[Updated at 4:26 p.m.]
Though the total market share of bitcoin in Indonesia is less than 1 percent, the weakening rupiah and the prospect of the digital currency as an investment may encourage its development in the archipelago.
“China is the largest market for Bitcoin, with 50 percent of the circulation,” said Oscar Darmawan, co-founder of Indonesian bitcoin trading website Bitcoin.co.id. “Indonesia and other countries only hold 1 percent or less.”
The value of bitcoin circulation in Indonesia, according to Oscar, is only around Rp 2 billion ($164,000) per month. Compared with China, where approximately 230 million yuan ($37.9 million) worth of bitcoin moves through the country every day, Indonesia has a fledgling market.
“If the US and China continue the trend, India and Indonesia could be the next big market [for bitcoin],” he said. “Currently, the number of investors and ‘merchants’ who accept bitcoin [in Indonesia] is still very small.”
Bitcoin may be a tempting investment for some. At the end of 2012, 1 bitcoin sold for $13.50 dollars. By December of this year, the currency was trading at $1,200 per 1 bitcoin. As of Dec. 21, the currency is currently trading between $754.89 and $621. 25, according to MtGox, a bitcoin exchange website based out of Tokyo.
Bitcoin has had a rocky history of late in Asia. In July, Thailand banned the currency. Later, the price of bitcoin fell sharply recently after China blocked yuan deposits for the currency.
“China’s central bank banned Chinese banks from clearing bitcoin transactions,”Oscar said. “Though bitcoin itself is not illegal, investor panic caused a sell-off that made bitcoin prices fall. Now’s a good time to invest in bitcoin because it went down.”
“The advantage of bitcoin compared to conventional currency is that bitcoins do not experience inflation,” he added. “The condition of a country sometimes makes its central bank print more currency, but it bitcoin, inflation is unlikely because the amount is fixed.”
Oscar said that bitcoin investors in Indonesia only number roughly 100 people at present.
“In order to raise awareness of bitcoin, we plan to hold seminars and book launches,” he said. “My target is to raise the value of bitcoin transactions in Indonesia from Rp 2 billion per month to Rp 2 billion per day.”
For potential investors, Oscar suggested that those who want to put their money in bitcoin prepared to set aside at least Rp 100 million and be ready to take a loss initially, since the exchange rate fluctuates rapidly.
“Set aside money for the experiment,” he said.
Not many websites are keen on accepting the virtual currency at the moment. Some online stores on sites such as Shopify.com and Wordpress.com will take bitcoin, but more mainstream sites such as Amazon.com and iTunes still have not accepted the trend.
“In Indonesia, I have found many [sites] that accept bitcoin,” Oscar said. “Among there are Republikhost.com and Ads-id.com,” Oscar said.
On Saturday, Bank Indonesia, the country's central bank issued a statement about bitcoin.
“Bitcoin is a potential payment method, but it’s different than ordinary currency,” Difi Ahmad Johansyah, the executive director for communication at Bank Indonesia, said. “It is not regulated by the central bank so there are risks.”
He added that the currency could potentially be used in scams and for money laundering operations. “At the moment, we’re studying bitcoin and we have no plan to issue a regulation on it.”
Correction: The story originally read that "Compared with China, where approximately 230,000 yuan ($37,883) worth of bitcoin moves through the country every day, Indonesia has a fledgling market." It should have said that 230 million yuan, or $37.9 million, is exchanged in China every day. The Jakarta Globe regrets the error.