Being the pioneer of regulating financial technology and cryptocurrency in the country, the Cagayan Economic Zone Authority (CEZA) is likely to take the opportunity to be part of the latest applications of blockchain technology — the non-fungible tokens or NFTs — that is expected to not only generate huge revenues but to create new job opportunities for Filipinos as well.
While checking cryptocurrencies like bitcoin (BTC), many people have wondered what an NFT is. Non-fungible tokens are similar to widely acclaimed BTC, they are tokens as well— secured in their respective blockchains. However, the only difference is, while BTC can be easily be traded or replaced with another BTC, NFTs can’t. This is because they are unique, and that uniqueness fuels their value, aside from the basic economic factors that it carries with them.
NFTs are digitally represented and can be bought, sold, or traded at a cryptocurrency exchange like tokens. With it, you can gain ownership of any unique asset, like that of digital art and other media.
When novel coronavirus (COVID-19) hit the country in mid-March 2020, the Philippine economy suffered a deep recession due to the impact of the pandemic. Many people have lost their jobs and started to think of ways to survive.
While 2020 will be remembered in history as a time of COVID-induced economic pain, it was also a year when people began thinking much more creatively about the relationship between technology and economic value.
Filipinos have figured out how to earn income by playing games through NFTs. These play-to-earn (PTE) games become the pandemic lifeline of many households and are increasingly becoming a host of real economic activity, enabled and accelerated at scale through blockchain technology.
For instance, the Axie Infinity game. This game has reportedly emerged as a popular way to pass the time for the Filipinos amid the COVID-19 pandemic. It is a play-to-earn game wherein players battle their “Axies” or NFTs to showcase who has the best abilities. The concept of the game is similar to that of Pokémon but on steroids. Every time a battle ends, the winner gets an award with a certain cryptocurrency known as Smooth Love Potion or SLP.
Nowadays, many Filipinos have used these PTE platforms as their new means to survive. They risk their hard-earned fiats to scour the uncharted waters of PTEs. Some even disclosed they have invested USD1000 (roughly PHP50, 000) to which they would earn it back in a week or so. This ROI (Return of Investment) is very short if compared to an investment in a traditional business wherein a 3-month ROI is already considered fast.
As of this writing, 1 SLP is equivalent to PHP5.81 (USD0.116405) and has a market capacity of PHP12, 459,461,189.
With this at hand, many tried their luck since there was no influx of funds to feed their households. Many claimed to be successful in their endeavors, some of which were even able to buy, build and construct new houses out of their earnings from PTEs. Though on the other end of the spectrum, they plummeted lower further than from where they started due to lack of knowledge in the industry, as well as the vulnerabilities brought about by the onset of this technology.
The Philippine government has recognized the rise of NFTs and the play-to-earn model like the Axie Infinity. In recent months, the government expressed its intention to tax the earnings from this play-to-earn game.
According to the Bureau of Internal Revenue (BIR), people are earning income through these types of platforms thus they should be taxed and declared.
The government is now focusing on resuming economic growth from 2021 onwards and generating revenues to fund and fuel its future projects. This came after the country’s revenues plummeted due to fewer taxations when businesses shut down because of COVID-19.
To date, the government through the BIR is finding ways to regulate and get a hold of a portion of this PHP12 trillion market (for Axie Infinity alone) through taxation.
On the part of CEZA, the investment agency will continue to support the national government in its efforts to increase its revenues, by attracting more foreign and local investments, including cryptocurrency.
– with inputs and research from LUKE MATTHEW DE LEON