Cryptocurrency and Remittences

[alyssa85]

Facebook's Libra was really aimed at the remittence market (which is why they proposed a stablecoin).

It's worth looking at other attempts of cryptocurrencies to break into the remittence market, and George Harrap, the CEO of Bitspark (Hong Kong based remittence company) did a useful assessment of the viability of different coins:

https://blockgeeks.com/news/bitcoin-outruns-ripple-at-global-remittances-says-new-report/

The biggest issue is liquidity:

There are no liquid Nigerian naira (NGN) and Ethereum (ETH) market, EOS and Vietnamese dong or XRP and Philippine peso markets,” Harrap observes. “The only market which has sufficient liquidity and people willing to provide a local currency in exchange for a cryptocurrency is usually bitcoin.”

Ripple, which was the stablecoin that was supposed to be ideal for remittences seems to be a failure because you can only convert it to bitcoin and USD:

The report notes that Western Union has trialed Ripple’s products, but have steered clear of xRapid, the solution which uses XRP. The report states, this is because “there is not enough liquidity, depth, nor enough on-ramps and off-ramps for it to work as intended.”

The majority of remittance payments are sent to developing countries, whose currencies lack liquid markets with XRP. Bitcoin, on the other hand, has been out there for a long time and has more market approval along with some level of regulatory recognition.

Bitcoin also supports direct exchanges to almost all the local currencies. Even though there are approximately 20 tokens that provide support for remittances, they have all failed to establish reliable liquidity channels with smaller fiat currencies.

As of February 2019, 99.9% of all cryptocurrency money transfers are in Bitcoin.

The only problem with bitcoin is the fees and the delays when the price rises and the mempool gets backlogged.

If a coin can appear with low fees and no backlogs, and if that coin takes over the remittence business, it should have a good chance to make a breakthrough as the dominant crypto. Zuckerberg was hoping that coin would be Libra, but that dream is dead now.

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[1Referee]

Ripple, which was the stablecoin that was supposed to be ideal for remittences seems to be a failure because you can only convert it to bitcoin and USD:

The report notes that Western Union has trialed Ripple’s products, but have steered clear of xRapid, the solution which uses XRP. The report states, this is because “there is not enough liquidity, depth, nor enough on-ramps and off-ramps for it to work as intended.”

It was never meant to be a stablecoin. The whole idea is that you don't have much more exposure to the volatility of this market than 5-10 seconds in total. An XRP transaction is settled in 4ish seconds, and then selling it for x/y/z currency will take a few seconds on top of that. On paper it actually looks quite good, but the main obstacle is indeed liquidity.

The whole hype around Ripple's partnerships are used by heavy bag holders to make it seem there is a lot demand for the XRP based services, but what most financial institutions have pledged to is the use of xCurrent and some other fiat based products.

The only problem with bitcoin is the fees and the delays when the price rises and the mempool gets backlogged.

Did you use Bitcoin recently? Segwit adoption has gone up a lot resulting in piss low fees. I haven't paid more than ~$0.08 in fees for my last transactions. In case there is a sudden increase in transactions I use RBF to bump the fee a bit. Times are different now. USDT's shift to ERC20 helped a lot too. Please don't tell me that $0.08 is still too high. 

[CryptoBry]

Facebook's Libra was really aimed at the remittance market (which is why they proposed a stablecoin). If a coin can appear with low fees and no backlogs, and if that coin takes over the remittance business, it should have a good chance to make a breakthrough as the dominant crypto. Zuckerberg was hoping that coin would be Libra, but that dream is dead now.

Yes, there is no question that the remittance market is quite huge and this is expanding at a good rate in the coming years. No wonder that there are big firms looking at this market with some desire to capture a good slice of the sweet pie (or you can make it pizza). There is a good potential with XRP but I think for now its expansion seems to be not so bright (just my opinion) though I am not counting this entity yet as they are still part of the rate as new partnerships are formed and will be acquired.

According to the World Bank, in 2018 overall global remittance grew 10% to US$689 billion, including US$528 billion to developing countries. Overall global remittance is expected to grow 3.7% to US$ 715 billion in 2019, including US$549 billion to developing nations.

Facebook's Libra is likewise taking a big leap hoping to capture the biggest slice of the market pie due to the resources and the infrastructure backing it up. With Facebook alone, the captured market is already so big that maybe at the time Mark's minions were on the drawing board they salivated at the thought of being the dominant force in the remittance industry.

I would not yet declare that Libra is dead but definitely it is on the ICU. Who knows if Mark and his people can pull some magic tricks and just give us a surprise show...sort of spectacle that can make Libra gain the upper hands from the clutches of regulators. Right, Mark?

[Periodik]

I guess the original plan was more than just a remittance coin. The project has a huge reservoir of possibilities. When I checked the members of the Libra Association several months ago, I was amazed. The project was really huge that it could really change the financial horizon of the world.

If you only consider Visa, Mastercard, Paypal, and similar companies in the Libra Association, you might see that remittance is the way to go for Libra. But if you take into consideration the likes of Spotify or Uber, you will see that there is in fact a very vast opportunity for the coin as well as the project in general. 

