Can Blockchain Technology Reshape the Remittance SectorAugust 30, 2018
We cannot deny that blockchain is super huge. Bitcoin alone is enough to highlight the potential of the blockchain technology. However, bitcoin as a currency is one case only. Thinking of Bitcoin and the technology as similar is like thinking that the internet and emails are similar. The truth is that they are very much different.
That’s the reason why a lot of pundits are foreseeing big amounts of disruption for sectors across the board, from real estate and healthcare to the struggling financial sector that is aware of the potential of blockchain to disrupt it.
The financial sector is multi-faceted and complicated. So, let’s take a fast look at a certain subsection of this industry: cross-border payments, money transfers, and remittances. Here’s how blockchain technology can disrupt it.
You might think that the potential for anonymous payments would result in less transparency, not more. It is true that it’s more complicated to track where the money is flowing to and from. Nonetheless, it is also true that both recipient and sender understand where their money is exactly. There won’t be longer periods in which the money is lost amongst the two accounts.
For example, Singapore’s XinFin is an organization which has built a hybrid private and public blockchain along with numerous applications, the first being interruption of government infrastructure financing. Some of their known applications include Supply Chain, invoice purchasing, and money transfer remittances.
AFFORDABLE PROCESSING RATES
For individuals who send money internationally on a regular basis, the processing charges can add up quickly. Blockchain technology get rids of the monopoly which conventional banks hold on the market. That also denotes that processing the fees are nearly non-existent.
Further, if one provider charges more than the other provider, people will switch simply to the much affordable provider. It is the interest of the providers to lessen the overheads for clients as much as possible.
SAY GOOD-BYE TO WIRE TRANSFERS
Our present financial systems depend on wire transfers. Conventional banks and other financial agencies back most of these. It is a good system; however, one of the issues with it is that takes a lot of time to process the transactions.
On the other hand, blockchain-based corporations can outmaneuver conventional wire transfer agencies by providing a cheap, secure and fast system to transfer money from one corner of the world to another.
One of the major benefits of blockchain technology is that is very complex for fraudsters and hackers to take advantage of it. We are aware that banks are centralized, meaning it makes it simpler to compromise them. Meanwhile, with blockchain, everything is monitored on a ledger that prevents people from spoofing or making a fake data.
Disruption from blockchain is surely inevitable, no matter what sector you are working in. The technology is still on its infant stage, and so there is enough space for disruption across the board as business people wise up to the potential of the technology.