{"id":355988,"date":"2021-10-21T17:07:00","date_gmt":"2021-10-21T14:07:00","guid":{"rendered":"https:\/\/en.buradabiliyorum.com\/crypto-remittances-see-adoption-but-volatility-may-be-a-deal-breaker\/"},"modified":"2021-10-21T17:07:00","modified_gmt":"2021-10-21T14:07:00","slug":"crypto-remittances-see-adoption-but-volatility-may-be-a-deal-breaker","status":"publish","type":"post","link":"https:\/\/buradabiliyorum.com\/en\/crypto-remittances-see-adoption-but-volatility-may-be-a-deal-breaker\/","title":{"rendered":"# Crypto remittances see adoption, but volatility may be a deal breaker"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_85 counter-hierarchy ez-toc-counter ez-toc-custom ez-toc-container-direction\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-6a418dc700757\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #dd3333;color:#dd3333\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #dd3333;color:#dd3333\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-6a418dc700757\" checked aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/buradabiliyorum.com\/en\/crypto-remittances-see-adoption-but-volatility-may-be-a-deal-breaker\/#Are_cryptocurrencies_banking_the_unbanked\" >Are cryptocurrencies banking the unbanked?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/buradabiliyorum.com\/en\/crypto-remittances-see-adoption-but-volatility-may-be-a-deal-breaker\/#Adoption_out_of_%E2%80%9Cpure_necessity%E2%80%9D\" >Adoption out of \u201cpure necessity\u201d<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/buradabiliyorum.com\/en\/crypto-remittances-see-adoption-but-volatility-may-be-a-deal-breaker\/#It_all_comes_down_to_numbers\" >It all comes down to numbers<\/a><\/li><\/ul><\/nav><\/div>\n<p>&#8220;<strong># Crypto remittances see adoption, but volatility may be a deal breaker <\/strong>&#8221;<\/p>\n<div class=\"post-content\" data-v-128018ef>Cryptocurrency adoption has been growing for a number of reasons. In emerging markets, research suggests crypto remittances are a factor, although some argue that the idea of using cryptocurrencies for these transactions is nothing more than a purist\u2019s dream.<\/p>\n<p>The CEO of cryptocurrency derivatives trading platform BitMEX, Alexander H\u00f6ptner, predicted earlier this month that by the end of next year, at least five countries will have accepted Bitcoin (BTC) as a legal tender, as crypto assets can be faster and cheaper for remittances.<\/p>\n<p>He believes that all five will be developing countries and that they would adopt cryptocurrencies because of the growing need for cheaper and faster cross-border transactions, increasing inflation and growing political issues.<\/p>\n<p>Various other commentators have suggested that Bitcoin and other cryptocurrencies are a solution to the high costs associated with remittance payments, as a cryptocurrency transaction can be much cheaper than a remittance payment while settling in a shorter amount of time.<\/p>\n<p>El Salvador was the first country in the world to adopt Bitcoin as legal tender with the country\u2019s Bitcoin Law officially coming into effect on September 7. The government launched a cryptocurrency wallet called Chivo that uses the Lightning Network, a layer-two scaling solution, to transact. The country has also purchased 700 BTC over time.<\/p>\n<p>Global remittances reached over $689 billion in 2018, and commissions were so high a $49 billion industry <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/www.globenewswire.com\/en\/news-release\/2021\/07\/12\/2261365\/0\/en\/Global-Remittance-Market-is-accounted-to-be-US-49-49-million-in-2020-with-a-CAGR-of-7-6-during-the-forecast-period-by-PMI.html\">grew<\/a> around them. To crypto proponents, El Salvador is a perfect example of how cryptocurrencies can positively change the world, but to others, volatility and a <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/general\/\" data-internallinksmanager029f6b8e52c=\"3\" title=\"General\" target=\"_blank\" rel=\"noopener\">general<\/a> lack of trust in the market make cryptocurrency adoption impractical and unadvisable.