But now it seems they will remain as possibilities.

[Jorge158]

Of course, it seems other projects are considering the remittance market. The DIVI project is a classical example because it has collaborated with a remittance company to form the Ridivi. The Ridivi aims to facilitate enhanced money transfer across the globe with cryptocurrency adoption as well. Offices of the Ridivi has started operating in Costa Rica and some being built in US and Africa.
More information Ridivi can be found via https://www.google.com/amp/s/blog.diviproject.org/ridivi/amp/

[lobat999]

Facebook's Libra was really aimed at the remittence market (which is why they proposed a stablecoin).

Libra Association Partners

Judging from above infographic on the members of Libra Association (some of which have already withdrawn),  I don't think its really aimed on remittance industry alone, since its partners came from varied industries such as blockchain,payment solutions, fintech, online marketplaces, telecommunications, Non profit NGO's, etc and If I'm not mistaken, non of which came from the remittance industry.

Although it could be used as currency for remittances, I assume that its use case could be far more bigger which could include almost any other industries where it is applicable.

Lastly, if they've really aimed Libra on remittances, then they could have partnered with the biggest names in international remittance in the likes of Western Union and MoneyGram but this has never materialized so far. Imho.

Link: https://libra.org/en-US/partners/

[avikz]

Libra was never aimed towards the remittance market. Facebook don't really like to capture a single market. What they always want to do is disrupting the business environment. That's why they have associated big brands from every type of sector with their Libra project.

Like lobat999 already posted about it, you can literally see remittance sector, telecom sector, transportation, banking, music etc. They are also aiming to multiply these numbers before the actual launch! Remittance is obviously one of the sectors where crypto can be a big help! But that doesn't end here!

[joniboini]

If you use a bank for remittance transactions, it will usually take days before it shows up on your account. Even if Bitcoin transactions might get stuck for hours, I do think it's not really a deal-breaker (and this is not true). Lightning would probably become a better choice compared to XRP.

If you only consider Visa, Mastercard, Paypal, and similar companies in the Libra Association, you might see that remittance is the way to go for Libra. But if you take into consideration the likes of Spotify or Uber, you will see that there is in fact a very vast opportunity for the coin as well as the project in general. 

More sectors mean more money. Not a surprise they'll do that.

[Hydrogen]

Facebook's Libra was really aimed at the remittence market (which is why they proposed a stablecoin).

If the topic is why stablecoin markets attract interest with many wanting a piece of it, I think that dates back to 2018 when tether announced they were destroying $500 million dollars worth of USDT supply.

Newsflash: Tether Destroys 500 Million Dollars Of USDT

October 24, 2018

Tether Limited, the issuer of the USD-pegged USDT cryptocurrency, has destroyed 500 million units of the embattled stablecoin.

Blockchain data reveals that earlier today, the firm transferred 500 million USDT from the token’s treasury address to this address, which the firm’s website indicates is the official USDT issuing address. Immediately following that transaction’s confirmation, the issuing address revoked the tokens, not only removing them from circulation (as tokens within the treasury are not counted as circulating) but also — once the transaction is confirmed — destroying them completely.

As CCN reported, USDT’s market cap has plunged in October, primarily because token holders have redeemed nearly 800 million USDT since the beginning of the month. Following these redemptions, nearly 1 billion tokens were sitting in the treasury where they remained on-chain but out of circulation. At the time of writing, the treasury continued to hold approximately 467 million USDT.

https://finance.yahoo.com/news/newsflash-tether-destroys-500-million-171435354.html

The 2nd paragraph portion about tether holders redeeming $800 million in USDT in a single month is key. It could mean tether generated $800 million in revenue in a 31 day span. Impressive numbers, in my opinion. That could define why there is high interest in the stablecoin market coming from big and established players like facebook.

If I remember correctly, tether can only be directly sold for us dollars. But I think that once bought it can be deposited to some exchanges and traded or sold for other things. In that sense libracoin would merely be following in tether's footsteps if they limited themselves to initial exchange for btc or usd.

[alyssa85]

Did you use Bitcoin recently? Segwit adoption has gone up a lot resulting in piss low fees. I haven't paid more than ~$0.08 in fees for my last transactions. In case there is a sudden increase in transactions I use RBF to bump the fee a bit. Times are different now. USDT's shift to ERC20 helped a lot too. Please don't tell me that $0.08 is still too high. 

I have. The fees are only low when the price is down. Everytime the price surges, the mempool fills up and the fees climb.

[yoseph]

Facebook's Libra was really aimed at the remittence market (which is why they proposed a stablecoin).

Libra Association Partners

Judging from above infographic on the members of Libra Association (some of which have already withdrawn),  I don't think its really aimed on remittance industry alone, since its partners came from varied industries such as blockchain,payment solutions, fintech, online marketplaces, telecommunications, Non profit NGO's, etc and If I'm not mistaken, non of which came from the remittance industry.

Although it could be used as currency for remittances, I assume that its use case could be far more bigger which could include almost any other industries where it is applicable.

