How Crypto Can Transform the Way We Send Money Around the World

Remittances, payments, and donations are essential forms of money transfer that support millions of people and causes around the world. Howe...

Remittances, payments, and donations are essential forms of money transfer that support millions of people and causes around the world. However, traditional methods of sending money across borders can be costly, slow, and complicated, limiting the efficiency and impact of these transactions.

Fortunately, there is a new and innovative way of sending money that can overcome these challenges: cryptocurrencies. Cryptocurrencies are digital currencies that use cryptography to secure transactions and operate on decentralized networks, such as blockchains. Cryptocurrencies offer many advantages over traditional money transfer methods, such as lower fees, faster transfers, increased transparency, reduced risk of fraud, access to underserved regions, and greater financial control.

In this blog post, we will explore how crypto can transform the way we send money around the world for remittances, payments, and donations, as well as some of the challenges and risks involved.

Crypto for Remittances

Remittances are money transfers made by individuals to their friends and family members in other countries. According to the World Bank¹, global remittances reached a record high of $794 billion in 2022, and are expected to grow even further in the coming years. Remittances are a vital source of income for many households worldwide, especially in developing countries.

However, traditional remittance methods often involve intermediaries, such as banks and money transfer companies, that charge high fees for their services. According to the World Bank², the global average cost of sending $200 was 6.5% in the first quarter of 2021, which is well above the Sustainable Development Goal target of 3% by 2030. Moreover, traditional remittance methods can take several days to process, depending on the country and the service provider.

Cryptocurrencies can provide a cheaper, faster, and more convenient alternative for sending remittances. Cryptocurrencies bypass intermediaries and enable direct peer-to-peer transactions. This can result in lower transaction fees, allowing more of the funds to reach the intended recipient. For example, according to CoinMarketCap, the average transaction fee for Bitcoin was $1.23 and for Ethereum was $2.15 as of October 7th 2023. Cryptocurrencies can also be sent and received almost instantly, as cryptocurrency transactions are processed on decentralized networks that operate 24/7. This can help individuals who need funds urgently or have to meet immediate financial obligations.

Furthermore, cryptocurrencies can provide access to remittances for individuals who lack access to traditional banking services or live in areas where payments are censored by governments or corporations. Cryptocurrencies do not require a bank account or a credit card to use; all one needs is a smartphone and an internet connection. Cryptocurrencies are also decentralized, meaning that there is no central authority that can manipulate or block transactions.

Some examples of crypto-based remittance platforms include:

• Paxful³, which is a peer-to-peer marketplace that allows users to buy and sell cryptocurrencies with various payment methods, such as bank transfers, mobile money, gift cards, and cash. Paxful also has a social mission to enable financial inclusion and empower communities through education and entrepreneurship.
• BitPesa, which is a digital foreign exchange and payment platform that leverages blockchain technology to facilitate low-cost and fast cross-border payments in Africa and beyond. BitPesa also provides business solutions for remittance companies,

merchants, banks, and other financial institutions.

• Sendwave, which is a mobile app that allows users to send money from the US, Canada, UK, France, Italy, Spain, Ireland to Africa and Asia with no fees. Sendwave uses cryptocurrencies as a bridge currency to convert fiat currencies at favorable exchange rates.

Crypto for Payments

Payments are money transfers made by individuals or businesses for goods or services. According to [Statista], the global digital payments market size was $5.44 trillion in 2020 and is projected to reach $11.29 trillion by 2026. Payments are an integral part of commerce and trade worldwide.

However, traditional payment methods can also be expensive, slow, and complicated, especially for cross-border transactions. Traditional payment methods often involve multiple intermediaries, such as banks, payment processors, card networks, and merchants, that charge fees for their services. These fees can add up to a significant portion of the transaction value. Moreover, traditional payment methods can take several days to settle, depending on the country and the service provider.

Cryptocurrencies can provide a more efficient, secure, and inclusive alternative for making payments. Cryptocurrencies enable direct peer-to-peer transactions without intermediaries. This can result in lower transaction fees and faster settlement times. Cryptocurrencies also provide increased transparency and security for payments transactions. Cryptocurrency transactions are recorded on public ledgers, such as the blockchain, making it easy to trace the flow of funds. Cryptocurrencies also use advanced encryption techniques to secure transactions, making them less vulnerable to fraud and theft.

