Blockchain For Remittance: How DLT is Effecting a Half a Trillion International Industry
The International Remittance Industry: How Blockchain Effects It
When it comes to finance, the amount of money that stands silently behind it is enough to stupify even the biggest imaginations. The same can be said of a less known area such as the international industry behind remittance, which draws in an incredible amount in its own rights.
This is thanks, in large part, to the number of migrants across the world that send money overseas, reaching a global volume of over $570 Billion. The remittance industry in particular, has been one existing in a state of static dominance, with major companies having a commanding place within it.
In spite of this, challengers from the Fintech world have managed to begin and survive within this field, even when against fierce competition, these have included TransferWise, InstaReM, and OFX.
While challengers are helping to keep the remittance industry dynamic, it remains one dominated by its ‘big three': Western Union, Moneygram and Ria, which account for roughly 25 percent of the total market share of the industry. But as time ticks on, and blockchain enters a position of greater maturity, will companies that integrate it into their system manage to change this relatively static industry.
Money Matters & Talks
It's thanks entirely to the creation of blockchain that cryptocurrencies like Litecoin, Ethereum, Bitcoin, Golem and PeerCoin exist. They're decentralized, offer a great deal of anonymity and, more importantly for the remittance industry, they offer a long-term faster, more efficient system of completing transactions on a large scale.
Take for example this, whenever a transaction is conducted and completed between two people in different countries, the entire process has to go through respective banks. Overall, this system can be significantly time-consuming and costly depending on the amount of money being transferred.
Enter blockchain and its numerous crypto iterations, using blockchain to send money, not only means having no banks on either side to make the movement of money take hours or even days, but the elimination of currency transfers via banks also means that you get one of the single most reliable conversion rates between currencies imaginable.
The Overall Reach
According to research conducted by The World Bank, it's estimated that over $429 Billion in remittances made their ways to developing countries across 2016. The sad reality is that for many of these individuals who are on the receiving end of this money, they have no direct access to that money and may not even have a bank account.
Cryptocurrency mobile wallets, however, provide scores of people in South America, Africa and Asia easy means to send and receive money, given that mobile phone usage is fairly high even in unbanked populations. You even have cryptocurrency companies such as Dash that are attempting to provide users in Latin America with a way to obtain crypto through their phones as well.
It's believed that the world and business of monetary transactions between people internationally is undergoing a rapid simplification. Analysts believe that within the . next 10 to 15 years, the transfer of money across the world will become as simple as sending an email to another user with as much rapidity in conducting it.
A Matter Of Security
While centralized institutions and systems like banks and the methods they use, offer a tried and tested system, having all that data in one location means that their, and by effect, your, data are immediately vulnerable in the face of hackers.
Decentralized systems, on the other hand, provide a new, safer way of doing business, the digital ledger provides a way in which every transaction is recorded and authorized by the user, making sure that no false purchases are made.
Blockchain has seen some glitches, mainly user-generated, and all have been addressed effectively. By using blockchain, the entire process of moving money from one person to another can be drastically slashed.
So Who's Using Blockchain Already?
While none of the other, more dominant names in the world of remittances have made approaches towards blockchain technology integration, there are a number of up and coming companies, including already well-established ones that have taken the initiative in snapping up this innovative tech.
While these companies are only looking at incorporating blockchain into their already existing services, it's only a matter of time and trust before this changes. Currently, the companies putting blockchain to work are:
Abra is a startup based in the United States, it's also gained a certain amount of momentum thanks to attracting the attention of a number of influential investors. Currently, its cusomers can use Abra's digital wallet app to send and receive money from users overseas. Transfers come with no fees and take place almost immediately.
BitPesa is the recent addition to the company's existing portfolio and aims to capitalize on the initial success of the earlier M-Pesa, which is put to use in a number of African countries. BitPesa has already started in a strong position, with available features are not very different compared to those of Abra.
Coins.ph is a company based in the Philippines and provides users with a Bitcoin wallet app that they can use to buy and sell any number and diversity of cryptocurrencies. Thanks to its existing partnership with Stellar, users can buy, sell and accept transactions with users within Europe. Consumers may also use its services to send money to and from Ghana, Nigeria and Kenya.
While cryptocurrencies may rise and fall, the good and the strong are here to outlast us all. And with blockchain offering a revolutionary take on the old ways of doing business, the world of remittance will see it being applied as not a matter of if, but when.