Cryptocurrency is regularly framed as a speculative investment, which…it is for plenty of people. But, as Rest of World reports, digital currencies can also be a conduit for the practical purpose of remittances. They’ve become an increasingly popular tool for working-class immigrants to send money across borders.
Case study: Three legacy remittance services—Western Union, MoneyGram, and Virgo—charged one woman, on average, $10 for every $200 she sent home. In contrast, Mexican crypto company Bitso charges just $1 for every $1,000. Deloitte estimates blockchain can reduce cross-border transaction costs by 40%–80%.
- Bitso currently handles 2.5% of US-Mexico remittances, or $1+ billion/year. As of December, it had a million users, mostly in Mexico and Argentina.
- Crypto remittances are also typically faster than traditional options.
Insider Intelligence recently predicted remittances would become the most mature blockchain-based payment method, and identified IBM (72 countries in-network) and Ripple (55 countries) as the biggest players.
Grace Broadbent, research analyst at Insider Intelligence, told us that while adoption is minimal right now, she expects blockchain-based remittances to grow quickly in the next five years. It’s hard to give an exact number, though, because “data in the space is opaque,” she says.
Looking ahead: “Remittances are historically non-digital transactions, making it hard to shift consumer behaviors,” Broadbent said. “But I do think the industry can overcome this hurdle, especially coming off of the momentum of the last year.” —DM