Bitcoin has shown to mean lower transaction fees when transferring value. It doesn’t matter if the payment is local or cross-border, It offers almost instant, trustless, borderless payments in a matter of minutes with almost no fees (Even zero at times).
Many see the potential for Bitcoin to greatly improve on legacy remittance payment systems in Africa. Their could be huge reduction in costs to both money transmitter businesses and the consumer. This is partly because large global businesses require huge funding to operate such services. Large overheads in- Buildings, Staff, Software Systems and Security. While this space has seen many new entries attempting to capture the market.
M-Pesa is a great example. They are definite improvement for consumers on current systems. This is good news, but what if it was possible to improve even further right now? The truth is, the Global Remittance market is choking Billions of Rands annually out of some of the poorest people in the world.
For instance – One of the most popular provider of cross-border payments in South Africa- Western Union charge approximately 20% in fees in the African market! Thats R200 for every R1000 for a cross-border payment!
What About Bitcoin?
“As more people use and accept Bitcoin, it creates positive feedback loops for usage and trust, which helps grow the industry. At some point we believe it will hit a critical mass that will cause growth to become exponential,”
Werner van Rooyen, at BitX.
Consumers on either side of the wealth spectrum are beginning to see the value in Bitcoin, as we can see by the recent VC funding of local start-ups such as BitX in the Bitcoin arena. BitX is a wallet and exchange platform for the South African market received around 50 million Rand in a round of funding!
Bitcoin is still in it’s relative infancy in the African market, also, general tech and IT development is behind the first world countries in which you see more widespread adoption.
Many Bitcoin entrepreneurs are currently searching for “Bitcoins Killer App” as it’s known fondly. This is the app that could spur widespread, mainstream Bitcoin adoption. I propose this question to you. What if Bitcoins killer app in Africa was remittances?
Imagine a world where you could send cross border payments securely between parties with no intermediaries! You don’t have to imagine,That world is already here! It just needs to be marketed, branded and released in such a way that it is easily accessible to everyone!
Ofcourse there are definite reasons as to why we should be using bitcoin, but like with any new technology, what are the reasons it is not used by mainstream consumers right now?
Barriers To Entry
There are a number of reasons bitcoin is not accepted by a large proportion of society yet, here is a list of some of them:
- As with new tech, especially those that are associated with Banks and Finance require a high level of trust.
- Bitcoin is not as easy to transact with compared to legacy systems, this is largely to do with the fact that it’s very new technology, Developers and Venture Capitalists globally are trying makes this easier and more efficiently integrated with current technologies.
- No tax or governmental regulation is in place yet for it, this scares investors and business as they are not sure which regulatory bodies and hoops they would have to jump through in the future to compete.
What are your thoughts?
Do you think Bitcoin is the future of remittance?
If not, what do you think the reasons it can’t replace current systems is?
Leave a comment below.