Bitcoin has a lot of uses in real life. It makes payments much easier by allowing people to pay from anywhere in the world. In that sense, it also helps the e-commerce industry. It allows business owners to expand their market reach and add another mode of payment.
Another real-life use is Bitcoin's ability to preserve wealth. Countries with struggling economies can use bitcoin to preserve the value of their native currencies. With all those real-life uses, we have yet to mention the one that stands out the most: remittances.
According to a report on Clovr, cryptocurrencies take 15.8% of the total money being sent across the world in 2018. It’s 4th place in the current money sending methods, only falling behind online services (like PayPal), money transfer services (Western Union) and traditional wire transfer (via bank or credit union).
Remittances are what you call money that is sent to a friend or family member in another country, generally used for food or household items. Although traditional remittance services work, they often come with a lot of fees, and it takes a while for transactions to be processed. Bitcoin is the perfect workaround for the many fees of standard remittances.
Traditional Remittances vs. Bitcoin
The way that traditional remittance services and bitcoin work are very different. They go through different processes and systems before your money ends up where you want it.
The first step to processing a standard remittance is to go to a Money Transfer Operator (MTO). Then, hand them the cash at their available exchange rate. After that, the MTO will begin the process of sending the money.
Like any other service, the MTO will charge you a fee for using their services. In most cases, the MTO is only the front end. Usually, MTOs will use the software and system of a bigger Remittance Service Provider (RSP) like Western Union or Moneygram. The MTO will then take a small portion of the fee that they charged you and the rest of the fee will go to the RSP. If MTOs are using the services of a bigger RSP, they might have to pay for the installation, subscription, and maintenance of the system.
This means more fees for the person trying to send money. To the supposed receiver of the money, this means that the fees have stacked up quite a bit. That means the costs are much higher than anticipated. To add to that, there is sometimes a lack of transparency in the exchange rates. Meaning it could cost even more for the end customer.
For bitcoin remittances, there are MTOs that are cloud-hosted that are easy to use. These target the developing nations, making it easy for the underbanked to send money. MTOs are able to send and receive funds with just an internet connection. This means that there aren’t as many fees for any system or program. All transaction details are usually stored in the blockchain. That includes the customer’s details used for verification.
The Competitive Advantage
As you can see, bitcoin remittances provide an easy and efficient way of sending money overseas and a cheaper alternative. Unlike its standard counterpart, bitcoin remittances don’t carry a lot of fees with them. It also has a lot more transparency. It provides a way for you to know where your money is going when you use bitcoin remittances. All transactions are recorded on a public ledger for everyone to see.
Using Peer-to-peer Marketplaces To Get The Most Out of Your Remittances
By using bitcoin exchanges, you can take full advantage of your remittances. There are tons of exchanges out there that will help you exchange your fiat into bitcoin. For example, if you’re living in Australia, there are several good bitcoin exchanges. These exchanges can help you convert your Australian Dollars (AUD) into bitcoin easily.
One of the better ones is Digital Surge. The platform is designed for Australians who want to get their hands on some bitcoins. It’s made easy for people who want to buy bitcoin using bank transfers. Digital Surge is considered to be one of the of the best bitcoin exchanges in Australia.
Peer-to-peer marketplaces have grown in popularity as an alternative to exchanges in recent years. Peer-to-peer platforms like Paxful make it incredibly easy to buy and sell bitcoin. Peer-to-peer platforms give users a more personalized trading experience. One way they make that happen is by providing a wide array of payment methods. Peer-to-peer marketplaces allow people to avoid the insane fees from banks and MTOs. It’s also much faster than sending standard remittances.
As you can see, peer-to-peer bitcoin trading is the reason that bitcoin remittances work. Without the peer-to-peer aspect, bitcoin remittances wouldn’t be as effective. Some platforms may probably charge high fees just like standard remittances do.
Real-life Examples of Bitcoin Remittances
A real-life example of peer-to-peer bitcoin trading being used to the fullest is the story of Ronald. Ronald is a born-and-raised African living in Luwafu, Makindye, located in Kampala Uganda.
He struggled to pay his tuition and struggled to find decent employment. His main means of survival is through his sister Ronah. Living in Brookline, Massachusetts, she sends money to him. Before they tried their hand at bitcoin, their only 2 possible options were Moneygram and Western Union.
As said earlier, those RSP’s ended up taking a big chunk of the money from numerous fees. When they tried their hand at bitcoin, they saw easy and efficient it was to send and receive.
Ronald and his family aren’t the only ones struggling with this kind of problem. There are expats from all around the world experiencing the same thing. Expats from Australia, America, and even Europe. Bitcoin allows family members to send money to the maximum capacity. Even if they aren’t in the same country.
You can read Ronald’s full story here.
The Peer-to-peer Revolution
Peer-to-peer finance is truly changing the way people use their money. Including its ability to send and receive remittances with ease, peer-to-peer finance has other real-life uses like wealth preservation and e-commerce. It’s the real-life uses like those that are starting to increase people’s awareness of peer-to-peer marketplaces. Now that the revolution has begun, are you in or are you out?
This was a guest article written by Paxful - a leading peer to peer cryptocurrency marketplace.