Remittance can be defined as transferring money to a remote location, usually between people living in different countries. While remittance has several benefits for the developed countries, developing or under-developed countries are the real profit makers. Third world countries have seen a major boost in the economy due to the large flow of money in the form of remittance. This income surpasses foreign direct investments and official development assistance in many countries as their economies highly depend on the cash transferred from abroad.
Blockchain is being integrated into many industrial and business domains. It is being used to provide solutions for different real-life problems. Being an efficient Distributed Ledger Technology (DLT), it can be the foundation of a new cross-border payment system capable of solving inefficiencies and offering a quicker, more reliable and more accessible service. Let’s discuss the benefits of blockchain and cryptocurrency for money transactions and what are the issues it is currently facing.
Benefits of Blockchain for Remittances
Blockchain, if incorporated in the global remittance industry, can produce wonderful solutions to the third-world problems and help people working overseas send money to their family easily. The following are some of the advantages blockchain has to offer.
Swift Payment Process
Blockchain technology will speed up and simplify cross-border transfers by taking out conventional middlemen, making remittances feasible and more accessible. The current remittance process is highly inefficient and costly for the general public. While the traditional method takes eight to nine steps before money finally reaches the receiver, blockchain simplifies the process to be done in four to five easy steps. Therefore, if you delve deeper, it makes perfect sense that blockchain and cryptocurrencies are geared to disrupt the existing system of remittances, which is hugely unfair and inefficient.
Efficient and Reliable
Blockchain innovation can be expensive as a relatively new and developing technology. However, considering that global annual remittance transactions are estimated to exceed $1 trillion by 2022, we see an enormous potential impact of blockchain here. Improvements in upload rates and lower fees will have a real impact on hundreds of millions of people’s well-being. Transferring money through old means results in huge losses in forms of fees and taxes at every step, thus decreasing the overall efficiency of the process.
Lots of Use Cases
Blockchain is being developed to do transactions through various mediums and devices, mobile phones, digital systems, and ATMs being the major ones.
To deliver new payment mechanisms, several businesses are now working with blockchain technology. Some mobile crypto-wallets enable users worldwide to send and receive digital payments. The combination of blockchain ledgers and ATMs can reduce the need for intermediaries and middle-men significantly. Users will not even need a bank account, and they will have to pay a very small amount to the ATM companies during the process.
The advantages of Blockchain are many and so are the problems in the way of its development. The biggest one is the regulation of blockchain technology by governments. The non-availability of internet services in the backward areas remains an issue. But we are sure that as this technology becomes stronger, it will certainly grow past these issues.