Bitcoin for Remittances

[btctraderr]

Ok, so there is alot of hype surrounding the potential here, we all know about how bitcoin makes it cheaper to transact cross borders, especially for migrant workers sending small sums of money home, but I have a few questions.

Is this doable now and if so how?

So its easy to get the BTC to anywhere in the world, but for the person who is sending their $200 home to say, India (somewhere with low bitcoin penetration), how does the person in India cash out that $200 in the local currency? Would it be a matter of:

Two people, Person A is sending money to Person B.

1. Person A deposits cash at bank with reference code
2. That money is received, the bitcoin exchange buys an amount of BTC equal to that dollar value
3. BTC is sent to receiver in the destination country who then needs to find a buyer for that BTC to hand cash to the Person B

So it's step 3 where we have the problems now in an underdeveloped market (somewhere with low bitcoin penetration), BTC for remittance can't work there until there are buyers for that BTC. Is there any other way to do it? Maybe cash balances are held in both countries at specific banks, the dollars are sent and the BTC bought for a price 3% above market, then based on exchange rates the appropriate value is ready for collection by person B and the BTC is sold on the market thereby making the 3% premium above market as the commision.

But this can be done without bitcoin, so I guess it brings me back to my previous example....the only way to send remittance at the moment to markets not served by bitcoin and by using bitcoin as a money transmission mechanism we still need to involve traditional banks.

Thoughts?

[bryant.coleman]

An experiment is going on in Kenya:

http://www.bloomberg.com/news/2013-11-28/bitcoin-service-targets-kenya-remittances-with-cut-rate-fees-1-.html

Let's wait and see whether it will be successful.

[beetcoin]

for the typical poor person in a 3rd world country, is it worth that extra effort and time to save the money? i'd say yes, since they are not wealthy.. but the problem is how many of them are tech savy enough to use bitcoin? another issue: it costs money to convert fiat into BTC, so that should be associated with the costs as well.

[justusranvier]

In many lesser developed countries, holders of BTC can sell them for local currency at above-market rates via LocalBitcoins and other OTC methods.

Depending on the details of the countries involved, the cost of the remittance can be effectively negative.

[beetcoin]

they could, but demand for BTC could be so low that they might not get much fiat for their BTC.

[niothor]

An experiment is going on in Kenya:

http://www.bloomberg.com/news/2013-11-28/bitcoin-service-targets-kenya-remittances-with-cut-rate-fees-1-.html

Let's wait and see whether it will be successful.

Another one? The last one failed without even starting and this seems to be run by the same people.

[bryant.coleman]

for the typical poor person in a 3rd world country, is it worth that extra effort and time to save the money? i'd say yes, since they are not wealthy.. but the problem is how many of them are tech savy enough to use bitcoin? another issue: it costs money to convert fiat into BTC, so that should be associated with the costs as well.

They don't need to be tech savy, as third party business is doing the transaction.

The currency conversion charges associated with the conversion of USD to Kenyan Schillings will be slightly less than those associated with conversion from USD to BTC and then to Schillings.... but the commission (Bitpay ?) will be quite low... Western Union charges around 10% for lower amounts, if I remember right...

[beetcoin]

for the typical poor person in a 3rd world country, is it worth that extra effort and time to save the money? i'd say yes, since they are not wealthy.. but the problem is how many of them are tech savy enough to use bitcoin? another issue: it costs money to convert fiat into BTC, so that should be associated with the costs as well.

They don't need to be tech savy, as third party business is doing the transaction.

The currency conversion charges associated with the conversion of USD to Kenyan Schillings will be slightly less than those associated with conversion from USD to BTC and then to Schillings.... but the commission (Bitpay ?) will be quite low... Western Union charges around 10% for lower amounts, if I remember right...

i'd think bitcoin would need to be in mass scale if a 3rd party/company opened up shop (in place of say a western union) to exchange the BTC, but may that could work. they'd need to check the recipient's ID and all, and they'd pay in fiat huh?

what they're talking about is if Person A goes to a local shop and pays $100 in USD to an exchanger, and that exchange uses $100 of his bitcoins to wire to the exchanger in Kenya... Person A specifies the name/identity of the recipient, and then Person B goes to the B&M shop, shows the ID and then receive $100 in the kenyan paper currency.. right?

[beetcoin]

if bitcoin gets popular enough, could you guys envision people opening up B&M bitcoin exchanges? not just to sell to the local people, but to wire to anywhere in the world.. all you'd need is a small open space, and an employee handling the money. you'd need a 3rd party or some central website, like say coinbase, to handle the transactions between 1 account and another.. and then local B&M locations provide the cash to the recipient. or you could buy BTC from someone who wants to sell.

i'd definitely invest in a small business like that.