What Is The Bootstrapper’s Guide To Bitcoin Remittances – Part 1
Bitcoin remittances are eyeing to the Philippines and Malaysia. What is the future of these remittances?
Where Are The Bitcoin Remittances Being Made?
With a lot of rhetoric going about Bitcoin and its impact on the $ 430 billion international remittance industry, it is one of the cryptocurrency’s most obvious uses as after all sending money across the planet was roughly the same effort as sending an email. Largely observed is the potential effect on emerging markets included savings in aggregate that are larger than most country's education budgets that cannot be overstated as beyond all the pontificating there still is the practical implementation that has yet to be sorted out.
Being a homespun company operating out of the Philippines, the startup is the third largest receiver of remittances in the world where the compelling numbers are that $ 26 billion received in 2013, an estimated $ 27.5billion in 2014, with consistent growth of about $ 1billion to $ 2billion annually with Mexico right behind with $ 23 billion received in 2013 with declining volume as the US housing market crash several years ago.
Mexico and Philippines although similar in volume couldn’t be more different from a remittances standpoint, while the US is the single largest source of remittances for both countries whereas for Mexico it accounts for 98 percent of the total volume and with the Philippines, it accounts for a little over 30 percent.
With a closer inspection, it seems to indicate that nearly $ 10 billion in volume from the Philippines is being attributed to the US that isn’t coming from the US at all. There is always this significant amount that in reality is simply funds being routed via Nostro bank accounts from the middle east hosting over 2.5million Filipinos with additionally there are 40 other countries currently hosting at least 10,000 Filipinos respectively which is international pageantry including Canada, Malaysia, Australia, Japan, and the United Kingdom.
It is then accurately said that Mexico relies on a singular remittance corridor with the US while the Philippines is dependent upon multiple corridors with multiple countries which is a circumstance more closely echoing the two largest remittance countries, India and China.
It is simply not possible for a small Bitcoin startup to singlehandedly overthrow Western Union, MoneyGram or even Remitly as at this stage it is however possible to provide a very compelling alternative to a small sub-section of customers as the oft-quoted startup saying goes as narrow your focus to the smallest possible problem you can solve.
To this extent let’s accept the fact that Bitcoin as a currency is pretty terrible at the moment as the focus instead on what its good at which is instant settlement while it also helps by letting assume that the average startup doesn’t have those resources that are open to overseas offices in multiple countries obtaining all the necessary legal and regulatory requirements for operating in those countries.
To conclude, lastly the very reasonable assumption that most migrant workers make is that they don’t care about cryptocurrency or the blockchain or the coming financial revolution that will naturally go to a service if it saves them money.
Referring to services like Rebit in the Philippines, Artabit in Indonesia and BitPesa in Africa, as the last mile bitcoins remittance services they accept Bitcoin from overseas converting it to pesos, dinars, or shillings delivering the funds to the final beneficiary via a variety of domestic transfer methods where the beneficiary doesn’t need to know that those funds were ever transmitted via Bitcoin as they only know that the sender had to spend a little less money while doing so. With no volatility risk, the recipient never touches Bitcoin as all risk is managed by the service.
While it comes that specializing on just the last mile there is surely an invitation for other Bitcoin entrepreneurs from other countries to form informal corridors as the customer in Hong Kong is surely in need of converting their HKD into BTC before sending it to last-mile service that one could make a reasonably profitable business out of performing that service for them.
Although it is already happening organically the on-ramp company is sure to accept local fiat currency at the till and converting that cash into bitcoins on the back end before transmitting the funds to the off-ramps in the Philippines, Indonesia or elsewhere.
While it may seem that on the surface it doesn’t seem like a very exciting premise for the financial revolution lets also think about what’s happening with small businesses thereby they have no formal partnerships, as also binding contracts, or even lines of credit between them settling cross border payments in real-time on behalf of customers that have never been possible before without a centralized intermediary.
The Final Words To Wrap Up The Discussion
While it is sure to help to describe it that way, the process seems straightforward as most of the bankers immediately understand the concept of “HKD -> BTC -> PHP,”, mainly because the standard workflow is “HKD -> USD -> PHP.” Whereas on paper there is just replaced the dollar with the more nimble, modern counterpart whereas in practice there’s however a lot more to it than that. The discussion extends to the next part with more details.