Cryptocurrencies are known for enabling people to send funds in a faster and cheaper way than fiat currencies. This efficiency is what is making many Crypto enthusiasts believe that more people will be getting into the sector in the near future. Although those who use the virtual currencies are aware of their potential, it is a recent study that has revealed how new coins are driving remittance.
Traditional Financial Institutions Vs. Cryptocurrency
Traditional financial institutions operate quite differently from the fiat currencies. Banks and other financial organizations generate most of their revenue from the high fees they charge for their services, remittance included. On the other hand, digital assets enable individuals and businesses to mover large sums of money at a low fee. For instance, more than $60 million was moved at a fee of only fifty cents through Litecoin.
Cryptocurrency Users Increase
Clovr recently released a report that showed that more people are using Cryptocurrencies to send remittance payments. Based on this study, the number of foreign-based workers preferring to send money back to their homes through Cryptocurrencies is growing every day. The efficiency and speed associated with the altcoins are making them ideal for sending either large or small amounts of funds.
The study established that most of these people send funds to their family. Over 3 in 4 respondents said that they were sending virtual currencies to a family member. Friends were also identified as other recipients of these coins. These payments were made to ensure the recipients can buy food and other household items and payments.
Remittance To Remain Popular In Coming Years
Millions of foreign-based workers keep sending billions of dollars to their loved ones in their home countries every year. Although the traditional financial institutions have dominated the sector for years, Cryptocurrencies are emerging as a major threat and are becoming attractive to more users every day. The new payments methods are eliminating third parties that are blamed for making the process not only expensive but also time-consuming.
More companies are now joining the Crypto sector to enjoy the benefits of blockchain technology and Cryptocurrency. Ripple, for instance, has created XRP, a token that has continued to gain huge admiration from the banking sector. The Crypto has been designed to reduce the time and cost of international money transfer. The partnership between Stellar and IBM is expected to also provide “Blockchain World Wire.”
Recently, reports have emerged of Facebook’s plan to join the Crypto sector. The giant tech firm is planning to create a stable coin that will be used on Whatsapp. The currency will enable Whatsapp users to send and receive funds on the mobile app. It appears that many companies are interested in joining the ever-growing money remittance sector. While speaking with CNBC a few months ago, Circle co-founder Jeremy Allaire said that all fiat currencies will one day become Cryptocurrencies due to the efficiency associated with the latter.
With regard to remittance, the report observed that as long as more people are moving to more developed countries for better jobs, the demand for money remittance services will continue to grow. Furthermore, the need for cheaper and more efficient processes will lead to an increase in the demand for digital payments options.