Do you understand what a remittance is? It’s a term used for the transfer of money across national boundaries by migrant workers to their families or loved ones. Since the number of migrant workers is increasing, the remittance industry is also growing.
Some of the existing flaws of the remittance industry are poor exchange rates, high transaction fees, time-consuming, etc. So, people are looking for better alternatives that can reduce these problems. And that’s where Cryptocurrencies come into the picture, especially Bitcoin.
Although many people believe that Bitcoin is a good investment asset, they want to know whether it can address the remittance issues. Read on to know how Bitcoin is contributing to the remittance economy. Now,
Contribution of Bitcoin to the Remittance Industry
Do you think Bitcoin can bring any changes to the remittance economy? Below are some potential advantages of Bitcoin in the remittance industry. Before that, you can visit here if you are looking for reliable Bitcoin trading software.
Suitable for Cross Border Payments
Fintech companies believe that distributed ledger technology can significantly improve the efficiency of the remittance industry. Several international banks and some fintech firms have already adopted Blockchain technology for remittance purposes.
Since the number of currency transfers is huge across the globe, banks and financial exchanges want to make the process more efficient. According to the statistical data by the World Bank in 2018, more than $4 trillion transactions occurred on a daily basis.
Although the global remittance has declined 14% due to the pandemic, it will grow at a faster rate towards the end of 2021. Now, the important question is how Bitcoin and Blockchain can contribute to the remittance economy.
The answer is very clear; Bitcoin can reduce the cost of the transaction, make the transactions faster, and provide transparency. Take a look at how the remittance industry can profit from Bitcoin.
Provides Excellent Transparency
Transparency is a main concern of the remittance industry. Most of the migrant workers exactly don’t know how their money is transferred when they send through foreign exchanges or banks. Since the money transfer occurs through different stages and multiple third parties are involved, it lacks transparency.
On the other hand, Bitcoin provides transparency because Blockchain technology inherently eliminates the middleman from the equation. That means it works on a decentralized platform that allows you to send or receive money directly to a user without the involvement of a middleman.
Another benefit of Bitcoin in the remittance industry is it provides high security. Since it works on the cryptographic encryption process, which uses a 256-bit encryption algorithm, it’s the highest form of encryption so far, and it’s difficult to hack and manipulate.
So, Bitcoin provides high security to the remittance industry. Since the accounts are end-to-end encrypted through Blockchain Technology, users can send money with peace of mind. There is no need to fear losing their money in the transaction process.
Bitcoin also offers several other benefits, such as it can save a lot of time. Since wire transfers and other existing remittance systems sometimes take days to complete the transactions, they are not time-efficient. Another benefit is that the users have control over their money and can know precisely where their money is.
Since there is no intermediary and they are connected through cryptographic encryption, they can transfer money in a faster, cheaper, and transparent way. Moreover, they can save money due to the low cost of transactions. As mentioned above, there is no intermediary involved; the transaction cost can decrease upto 5%, saving millions of dollars.
The above facts show that Bitcoin can bring a revolution in the remittance industry. Although most banks have not adopted it, some leading personal banks, like Wirex, have adopted Blockchain technology for remittance purposes. I expect that more banks and financial institutions will adopt Bitcoin for remittances in the coming days.