Bali’s crypto summer is ending
The Indonesian island has become a base for crypto entrepreneurs, but few are praising the crypto winter
A short walk from a cluster of Balinese beach clubs, a group of blockchain pros mingle poolside at a villa owned by a swimwear entrepreneur. Millennial enthusiasts and more seasoned finance professionals take turns wagering chips in village festival-style games set in the gardens around frangipani trees and an open bar.
The May event was hosted by a Singapore-based financial company in Bali to mark the launch of its environmental, social and governance ESG “legacy” token. The company, which holds concession rights to an estimated 150,000 troy ounces of gold under a forest in Ontario, Canada, has proposed the token as an innovative mechanism to keep the gold unmined.
Energetic ideas based on blockchain technology quickly sprang up in Canggu, Seminyak and other districts in Bali, crowded with telecommuters when pandemic restrictions were eased in mid-2022.
Energetic ideas based on blockchain technology quickly emerged in Bali with the easing of pandemic restrictions flooding in from remote workers.
“You can have the quality of life in Bali while earning the salary of a western country,” said Paul, 19, a self-taught developer who came to Bali to spend a month remotely programming a blockchain platform for a retailer in Paris .
Many cryptocurrency speculators with an instinct for arbitrage have been drawn to the opportunities of Bali’s crypto summer, with high-end amenities at a far lower cost than San Francisco or Singapore.
Few seemed to have priced 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 paused withdrawals and alternative investments collapsed.
Like Paul, many newcomers will find a network just 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 in the past there was winter.”
Tokocrypto claims to have tens of thousands of registered users in Bali, an order of magnitude increase in just a year. Pansy said this breakneck growth could be the result of tens of thousands of newly unemployed tourism workers looking for income during the pandemic and media coverage of cryptocurrencies in Indonesia that began a few years ago.
At discussion groups in July, participants reflected on the emergence of “Silicon Bali” for crypto and blockchain and how best to match foreign visitors with Indonesian talent.
An event this month drew about 30 people to T-Hub. Aaron Penalba arrived in a T-shirt sporting a Nike Swoosh and the words “Just HODL It” — Hold on for Dear Life — has been a mantra among those who believe bitcoin’s usefulness and finite stocks herald wealth.
A young audience listened to Penalba explain the basics of minting and staking and the nuances of royalty payments for those looking 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 dealer, was an early adopter of fast-paced trading in digital art collections like the Bored Ape Kennel Club. (“They’re basically dogs,” he explains.)
Digital artist Mike Winkelmann famously sold his NFT artworks through auction house Christie’s for $69 million in May 2021, as NFT transactions soared to approximately $17 billion that year.
“In the beginning it was just being there – getting in early,” said Penalba.
But sales of digital art, music, and other NFTs plummeted about 92 percent from January to May 2022 as sentiment shifted, according to NonFungible, a blockchain data company founded in 2018.
Statistics agency data shows Indonesia’s top tourism destination is still finding its footing after a devastating two-year power outage caused by the pandemic. Tens of thousands of tourism workers have had to reduce hours or lost their jobs altogether as the travel industry collapsed around them.
In April 2019, nearly half a million people arrived at Bali’s Ngurah Rai International Airport – this year in April, as restrictions began to ease, the total was barely a tenth that (although there were signs of a stronger recovery in May and June).
Young professionals, just released from lockdowns in Europe and elsewhere, seem eager to choose Bali as a base, although some say paperwork issues have dampened enthusiasm for longer stays.
“I think it’s very nomadic here,” said Gabrielle, who organizes crypto networking events in Dubai and Singapore.
In 2021, Thailand announced it would issue 10-year work permits to foreigners earning more than $80,000 a year. This year, Indonesia’s tourism minister, Sandiaga Uno, unveiled similar plans for a five-year visa for Bali, aimed at boosting telecommuters.
Stories of scams are rife among Bali’s crypto traders and are a new priority for regulators looking to limit the impact of advertising and irresponsible social media influencers.
The Commodity Futures Trading Regulatory Agency, part of the Indonesian Ministry of Commerce, took over oversight of cryptocurrencies in 2018. It currently allows trading of 229 assets.
Cryptocurrency transaction volume in Indonesia surged from Rp 64.9 trillion in 2020 to Rp 859.4 trillion in 2021, the head of the agency said at a parliamentary hearing in March. As of February this year, the number of participants transacting cryptocurrencies in Indonesia had more than doubled to 12.4 million, compared to just 10 months earlier.
Blockchain developer Paul theorizes that most people in Bali’s cryptocurrency community are simply speculating on rising prices, with only a fraction working on technology that proponents hope will lower the cost of everything from farming to remittances of migrant workers.
“You can make a lot of money,” Penalba said during his presentation. “If you are lucky.”
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