Updated 5:25pm, 23rd December

News has emerged that a bitcoin exchange service has opened in Indonesia, the world's fourth-largest country by population – but one that hasn't appeared much on the bitcoin radar so far.

Bitcoin.co.id

joins other Indonesian bitcoin services such as artaBit and tuker.in. However, according to user reports from Indonesia, these sites are still in development and not fully functional, open exchanges – users may buy and sell bitcoins, but exchange prices are fixed by the sites. Tuker.in also accepts litecoin.

Local resident Ericson Pasaribu, who said he has used all three services without issue, said the 'exchanges' at this point worked more like money changers.

They exchanged local currency (Rp, or Indonesian rupiah) for bitcoins but at a rate pegged to those of exchanges like Mt. Gox and Bitstamp, with an added premium. Bitcoin.co.id promised to buy bitcoins at  Rp 7,139,000 ($584.90) each or to sell them for Rp 8,166,700 ($669).

Alongside these web-based services, LocalBitcoins is a popular choice among Indonesian bitcoin enthusiasts.

Pasaribu noted that such services were a necessary stepping stone to promote bitcoin's use and increase the number of coins in circulation. Larger international exchanges like Mt. Gox were difficult to access from Indonesia, with new accounts taking months to verify, if at all.

There is a slight lag on bitcoin.co.id's processing time: within an hour during business hours Monday to Friday, but up to 12 hours outside that. This is apparently a precaution against overloading, since bitcoin supply is limited in Indonesia.

Bitcoin.co.id founder and CEO Oscar Darmawan said bitcoin trade was still only about 5 BTC per day, but that there was a huge potential for growth with a large number of internet users in Indonesia.

Local miners were supplying bitcoins to the exchange, he added, with some of them producing 30 BTC a month. While that is still low compared to mining rates in other countries, he hoped a gathering of local miners in early 2014 would bring more online soon.

Bitcoin.co.id would become a fully-fledged, open market exchange in future if circumstances allowed, Darmawan said.

"We are thinking to become a full open exchange in Indonesia but we are still monitoring the trend because the volume is not there yet  to make that plan possible."

"People in seminars and education are interested in Bitcoin more for speculation currently, but in the very minimal amount. Some of them even buy only 0.01 - 0.005 (most of them). They try to buy because of media attention. We are trying to get some real investors in bitcoin by early next year as well."

Indonesia has long been regarded a sleeping economic giant. It has a population of nearly 240 million people, many of whom suffer from limited access to traditional banking services.

In September, Indonesia's National Banking Association (Perbanas) called Indonesia's banking industry "a failure”, citing that only 40% of the population had access to banking services. This stood in contrast to telecommunications, which had 102% penetration thanks to multiple SIM card ownership.

This hasn't stopped Indonesia's banks from becoming some of the world's most profitable. Yet, despite large-scale access to telecommunications, Indonesian society remains predominantly cash-based.

ArtaBit's founder, Ayoub Naciri, has stated in a number of interviews that he sees bitcoin as a particularly useful tool in Southeast Asia for international remittances in the sub-$1,000 range. Customers currently pay a flat fee to companies like Western Union which can be as high as 30% on small transactions.

The country is regarded as an 'emerging economy' and is a member of the Group of Twenty (G20) largest industrialized economies. Despite Indonesia and its currency, the rupiah, suffering big blows in the Asian Financial Crisis of the late 1990s, the economy has recovered since.

In addition, it has managed to grow throughout the more recent Global Financial Crisis due to limited exports to the US and Europe. Indonesia's recent economic growth is also third highest in the G20, behind only India and China.

87% of the country's population is Muslim, and there are frequent calls for Indonesia to follow the lead of neighbouring Malaysia and establish itself as a hub for Islamic banking and other financial services.

This combination of economic turbulence and growth makes Indonesia a fertile ground for financial innovation. Add to this a large, increasingly wealthy population with a need for banking services – there is potential for a bitcoin boom, should someone provide the catalyst.

Indonesia's tech startup scene, driven by a young population in places like Jakarta, is focused on mobile and consumer app development, including new payment solutions.

Jakarta image via Shutterstock