Global remittances continue to rise year on year, aided by the vast number of ways currently available for sending funds across borders. One must only watch a football match on television to get a barrage of commercials celebrating low rates on money transfers, the "ease of use" of MoneyGram and Western Union, and their undying love for customers of all ages, races and creeds. But the fierce competition between legacy remittance companies trying to lure customers into their embrace is a sure sign of greater things to come. Established remittance companies have got to be shaking in their boots, looking at the speed, convenience, high liquidity, independence, and reliability of crypto
Here are the words that a crypto-Bible would start with should anybody ever decide to write one: in the beginning, it was slow. The infrastructure for getting paid in cryptocurrencies was (and largely remains, but this is a topic for another blog) impenetrable to an untrained eye. Smaller, more vulnerable economies in desperate need of financial independence and new remittances techniques couldn’t (and still can’t, but again, another blog) break away from the Troika’s tight policy grip. But time, technology and, most of all, the ruling class’ greed have paved the way for Bitcoin into the financial mainstream. What followed are the secondary effects, the technological “known unknowns” of the Cryptoverse that allowed us, regular people, to finally enjoy the benefits of fast and cheap cross-border transfers via cryptocurrencies.
This is a code word for peer-to-peer cryptocurrency transfers without the need for a centralised authority. Nobody likes tabs kept on private transactions and red flags raised every time a token changes hands. Luckily, sending value using a network of peers substantially reduces the bureaucracy and the number of intermediaries needed to send money from one geography to another. All you need is an activated cryptocurrency wallet, which you can set up in minutes without the need to visit a bank.
Just like in a search for any good deal, you have to look for an exchange that gets you comparatively better rates and lower fees. But once you’ve found one, the savings are quite substantial. It’s especially important in the economy where seasonal workers or subcontractors mainly send remittances to their families in lower-income countries. In other words, every penny counts when you’re counting pennies…
One of the main reasons that payment services that involve cryptocurrencies are used at all by anyone for any purpose is that these payments live on encrypted ledgers created and maintained by peers, and are virtually impregnable to digital evildoers. Is blockchain tech flawless? Far from it, but an acutely aware user who knows what he or she is doing, is careful, and attentive to details will find that transacting with crypto is much more secure precisely because there’s nobody to look over our shoulder at an ATM.
The reason transacting with crypto (, especially with stablecoins), is so fast is that payments are logged on the blockchain without the need for multiple correspondent banks that usually take days to review and authorise transactions. Whereas using cryptocurrencies for money transfers is almost instantaneous.
Bitcoin had an excellent two years, and I’m not talking about its price movement. I’m talking about a notable amount of adoption in the latter half of 2020 and Q1 of 2021 as several mainstream companies, such as MicroStrategy, MassMutual, and others bought copious amounts of BTC. Many movers and shakers in the financial markets are convinced that cryptocurrencies are entering an “acceptance stage on its adoption journey.”
The Lengthy Post Scriptum
With Bitcoin’s meteoric rise, institutional investors and big businesses are adding digital assets to their balance sheets to hedge against rampant inflation of fiat currency. “We’ve been looking at Bitcoin long enough, marvelling at its mathematical precision as its technogenesis took hold in our daily lives,” says Roman Potemkin, TRASTRA’s Founder and CEO. “And now the exuberance stage is giving way to the mass realisation that Bitcoin’s utility is something we’ve been missing trying to build a better, stronger, more reliable system of financial transactions in place of the one that’s been plaguing the world for centuries.”
What does it all mean for the remittances economy? Well, Bitcoin has reached notoriety over the past two years as several mainstream companies took positions in the asset, making BTC allocation more common. The list of institutional adopters is growing longer by the minute: MicroStrategy, MassMutual, PayPal, Goldman Sachs, many others are furthering crypto adoption by adding major cryptocurrencies and stablecoins to their investment portfolios or payment systems.
Crypto banks are spreading their wings all over the world after the July 2020 approval from the US Office of the Comptroller of the Currency (OCC) to custody crypto assets. AVANTI has been offering “digital asset banking, custody, and payment solutions” for a while now. In January 2021, the OCC authorised institutional digital asset platform Anchorage to operate as a national bank.
“It seems to me that the top-down motion of the adoption, though not exactly conventional in a democratic society, in this case, suggests that the “big boys” will not let the crypto motif go quietly into the night, which ultimately encourages “little guys” like TRASTRA and others,” continues Roman Potemkin. “Payment industry is catching up but not as fast as it should, which is no surprise given the size of the corporate ladder a simple decision has to climb before implementation. And this is our window of opportunity: we are hungrier, we do it faster, we are more flexible and agile. We pick up the new, quickly factor it in our solutions, and by the time Western Union decides that API integration is actually a good thing, we provide a fully functional payment system for the EEA-based workforce.”