Remittances are money transfers that people send to their families or friends in other countries.. They are a vital source of income and support for millions of people around the world. According to the World Bank, remittances reached 794 billion dollars in 2022of which 626 billion went to low- and middle-income countries.
Source: World Bank/Knomad
But sending remittances is not easy. It can be expensive, time consuming and complicated. Traditional remittance services charge high fees, take days or weeks to process transactions, and require a lot of paperwork and verification. They also have limited access and coverage, especially in rural and remote areas.
Traditional remittance services like Western Union and MoneyGram can be expensive and slow. The average cost of sending a remittance is 7% of the value of the transaction. This means that if you send $100 to your family in Mexico, you will pay $7 in fees. In addition, remittances can take several days to reach their destination.
That’s where bitcoin comes in. Bitcoin is fast, cheap and secure. It can be sent and received by anyone, anywhere, at any time, with just a smartphone and an internet connection. It does not require intermediaries, banks or governments to work. It is transparent, immutable and resistant to censorship.
Advantages of using bitcoin for remittances
Bitcoin has many advantages for remittances. Here are some of them:
– Low commissions: bitcoin transactions are much cheaper than traditional remittance services. The average fee for sending bitcoin is less than $1, compared to $14 for sending $200 via Western Union or MoneyGram.
– Speed: bitcoin transactions are much faster than traditional remittance services. They can be confirmed in minutes or hours, compared to days or weeks for wire transfers or wire transfers.
– Accessibility: bitcoin transactions are much more accessible than traditional remittance services. They can be done by anyone with a smartphone and an internet connection, regardless of location, identity, or financial situation. They do not require bank accounts, identity documents or physical branches. Even in some nations like Nigeria, its use is being implemented without the need for an Internet connection, which opens up a wider range of opportunities.
– Privacy: bitcoin transactions are much more private than traditional remittance services. They do not reveal the sender’s or receiver’s personal information, such as their names, addresses, or phone numbers. They only show the public addresses of the wallets involved in the transaction, which are random strings of numbers and letters.
– Security: bitcoin transactions are much more secure than traditional remittance services. They are protected by cryptography and verified by a network of nodes that follow a set of rules called a protocol. They cannot be reversed, altered or manipulated by anyone.
Bitcoin is changing the way people send and receive money across borders. It is empowering people to have more control over their finances and support their loved ones in a faster, cheaper and easier way. It is also creating new opportunities for economic growth and development in remittance-dependent countries such as Mexico, China, India, Egypt, and the Philippines.
Experts also believe Bitcoin for remittances
One way to send international remittances with bitcoin is by using a virtual exchange house, where you can buy and sell bitcoins with different payment methods. You can also use a P2P market where you can trade directly with other users.
Although there is no precise data on the amount of BTC used among the 794 billion dollars sent in remittances in 2022, There is no doubt that the Bitcoin network has been used on countless occasions to send remittances around the world..
The war in Ukraine due to the Russian invasion revealed this clear example of the usefulness of bitcoin as a feasible method for sending money to countries with difficulties of any kind.
In that sense, we consulted Peko Wan, Director of Ecosystem at Pundi X Labs about why bitcoin should be considered as a remittance option.
The Pundi X Labs executive highlighted that the king cryptocurrency can be used for remittances by remittance agencies, since it is possible to establish a direct bridge between the remittance agency of country A and the remittance agency of country B:
“The remittance agency in country A receives local currency A from clients and converts it into cryptocurrency that the receiving remittance office in country B can accept, converts it into currency B, and deposits it into the recipient’s bank account,” he notes. Peko Wan.
Furthermore, he points out that “the sender in country A can transfer the crypto directly to the recipient in country B” without intermediaries:
“The recipient converts the crypto into local currency. The recipient converts the crypto into local currency through local crypto exchanges.” thus highlighting the properties of speed, security and immediate availability through the use of cryptocurrencies such as bitcoin for sending remittances between different latitudes.
On the other hand, for Federico Ast, founder of Kleros and entrepreneur in Blockchain and Legaltech; Using Bitcoin allows you to significantly reduce the costs of sending/receiving remittances.
“It allows you to save a lot on international bank commissions that are usually very expensive (in some cases they even represent 50% of the amount)”, highlights the founder of Kleros.
He considers that by using bitcoin some restrictions imposed in some countries by capital controls that do not allow sending/receiving funds from abroad can be circumvented.
“Bitcoin allows people from all over the world to have sovereignty to use their money and send it to their friends and family who need it, especially in developing countries”, Federico Ast concludes his speech.
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