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What you Need to Know about the Disruptive ‘Bitcoin Remittance Business’!

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Bitcoin Remittance Business

Bitcoin is facing a lot of challenges by various governments around the world, despite being the leading cryptocurrency. There are several reasons for that. But there is one area where there is a massive surge for Bitcoin, and that is the overseas remittance market. Instead of using Bitcoin as a currency, it is mostly being used as an excellent medium for international money transfers. This allows Bitcoins users to avoid paying high tariffs to traditional banks and currency transfer services when the transactions are done via fiat currencies through wire transfer.

A lot of people from different corners of the world are able to regularly send money to their families living far away in their respective natives through this Bitcoin remittance method. The latest report released by the World Bank states that the global remittances crossed $528 billion in 2018, of which $375 billion was sent to developing and third world nations alone. India retained the top position among remittance recipients, with Bitcoin remittance of $80 billion, while China with $67 billion, the Philippines with $34 billion, Mexico with $34 billion, and Egypt with $26 billion hold the top positions on the list. Crypto experts are projecting that these remittances will grow by 10.3% for the upcoming year. If that happens, the global Bitcoin remittances will cross $690 Billion.

What is the Standard Remittance Method?

What is the standard method for sending money to different countries across the globe? How are these ~$600 billion being sent to different countries before Bitcoin? Let us understand. For instance, if a person working in America wants to remit a dollar amount to his home country in India or Africa, he is supposed to visit a Money Transfer Operator shop and hands over cash at the current exchange rate, then that Money Transfer Operator starts to process the money to the destination country. These MTOs will obviously charge for its services. In reality, the MTO is only acting as a frontend agent.

The operator will have to utilize the service, software, and process that are actually provided by a bigger remittance software provider like Western Union or Xpress Money. Due to the lack of software system availability and financial capacity, these MTOs will only receive a part of the charges that it takes from their customer, as the bulk is pocketed by the Remittance Software Provider (RSP). On top of it, MTO should also have to pay other regular charges for installation, subscription, and system maintenance. This increases the overall cost for the end customer as all of these charges are levied on them. The MTO and the RSP will try to take the maximum fees as they were the only reliable service to send money abroad. On top of it, there is also a lack of transparency in the exchange rates offered to the end customer, who has to bear more charges in the form of unfavorable rates.

How Does Bitcoin-Based Remittance Work?

With the advent of technology and the amazing cryptocurrencies (especially Bitcoin), these foreign remittances have become extremely easier. A lot of start-ups are providing these low cost, extremely convenient Bitcoin remittance services.

Bitspark is one of the major players in this area. It is a Hong Kong-based Bitcoin Remittance Company that offers services like sending money to third world countries like the Philippines, Indonesia, and Vietnam. This company also offers a cloud-hosted solution for MTOs in the developing nations that works seamlessly with hardly any banking infrastructure.

Through a simple internet connection and an inexpensive software running on the device, MTOs all over the world are able to send and receive customer’s money without any additional fees for installation, maintenance, and subscription charges. All the required details of the transactions, including the KYC and other anti-money laundering necessities, are stored in a secured low-cost database, which could also be a blockchain system. The process is simple. The businesses just make an approximate estimate of the money needed for a day or for a particular remittance. Then they purchase equivalent Bitcoins in advance and immediately sell them for the fiat currency in the receiving country. This business is free of risk as it does not hold the virtual currency tokens for a very long period of time. Customer’s transactions are performed within a few minutes, thereby saving a lot of time and increasing the transaction speed.

Eliminating the high transfer fee!

Some of the main benefits of this Bitcoin-Remittance services include low overall costs to the end customer, quick global money transfers within minutes or sometimes seconds, no additional hidden costs to the MTOs, a larger share of commission for their agency role and safe & secure regulatory compliant business mechanism. The ‘Bitspark’ user is not expected to have any knowledge about the backend blockchain technology, as the user-friendly interface offers simple steps to process the money transfer within a few seconds. Bitspark also has its mobile app ‘Sendy,’ which works as a simple mobile wallet as well as an MTO locater. After completing required verification, any ‘Sendy’ user can work as a top-up agent and can start earning commissions for any top-ups he facilitates for the other users. There a lot of start-ups mushrooming with regard to this business. These start-ups offer a platform for bitcoin-based remittance services. For example, a start-up company called ‘Rebit’ offers money payments to the Philippines only from bigger economies like from Canada, Japan, and South Korea. It is planning to expand to the Middle East. Bloom, Payphil, and Coins.ph are other major players operating in the Asian region using an almost similar model.

Generally, such businesses do not deal with remitting customers directly. Instead, they provide a backend system that works on Bitcoin transactions. Traditional remittance providers are trying to defend themselves from the emerging competition. The giants like Western Union and MoneyGram which dominate the current market, are testing Ripple’s XRP a cryptocurrency which is smaller and more centralized than Bitcoin.

Disclaimer – Investing in cryptocurrencies and Initial Coin Offerings is highly risky. Since every individual’s situation is different and unique, a qualified professional who has enough knowledge should always be consulted before making any significant financial decisions.bitcoin

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