term until the moment the price rises to be resold," said Luno Community & Event Debora Ginting to DailySocial.

Government guarantee

Although there are already signs that bitcoin globally is in decline which has led to a lot of massive selling (Sell-off) in November 2018, at the beginning of this year Indonesia was visited by many marketplaces cryptocurrency foreign. Starting from Upbit and GoPax, both from South Korea, and Singapore-based Liqnet.

According to Upbit APAC CEO Alex Kim, Upbit's arrival in Indonesia was due to the blockchain business potential and legal clarity related to crypto assets attracting foreign players. Indonesia is also said to have spawned a unicorn startup and has a very enthusiastic market.

"I see traditional businesses can also benefit by exploring blockchain technology to transform their business, as they did with internet technology. Blockchain will not be a one-size-fits-all tool. But the trust and efficiency it provides could be the missing piece in getting a lot of things done." business matters."

In particular, there are three factors why Indonesia has great potential for the market cryptocurrency. Starting from the large population to the high market penetration of smartphone use, where more than 50% of Indonesians already use the internet and smartphones in their daily lives. Meanwhile, in terms of regulation, the regulators also support this buying and selling transaction and are fully supervised by the Futures Trading Supervisory Agency (CoFTRA).

The Futures Trading Supervisory Agency (CoFTRA) earlier this year released a Regulation No. 5 of 2019 which regulates the provisions for the operation of the crypto asset market on the futures exchange.

This regulation is a follow-up Minister of Trade Regulation No. 99 Year 2018 about trading crypto assets that are the handle exchange who are interested in exploring business in Indonesia.

"Our country has begun to explore the regulations that actually make the crypto exchanger bolder to enter. However, perhaps with the existing regulations, the crypto exchanger Foreigners will be constrained by the minimum amount of capital applied to obtain a license to operate in Indonesia later," said Debora.

With the issuance of the regulation, all crypto asset traders are required to complete the documents requested by the regulator. If they meet the required requirements, their legality as a crypto asset exchange platform is guaranteed.

"By providing legal clarity on crypto assets as commodities, it clearly sets the standard for market integrity, investor protection, and prevention of money laundering or terrorist financing. I believe that regulators will greatly accelerate healthy innovation in a more mature direction," said Alex.

In addition to the names mentioned above, there are at least 20 crypto asset marketplaces operating in Indonesia, such as Indodax, Luno, Triv, Tokocrypto, NUCEX, NUSAX, Coinone, Huobi Pro, My Account, UDAX, BITRADX, BITOCTO, Bitsten, Biido, Tokenomy, Pintu, Latoken, Liquid, and Marketcrypto.

User demographics

Although some crypto asset marketplaces educate the market to attract more users, currently not many users are trading crypto assets in Indonesia.

"As a secondary market operator, we have two types of users, investors and issuers. On the investor side, the target users today are the tech-savvy generation. They are open to new technologies and follow the latest global trends with great curiosity. However, number of investors crypto-assets very small at the moment," Alex said.

According to Indodax CEO Oscar Darmawan, Indonesia's current population is mostly in the productive age.

"Young people or millennials have attention and interest in an innovation, especially technology. Because they generally want something that is fast, easy and safe. Technology answers their aspirations, one of which is through Blockchain which supports the existence of Bitcoin as a digital asset that needs to be owned and has become part of the lifestyle of today's youth."

If explained further, in Indonesia itself there are several target markets that are targeted by crypto asset exchange players in Indonesia, the first is the productive age range of 23-44 years.

Next is the categorization based on interest and background. Activists and investment actors are classified into several groups: subgroup based on the type of investment they make, among which are crypto asset enthusiasts, stocks, and Traders Union: Best Low Spread Forex Brokersinvestors/tradersand wealth or fund managers.

The latter category is claimed to be the largest cryptocurrency exchange user today. They already know and are used to buying and selling transactions, outside of crypto assets.

One of the investors, call him Cak Uding, said that most Indonesian investors currently tend to just "play" in crypto exchanges. Even though he didn't deny there was trader who dare to transact with large amounts, mostly not based on careful consideration. This is different from investors in the conventional stock market.

"I see a lot of premature [as an investment product] and transaction volatility is mostly driven by rumor or gossip. Another thing to consider is the issue of legal guarantees," he said.

Another investor, let's call him Andre, saw that most of the transactions in crypto assets were due to follow-ups.

"As trader, I see in Indonesia it seems that there are many who 'follow in the band'. Trading after it happens booming bitcoin in 2017. Many people flocked to look for profits from trading transactions in crypto at that time. But if you look at the current trend, when the price of crypto is falling sharply, many are doing it withdrawal to secure its assets or even divert it to other investments," he said.

Initial phase

Tokocrypto CCO Teguh Harmanda to DailySocial admits that crypto asset exchanges are still in their early stages. Until now, demographically, it is not clear who trader digital currency exchange in Indonesia.

"Frankly for old traders [who have been in this product for a long time -Ed] they don't find any problems, because they can still find profit at this time. But for trader new to seeing the extraordinary crypto price sentiment, I don't think the mentality is enough to see the current market bearish this."

Teguh himself still believes that one day crypto will provide positive benefits, when the underlying technology based on blockchain has been adopted massively.

Meanwhile, according to the Chairman of the Indonesian Blockchain Association (ABI) Steven Suhadi, despite experiencing a massive decline throughout 2018, he sees that for the next few years the trend of crypto asset exchanges will continue to increase. Not only used by existing users but a new user.

"If we look at the United States and other countries, the trend is increasing. And with the regulations and rules that govern the matter crypto asset exchange at least it can help convince people to use local and foreign crypto asset exchanges in Indonesia," said Steven.