With the advent of cryptocurrency, it is now possible for me to send you money wherever you are whenever you want at no cost in less than 1 minute.
Yes! Gone are now the days when we had to grit our teeth over inconveniences like paper cheques, bank opening hours, and expensive bank fees.
Before we get into how it works, let’s do a small recap on the situation of remittance (defined as the act of wiring money) in the modern world.
In the global world that we live in, many of us have lived abroad or have family/friends abroad.
As an expat, there definitely are times when I need to send money back homewhetherto pay off loansto pay my taxes,to send money to my familyor to invest in assets back in my home country
The act of sending money overseas is called ‘Remittance’ and it is nothing new.In fact, there is more than HALF a TRILLION dollars (US Dollars) worth of funds that people transfer overseas in a year.
So how do people transfer money overseas?The most common answer is via a bank.The process is pretty straightforward.If you have an account at a bank,you tell the bank that you would like to make an overseas money transferYou also state how much you would like to transfer as well as the details of the payee.Once bank inputs all the necessary details and initiates the overseas transfer, they show you how much commission they took out of your money.They will also tell you how long it will take for the funds to be transferred to the payeeSimple, right?
So DOES your money actually make its way to the person you are sending it to?Are the banks NOT making false claims?Yes, they are in fact telling the truth.Digital remittance via banks has been around for more than 30 years.As a result, you CAN expect that the money you transfer will arrive in the account of the person you are sending it.
But doubts and problems underlie this seemingly okay system of remittance through banks. For example,
In addition, the amount of time taken for a bank transfer to happen does not take into account the weekend either which means that if you were to wire money on a friday, it could take 2 extra days to transfer!
The final problematic aspect is the amount the banks are charging you for an overseas transfer.
Yes, the human race HAS come a long way to sending money online from not having paper currency exchanged between buyers and sellers. But as it is always the case with the current status quo and technology,
just because something is considered the best option right now DOES NOT MEAN that there CAN be something better out there.
Something…that can blow all of these annoying painpoints outlined above to smithereens!
Let’s get into the revolutionary way of wiring money abroad at no cost in less than 1 minute.
What enables this is cryptocurrency and blockchain technology. For now, the gist of things is that we now have Blockchain technology that can transfer financial data faster than any currently established practice used by the status quo. On top of the speed, the new technology is more capable of preventing fraudulent transactions. I will have a post dedicated to blockchain where I go into detail on how this is possible. Finally, the backbone technology has a website that enables an internet user to trigger the blockchain technology to buy, sell, deposit, and withdraw cryptocurrency. The website is the cryptocurrency exchange and with that we can now go into exactly HOW to transfer money via crypto starting with signing up to the crypto exchange.
1. Setup your first account on the FTX crypto exchange
2. Setup your second account on the FTX crypto exchange with another email address
3. Deposit fiat currency into the FTX exchange
4. Buy XRP ripple crypto with the fiat currency
5. Send your XRP ripple to your second account
6. Convert the xrp in your second account to USD
7. Make withdrawal of USD into your bank account
The takeaway point here is that there IS a way to beat the current system of remittance that is super slow, costly, and advantageous to the banks not the people. This has far-reaching implications for businesses that are increasingly becoming more global and digital. For example, in the current system, ecommerce companies and travel agencies are forced to charge higher prices to their customers should they be from abroad or have to be sent abroad. This is because of the unavoidable costs of exchange rate and banking fees when money needs to be wired internationally. But given the new system of crypto remittances, this could allow companies to charge better prices to their customers and reduce their turnaround times.
Something else to think about is what on a global level, crypto remittances may mean. It means that money can be transferred to any country and anybody no matter what they do, what their background is, and what their social standing may be. It means that we have a global system of flowing money that can be more volatile but also more democratized – the power and transparency on money now lies with you and I rather than the bank
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