Bitcoin proponents have long been eyeing one of fiat currencies’ most vulnerable areas: international borders. Where one currency ends and another begins, what should be a straightforward transfer of value quickly becomes a headache—often an expensive one. Fees accrue, foreign exchange exposure looms, and regulators sniff away in the background.
If you’re a tourist or a business-type, this is irksome, but so are trans-ocean flights, phrasebooks and the rest of it. You will presumably focus on relatively accessible and accommodating countries, or relatively lucrative ones, as the case may be.
But you can’t choose where you’re born, which makes sending remittances among the most trying experiences in the whole fragmented global currency system. If you are working in Switzerland to help support your family in Sri Lanka, you’re going to send that monthly check whether you lose 9%, 14% or 18% in the process. Deciding you’d rather send it to Bolivia makes no sense, so you’re at the mercy of whoever—Western Union (WU) and Moneygram (MGI) are the usual culprits—is around to provide the service.
Enter Bitcoin. Borderless and practically fee-free, it’s the perfect solution to the torturous process of sending remittances. Which, by the way, are forecasted to total $608 billion this year, according to the World Bank. So are “rebittances” (there’s always a portmanteau) the blue ocean they appear to be at first glance, just waiting for a cheap, painless alternative in the form of Bitcoin? The reality as it stands may disappoint the more starry-eyed optimists, but the idea certainly has potential. The crucial step to realizing that potential is to understand the challenges.
The first objection Bitcoin remittance proponents have to the current system is high fees. “A typical money transfer costs up to 10% fees,” AXA Strategic Ventures’ Florian
Originally appeared at: http://www.nasdaq.com/article/bitcoin-and-remittances-can-it-work-cm504136