Furthermore, cryptocurrencies can provide access to payments for individuals and businesses who face barriers or restrictions to traditional payment methods. Cryptocurrencies can enable cross-border payments without the need for currency conversion or compliance with local regulations. Cryptocurrencies can also enable payments for goods or services that are otherwise difficult or impossible to pay for with traditional methods, such as digital content, online gaming, or peer-to-peer lending.

Some examples of crypto-based payment platforms include:

• PayPal, which is a leading online payment service that allows users to send and receive money, shop online, and pay bills. PayPal has recently introduced the ability for users in the US to buy, sell, and hold cryptocurrencies, such as Bitcoin, Ethereum, Litecoin, and Bitcoin Cash. PayPal also plans to enable users to pay with cryptocurrencies at its 26 million merchants worldwide.
• BitPay, which is a global blockchain payment provider that enables businesses and individuals to accept and send cryptocurrencies for various purposes. BitPay also offers a BitPay Card, which is a prepaid Mastercard that allows users to convert and spend their cryptocurrencies anywhere Mastercard is accepted.
• Flexa, which is a digital payment network that allows users to spend cryptocurrencies at various retailers, such as Starbucks, Nordstrom, Whole Foods, and more. Flexa uses its own cryptocurrency, AMP, as a collateral token to secure transactions and ensure instant settlement.

Crypto for Donations

Donations are money transfers made by individuals or organizations to support charitable causes or non-profit organizations. According to [Giving USA], Americans gave an estimated $471.44 billion in charitable donations in 2020, an increase of 5.1% from 2019. Donations are a crucial source of funding for many social and environmental issues around the world.

However, traditional donation methods can also be costly, slow, and complex, limiting the effectiveness and impact of these transactions. Traditional donation methods often involve intermediaries, such as banks,

payment processors, and charities, that charge fees for their services. These fees can reduce the amount of funds that reach the intended beneficiaries. Moreover, traditional donation methods can take several days to process and deliver the funds, depending on the country and the service provider.

Cryptocurrencies can provide a more direct, transparent, and accountable alternative for making donations. Cryptocurrencies enable direct peer-to-peer transactions without intermediaries. This can result in lower transaction fees and faster delivery times. Cryptocurrencies also provide increased transparency and accountability for donation transactions. Cryptocurrency transactions are recorded on public ledgers, such as the blockchain, making it easy to track the flow of funds and verify the impact of donations. Cryptocurrencies also allow donors to have more control over their donations, such as choosing the recipients, setting the conditions, and receiving feedback.

Furthermore, cryptocurrencies can provide access to donations for individuals and organizations who face challenges or barriers to traditional donation methods. Cryptocurrencies can enable cross-border donations without the need for currency conversion or compliance with local regulations. Cryptocurrencies can also enable donations for causes or organizations that are otherwise difficult or impossible to support with traditional methods, such as political activism, human rights, or disaster relief.

Some examples of crypto-based donation platforms include:

• GiveCrypto, which is a non-profit organization that distributes cryptocurrencies to people living in poverty around the world. GiveCrypto aims to provide universal access to basic income, financial inclusion, and economic empowerment through cryptocurrencies.
• The Giving Block, which is a platform that connects donors with non-profit organizations that accept cryptocurrencies as donations. The Giving Block also provides tools and services for non-profits to integrate cryptocurrencies into their fundraising strategies.
• Binance Charity, which is a blockchain-powered donation platform that supports various humanitarian projects around the world. Binance Charity leverages the Binance ecosystem and its partners to provide transparent and efficient donation solutions.

Challenges and Risks of Using Crypto for Money Transfer

While cryptocurrencies offer many benefits for remittances, payments, and donations, they also come with some challenges and risks that need to be considered and addressed. Some of these challenges and risks include:

• Volatility: Cryptocurrencies are known for their high price volatility, meaning that their value can fluctuate significantly in a short period of time. This can pose a risk for both senders and receivers of money transfers who may lose money due to unfavorable exchange rate movements. To mitigate this risk, some platforms offer stablecoins, which are cryptocurrencies that are pegged to fiat currencies or other assets to maintain a stable value.
• Regulation: Cryptocurrencies are still a relatively new and unregulated phenomenon in many countries around the world.