Blockchain reinvigorating remittance system to adapt to the new generation

December 14, 2016

Blockchain based protocols are mathematical models and software programs designed to authenticate, validate, and store valuable information in unbroken sequences that are synchronized all over the world. These protocols have unique sets of validations that make the whole system safer by reducing fraud, duplicity, and forgery as much as possible.

 Bitcoin interesting characteristics for money transfer

  • Used by the consumer (P2P):
  1. Like an email, a bitcoin (or a fraction of a bitcoin) can be sent digitally from one person to another, across the world, almost instantly.
  2. You can hold your Bitcoins in a digital or virtual wallet and send Bitcoins from one wallet to another wallet.
  3. The recipient, who can be can be anywhere in the world, can buy goods and services in the internet or in a domestic market where bitcoins are accepted or exchange them for local currency with other people or using specialized businesses (even ATMs). The larger the local ecosystem, the easier is to use.
  4. Transaction fees are minimal. Bitcoin exchangers can charge fees for distribution through domestic payment systems or to exchange bitcoins into at currency.

The promising characteristics in such a business model are:

  • Provided the Bitcoin market is active in both ends, the transaction costs can be minimal, almost zero, as both (Money Transmitter Organisation) MTO A & MTO B are each one benefiting from the exchange rate spread.
  • There is no credit risk between MTO A & MTO B and liquidity is kept at a minimum with no advances as it is customary nowadays.
  • No use of a Bank: this keeps the costs low and reduces the risk of losing bank accounts (if the Banks closes account).
  • If MTO A and MTO B are already money transfer companies there are other added advantages:
  • Fund receipts from sending clients by MTO A don’t need to be modified.
  • Fund dispersal by MTO B to remittance beneficiaries don’t need to be modified.
  • No change in KYC, AML, CTF procedures already in place.
  • A competitive advantage over competitors since the drop in price, even slight, can reap large benefit.

Application of bitcoin remittance in companies

REBIT as an example to explain a remittance system. Rebit is
a company operating in the Hong Kong- Philippines Corridor. Rebit is a service of Satoshi Citadel Industries, a Philippine-based holdings company for Bitcoin-related ventures. Rebit is using Bitcoin to connect its partner in Hong Kong in Manila.

The sender hands down Hong Kong Dollars (HKD) to a teller in the World-Wide House arcade in Central, a shopping center popular with Filipinos in HK. In Manila, Rebit delivers the corresponding Philippine Pesos (PHP) to the recipient in the Philippines, sometimes in cash at their once, but usually by the remittance distribution networks already well- established in the country, such as banks, ATMs, Mobile Wallets, and courier services.

The operation is quick and very inexpensive, plus the HKD-PHP exchange rate is very competitive. The operation is managed internally without the client on both ends ever receiving Bitcoins or even knowing what Bitcoins are. The HK agency internally exchanges the HKDs into Bitcoins and transfers those Bitcoins from their wallet to Rebit’s Wallet in Manila, who
in turns exchanges the Bitcoins into PHPs. Buying and selling Bitcoins at both ends is not a problem, and in fact, it is the revenue from these exchanges that allows the sender of the remittance to pay an extremely low fee.



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