Introduction
Sending money across borders is an essential everyday transaction made by millions of people globally through traditional banking systems over the years. But, in today's time, the way people do international remittances is undergoing a significant transformation due to the availability of cryptocurrencies. With the rise of it, traditional methods of sending remittances are facing new challenges and opportunities.
Thus, in this article, we'll get to know more about how cryptocurrencies are reshaping the remittance landscape and what are the advantages and challenges that comes with it.
The Drawbacks of Traditional Remittance Methods
Before heading to the main discussion, let's first look back on the disadvantages of using traditional methods, as to why the use of cryptocurrencies is highly encouraged in the present time. Knowing that remittances, the money sent home by workers abroad, are a vital lifeline for millions of families worldwide, it's a must to have a different alternative that's more efficient.
Again, here are several notable challenges of traditional remittance:
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High transaction fees - sending money internationally through traditional banks are always known to be facing multiple intermediaries, which causes and leads to more fees and are much higher. The downside, these fees can consume a significant portion of the money being sent, making the money to be received by the recipient less and less.
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Slow transaction times - Aside from the fees, doing remittance on traditional banks are expected to have longer wait times. It may take several days or even weeks to process which is very inconvenient. These delays aren't ideal for urgent situations where funds are needed quickly.
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Limited access for many people - There are certain countries, especially the developing ones that lack easy access to traditional banking services or none, which is worse. Thus, many individuals are left with no choice as this exclusion leaves them unable to participate in the global economy.
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Currency exchange costs - This is yet another type of fee which is a significant disadvantage when transacting through traditional banks. When money is sent across borders, it often needs to be converted into the recipient's local currency. Thus, this causes fluctuation with the exchange rates which will affect the final amount received, most of the time making it lesser. This is one of the reasons why crypto gambling is increasing accessibility for players worldwide, as it bypasses these traditional banking fees.
How Cryptocurrencies Are Transforming Remittances
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Lower fees - when using cryptos, there will be no intermediaries involved. That being out of the picture, through using cryptos, the fees are significantly reduced. This means more money ends up in the pockets of the recipients.
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Fast transaction - Cryptocurrency transactions can be processed in near real-time. This means the recipient can immediately have the funds available on their end in a matter of minutes. Thus, this option is very valuable and is especially beneficial in emergencies or urgent situations.
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Easy access - The only thing you need to be able to use and transact with cryptocurrencies is a reliable internet connection. No need for identification cards, bank statements, or other requirements that's not accessible to some people. Thus, this level of accessibility allows individuals to participate in the financial system without much fuss. This is particularly beneficial for those interested in using decentralized finance solutions for tasks like cross-border payments and remittances.
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Enhanced security and transparency - Cryptocurrencies uses blockchain technology, a digital ledger that records all transaction history but anonymously. Whereas, this ensures all activities made with cryptos are secure and transparent. Through this feature, trust is built among its users and results to a reduced risk of fraud.
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Stable value with stablecoins - As the name implies, stablecoins are a type of cryptocurrency that are reliant and connected to traditional currencies, like the U.S dollar. Meaning, unlike other cryptos, its value is stable and won't be affected with price swings. They help reduce the volatility typically associated with cryptocurrencies which it's the best and the safer option for remittances.
Conclusion
It would be an understatement to say that cryptocurrencies are just a great alternative, wherein fact it is a revolutionary development in cross-border remittances. If more people would just embrace the idea and understand what it really is, it's not hard to realize how efficient, accessible, and cost-effective it is when it comes to money transactions abroad.
It's very timely as this financial landscape continues to evolve. In the upcoming years, it is expected that cryptocurrencies will remain and will most likely become one of the staples. Thus, look out for more advancements that will make sending money across borders easier and more inclusive than ever before.