Lastly, if they've really aimed Libra on remittances, then they could have partnered with the biggest names in international remittance in the likes of Western Union and MoneyGram but this has never materialized so far. Imho.

Link: https://libra.org/en-US/partners/

I believe their services was not meant just for remittances alone but as a payment system that's why they decided to partner PayPal who later withdraw from the partnership. I don't see how they plan on taking on their competitors who are currently already in the same business. Western Union and now Moneygram are now sending remittances straight to people's phone.

[blckhawk]

Although part of it might engage in remittances, their partners suggest that it would be used, as a stablecoin, as payment to different services that can be connected to the Facebook platform. In addition, we cannot consider Libra as dead, as of now. There are still posssibilities that it would indeed launch. I personally think that when Libra goes live, and innocent ones have been convinced of its convenience, it would become a success. The problem with Facebook is data privacy concerns.

[NathanJB]

Although part of it might engage in remittances, their partners suggest that it would be used, as a stablecoin, as payment to different services that can be connected to the Facebook platform. In addition, we cannot consider Libra as dead, as of now. There are still posssibilities that it would indeed launch. I personally think that when Libra goes live, and innocent ones have been convinced of its convenience, it would become a success. The problem with Facebook is data privacy concerns.

This is the one that gives the most negative impact to the libra project, its ties with Facebook. Facebook's reputation is already dirty to the bones in terms of handling personal private data that people are now afraid to support libra. But I think it was already made clear before that libra is not run by facebook. Those companies in the image above are all supervising libra and facebook is just one of them. I think they all have equal stakes in the operation of libra.

[buwaytress]

Not entirely wrong, but the ones really trying to attack remittance markets and doing a pretty good job of it is Alipay, for example. And then we've got all kinds of mobile money solutions in place for years already in countries like Kenya (mpesa is still amazing to me even today).

But you'd be really surprised to learn that Bitcoin remittance is already a thing. It's how I send money home (not directly, but selling my bitcoin instead, for example, is soooo much cheaper than sending dollars home). In fact, choosing to accept Bitcoin as payment and using that to send money home? It's not just saved me on fees, the sell rate is so good I end up sending home a bit more that I sold.

[Zanzibet]

But you'd be really surprised to learn that Bitcoin remittance is already a thing. It's how I send money home (not directly, but selling my bitcoin instead, for example, is soooo much cheaper than sending dollars home). In fact, choosing to accept Bitcoin as payment and using that to send money home? It's not just saved me on fees, the sell rate is so good I end up sending home a bit more that I sold.

I really agree with idea of Libra tapping into remittance market. Indeed Bitcoin is very much convenient in that regard and cheaper too. With the size of Facebook and its wide usage. If they are to get regulatory approval in future. These initiatives are most likely to take the market by storm which ever strategy they choose to adopt regarding Libra coin.

[alyssa85]

I really agree with idea of Libra tapping into remittance market. Indeed Bitcoin is very much convenient in that regard and cheaper too. With the size of Facebook and its wide usage. If they are to get regulatory approval in future. These initiatives are most likely to take the market by storm which ever strategy they choose to adopt regarding Libra coin.

Libra is dead - 7 payment processors have now backed out of the deal.

So the remittence market is going to be controlled by a crypto that can be exchanged for local fiat on a lot of exchanges.

At the moment bitcoin is winning. But if another coin wants to enter this market they need to focus on making sure they're on as many exchanges as possible, and pared with local fiat currencies.

[el kaka22]

Being able to use for remittances and being only for remittances are different things and they are really not even close. Libra could definitely be used for remittances but it wasn't for that, I doubt it will happen neither now, there are too many things going against Libra nowadays so they are going to stop for sure but even if they do not there are too many places that want to use Libra.

We are missing out on a huge deal here, a company that is globally used as a wallet for any crypto (add in thousands of options if possible, if not have at least 50) and have debit card and a mobile app that makes it possible for you to use that debit card or mobile app to pay anywhere even if they don't accept crypto would be a billion dollar market, that is what Libra was going after.

[electronicash]

well now that the support of those partnerships like paypal and so on disovles, remittance is not possible market for libra anymore. that market remains for the fiat and btc again thanks to the regulators who oppose it, they got what they want and i guess they intend to get that piece of pie from libra. what is left for libra to go on with the partners that ain't getting involve to transferring value to someone across the globe? spotify?  

[Kyraishi]

Hm... They might still have a shot.

Firstly. Great post, there are too many random people who just randomally shit on Libra even though they had a decent idea and approach to the remittance market.

There is a decent chance it doesn't die yet though. Sure some big partners pulled out, but Facebook are teasing another 180 new companies to join their partnership scheme.

[1Referee]

I have. The fees are only low when the price is down. Everytime the price surges, the mempool fills up and the fees climb.

That's normal. I'm not sure what address format you are transacting in, but when you use bech32 (addresses starting with bc1) you can save like a third in fees easily.

If you use the legacy format addresses then you are pretty much robbing yourself. In case you haven't already, switch to Electrum (they have both desktop and mobile wallets) and enjoy lower fees. Bitcoin Core is an option too, but you have to download a lot of block data and the data has to be validated, which most people understandably rather avoid.