Business Finance: Can Cryptocurrency Be the Future of Remittance: Ken Research

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Business Finance Can Cryptocurrency Be the Future
of Remittance Ken Research
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Introduction There has been an increasing trend
by migrant workers in foreign mature economies
like North America and Europe to send money back
to their families in their home country in the
form of Remittance. Research predicts that by
2030 there will be an inflow of USD 6 Trillion
with about half being sent to Asia. The biggest
recipients of this fortune would be to developing
countries with high rural population India was
the largest remittance market in the world in
2017 with USD 69 Billion being sent back to India
alone. India was followed by China with a
remittance amount of USD 64 Billion and
Philippines with USD 33 Billion being the three
largest remittance markets in the world. Aside
from these three, more Asian countries like
Pakistan and Vietnam were also on the list with
remittance amounts of USD 20 Billion and USD 14
Billion with all of the mentioned countries being
in the top 10. This helps explain why the Asian
remittance market for 2017 was at USD 256 Billion.
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The Issue Although there is a significant amount
of money being sent to these economies, a major
portion is lost through transaction and service
fees. In many developing economies, every penny
counts as most families receiving remittance
money use about 70 of the money received to
cover their basic expenses. Transaction costs eat
away a major chunk of the money with margins
ranging from 2 to over 15 in developing
markets. Although the global average is around 7
the number is majorly skewed with far higher
rates in lower economic countries. This loss of
funds as the cost of sending money home is
causing a major dent in the role remittance can
play towards the development of the global
economy. Opportunity The implementation and
growth of the peer to peer network for financial
transactions and the growing need for a
decentralized currency has led to the explosive
increase in demand for crypto currency, mainly
Bit coin. Although Bit coin is the most prominent
there are other crypto currencies that exist
which are gaining popularity and increasing value
like Ethereum, Litecoin, Ripple, etc.
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The major growth, while positive for the future
outlook of the economy and for crypto currency
has had a large portion owing to people buying
crypto currency without fully understanding the
concept and its application. The second roadblock
has been the level of adoption by vendors and
companies owing to the skeptical nature of crypto
currency. These factors have led to Bitcoins
being worth USD 0.09 per bitcoin in July 2010 to
USD 17,549.67 by Dec 2017. Although the
volatility of the currency has yet to be
addressed due to the lack of a law regime for
regulation and due to a waving market sentiment.
The security and validation offered allow for
bitcoin or any solid crypto currency to be the
most stable medium for the future of finance.
Having all transactions done using crypto
currency would result in a completely
decentralized and open financial system which
would completely be controlled by the network
using it ensuring no one party gains through an
unfavorable or unsavory method. Given these
advantages, there are major applications for
remittance through crypto currency.
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This trend has already started to see growth in
South Korea and China with companies aiming to
use crypto currency for remittance transactions
and the trend is also expected to be implemented
soon in Malaysia. Given that financial technology
companies have had a major growth rate in Asian
markets there is a major scope for a strong, well
branded and trusted crypto remittance company to
ensure that maximum remittance amounts reach the
families that need them. Start-ups such as
Bitspark in Hong Kong, and Bloom, Payphil,
coins.ph and Satoshi Citadel Industries (SCI)
remittance unit Rebit in Philippines, are trying
to turn that into a business model. There is an
even bigger advantage for developing economies
Reduced demand for crypto currencies in smaller
economies often can lead to lower bitcoin prices,
so sending 100 to Indonesia or the Philippines
via bitcoin would result in the equivalent of
more than 100 at the other end. Without the bank
fees, the shops say they can charge their
customers 25 to 75 percent less. This means a
great deal to countries where the majority are in
poverty and need every bit they can get. The
introduction of Crypto currency has led to easier
and safer transactions and while there are still
security issues which need to be resolved, they
are expected to be sorted out in the near future
as research indicates that by 2030, Bitcoin will
become the 6th largest global reserve currency
leading to it having a mainstream place in
society and therefore the economy
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ancial-services-and-insurance/remittance/177.html
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