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The opinions expressed in this article are those of the author.
While some conservatives focus on fostering national security with barriers, cryptocurrencies have in their hearts the mission to cut across national borders. Money speaks and cryptocurrency allows anyone to talk to each other, at the same time and with lower rates and less average men. The race is open for those who will facilitate cross-border payments for the future.
President Trump has repeatedly indicated that he is not concerned with the government's blockade to achieve his goal of building a wall along the southern border with Mexico. Today, he said it could last "a long time". Trump is determined to have the promise of the campaign for a boundary wall delivered. Non-essential government agencies are running out of funds left and right. Some agencies that have been hit by arrests in the past, such as veterans administration, are financed until June.
Western Union, Bitcoin or Ripple?
Western Union has seriously begun to consider the use of cryptocurrencies as part of its business model. Up to now, it has been a primary way for Mexican immigrants and migrant workers to send money to Mexico or elsewhere. According to BusinessWire and the World Bank, Mexico is the fourth largest recipient of international money remittances in the world.
Western Union transactions incur commissions on both sides of the transaction. According to Mexico Mike, the beneficiaries could pay up to 10% when they actually receive the money.
In most cryptocurrency models, the recipient does not pay a commission at all, since he is not trying to add transaction data to the blockchain, but to the sender. At the same time, the transaction fee is usually not associated with the amount of money being traded, but rather with the actual amount of data required to process it with the blockchain used.
This is the case of Bitcoin. The existence in Mexico of native Bitcoin exchanges to convert cryptocurrency into pesos and even ATM Bitcoins and OTC traders means that Bitcoin is currently a viable option, but it is obviously not easy to find metrics on how much of this it has been done.
Read also: While Trump is targeting Mexican remittances, it is time for the Government of Mexico to get serious about Bitcoin
Ripple measures transaction costs in "drops" or units of XRP 0.000001. Banks around the world have actively considered or integrated Ripple's technology into their services, in particular with a view to creating cross-border remittance services. The efforts in the Middle East have so far been limited by the jurisdictions. For example, the service recently announced in Kuwait it will initially be limited to Jordan. The one announced in Dubai not long ago is intended to work with the Asian banks associated with RippleNet.
RippleNet has more than 100 affiliated banks worldwide, but they are not automatically forced to collaborate with each other. Individual partnerships and legal obstacles still need to be established. For its part, Ripple and other banking blockchain-oriented products aim to remove the friction from cross-border remittances in Mexico and elsewhere. This means much lower costs for banks, but retail users can still pay for the privilege. Ripple has a partnership with the Mexican firm Cuallix that looks promising.
What about Stellar?
While Ripple focuses primarily on bank remittances and financial assets, its Stellar fork has always kept its focus on individual remittances. As an answer by Quora says:
First, there are fundamental philosophical differences. Stellar is a non-profit open source technology that primarily serves to promote financial access and inclusion. SDF partners with global money transfer operators and financial institutions, with an emphasis on helping to serve underserved and unbanked. SDF already has live payments, starting from Europe in the Philippines. They are planning to start live payments with some areas of Africa and the GCC.
Stellar facilitates the OTC cashouts of its cryptocurrency Lumens via Tempo, an international supply chain service that has collaborated with these Mexico services. Time focuses primarily on the European market, however. Of note, Tempo is starting an ICO using the stellar blockchain.
Who else?
Any blockchain can easily facilitate cross-border transactions, but the question of liquidity is always the problem. In the case of Venezuela, several blockchain groups have made significant efforts to help those who have been victims of extreme inflationary politics, including Dash, Flash and ZCash.
If Trump's immigration policies manage to contain illegal immigration, it seems likely that the US-Mexico remittance market will only increase, as family members and friends on both sides help each other financially. According to a World Bank report published in December, Mexico received $ 33 billion remittances last year.
India, China and Mexico
China is another goal of Trump's national economic and security policies. Trade with them has become more complicated under his guidance due to an escalation of tariffs on imports and exports. The aim, according to Trump, is to stimulate US production and protect the global interests of the United States. Nevertheless, while Mexico is the fourth in the global remittance target markets, India and China are the leaders. China received almost double the remittances that Mexico made in 2017.
Western Union offers services to China and all other markets, but its high costs, as well as those by banks, create market opportunities for blockchain companies. Immediate and secure transfer of money is the first role of blockchain financial systems, but real-world applications seem to lag behind where they are not lacking.
While we often talk about the network effect when it comes to blockchain, what matters when it comes to remittances is the liquid assets network effect.
That's why Western Union, Money Gram and Rio maintain the market – they have the most points of sale that will honor their remittances.
If blockchain players are serious about capturing part of the remittance market of nearly half a trillion dollars, which only grows from year to year, then they will have to compete with the remittance companies of the old world for these reasons.
Images from Shutterstock.
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