What Is The Bootstrapper’s Guide To Bitcoin Remittances – Part 2
Continuing from the previous post here are more details. Why are the Bitcoin remittances working out in many countries?
Continuing from the previous post all Bitcoin remittance startups are brokerages where operating on-ramps they have access to the large amount of Bitcoin they can purchase in the real-time buying Bitcoin on-demand as the only way to reduce volatility risk holding cryptocurrency that has not proven to be a financially sound strategy. With access to an exchange comes locally available pay-in methods and low trading fees that are key as in the US Coinbase and Circle are at the top of the list. The others are in popularity within Europe, Bitstamp, and Kraken, in Australia, Coinjar, and Independent reserve, in Singapore Itbit, in Middle East Igot and the list continues.
To operate as off-ramps the startups require to have enough buyers for the Bitcoin received to raise sufficient fiat to make payouts to the customer’s beneficiaries with Bitcoin prices tending upwards as the simple game of buying low and selling high with the movement has been in the other direction.
As of now, the remittance volumes are in the low hundred BTCs daily with a single broker coming with good connections often selling over the counter quickly enough to turn a small profit or at least break even with service volume growing however automation in the form of trading bots interact with international exchanges necessary to keep ahead of volatility.
While it is a lot harder to be the off-ramp, in most cases the basic migration theory was all over again as the on-ramps tend to exist in countries with better banking infrastructure and deeper Bitcoin liquidity with off-ramps tending to be countries where Bitcoin community is in its infancy. It does not pose to be such a problem as a massive opportunity and if one has the stomach for it operating as a last-mile remittance service is where the largest growth spurts are observed while it’s only natural between the two of them the Philippines and Indonesia receiving remittance from over 50 different jurisdictions with new inward corridors coming online the incoming Bitcoin volume spikes.
It is better to note that to this additionally the off-ramps are needed to be connected with as to the various domestic remittance methods in their respective countries, whereas in the Philippines there are more pawnshops than ATMs as such pawnshops are more frequently used as cash-out methods than the banks. Whereas in Indonesia a combination of banks and the post office appear to be the preferred strategies.
In case of India, the extremely popular money transfer system of hawala implies your cash pickup point could be anything from a jewelry store to a travel agency with interestingly it is observed if a fledgling Bitcoin remittance businesses in India have chosen to model their approach after the hawala brokers or use the formal routes provided by the banks and the post office.
It is often observed in most countries, the business is engaging in remittance activities that are categorized as a money transfer operator requiring to obtain a license as such. While the costs of these licenses tend to vary wildly from country to country in the US hardly any Bitcoin companies have ever managed to obtain license covering all 50 states that are prohibitive enough with startups like CoinX mentioning their license status prominently on their website whereas around the world the range is from tens of thousands of dollars in some ASEAN countries up to $ 1-2 million in the Middle East.
With a slightly different approach, every country has an Anti-Money Laundering policy and Know-Your-Customer requirements as the costs of complying with these laws have an impact on the end-user pricing as a handful of companies provide KYC –as-a-service at fairly reasonable costs alleviating that overhead somewhat. This brings some countries to have stricter KYC requirements as however, it will be necessary to verify a startup’s compliance with the local AML council.
Finally, The Dream
As we are currently at the starting line of a marathon including $ 42 billion in the global savings at its end, it is that which you imagine if every country had one of them that are loosely coupled it is whereas fully interoperable as Bitcoin remittance brokerages with each one acting as both an on-ramp and an off-ramp onto the global network as its hawala, writ large and thoroughly rebooted. This implies there are no centralized intermediary needs to exist to make it happen with each business autonomous and settling all debts with Bitcoin real-time as it may not be enough to overthrow Western Union whereas it will be enough to get its attention.