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"Are_cryptocurrencies_banking_the_unbanked\"><\/span>Are cryptocurrencies banking the unbanked?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>With the Chivo wallet, Bitcoin could effectively help offer financial services to El Salvador\u2019s un- and underbanked population. The country\u2019s president Nayib Bukele revealed in September 2021 that 2.1 million Salvadorans are actively using the wallet, despite the pushback against the new law that saw protests even burn a Bitcoin ATM machine.<\/p>\n<blockquote class=\"twitter-tweet\">\n<p lang=\"en\" dir=\"ltr\">2.1 million Salvadorans are ACTIVELY USING <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/twitter.com\/chivowallet?ref_src=twsrc%5Etfw\">@chivowallet<\/a> (not <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/download-scripts-themes-apps\/\" data-internallinksmanager029f6b8e52c=\"9\" title=\"Download Scripts &amp; Themes &amp; Apps\" target=\"_blank\" rel=\"noopener\">download<\/a>s).<\/p>\n<p>Chivo is not a bank, but in less than 3 weeks, it now has more users than any bank in El Salvador and is moving fast to have more users that ALL BANKS IN EL SALVADOR combined.<\/p>\n<p>This is wild!<a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/twitter.com\/hashtag\/Bitcoin?src=hash&amp;ref_src=twsrc%5Etfw\">#Bitcoin<\/a><\/p>\n<p>\u2014 Nayib Bukele  (@nayibbukele) <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/twitter.com\/nayibbukele\/status\/1441846960332361730?ref_src=twsrc%5Etfw\">September 25, 2021<\/a><\/p><\/blockquote>\n<p><script async src=\"https:\/\/platform.twitter.com\/widgets.js\" charset=\"utf-8\"><\/script><\/p>\n<p>Per his words, Chivo isn\u2019t a bank, but in three weeks gained more users than any bank in the country. That adoption may, however, be related to a $30 in BTC airdrop El Salvador sent to every adult citizen with the government\u2019s wallet app.<\/p>\n<p>Speaking to Cointelegraph, Eric Berman, senior legal editor of U.S. finance at Thomson Reuters Practical Law, said remittances using cryptocurrencies are a \u201cpurist\u2019s pipe dream.\u201d While H\u00f6ptner pointed out that remittances made up 23% of El Salvador\u2019s gross domestic product in 2020, Berman countered that only a fraction of the nation\u2019s businesses has taken a Bitcoin payment and that the government\u2019s cryptocurrency app has been plagued by technical issues.<\/p>\n<p>Berman further added that \u201cmost of El Salvador\u2019s $6 billion in annual remittances still comes via money transfers,\u201d as many are wary of the cryptocurrency\u2019s volatility. Because of the volatility\u2019s impracticality, he said, Bitcoin hasn\u2019t been widely adopted as a payment method among merchants, adding:<\/p>\n<blockquote><p>\u201cThis impracticability is magnified exponentially for the disenfranchised and unbanked. No one wants to send mom $100 only to have it be worth $80 by the time it gets to her.\u201d<\/p><\/blockquote>\n<p>Berman added that \u201crather than the populist uprising that BTC purists have been touting for years,\u201d Bitcoin\u2019s adoption has instead been growing thanks to \u201csome perhaps long overdue happy noises from U.S. and global regulators.\u201d<\/p>\n<p>Indeed, the United States Securities and Exchange Commission (SEC) head Gary Gensler has confirmed the regulator won\u2019t ban crypto. In fact, the SEC approved the first Bitcoin futures-linked exchange-traded fund (ETF) in the United States, ProShares\u2019 Bitcoin Strategy ETF, this week.<\/p>\n<p>Bitcoin\u2019s growing adoption and price, Berman suggested, are the result of \u201cinstitutional enthusiasm that is quite the antithesis of the grassroots movement for the disenfranchised and unbanked that spawned BTC over a decade ago.\u201d<\/p>\n<p>Oleksandr Lutskevych, the founder and CEO of cryptocurrency exchange CEX.IO, seemingly disagrees with Berman\u2019s assessment, saying El Salvador\u2019s adoption highlights Bitcoin as \u201creplacing the traditional, centralized rails used for remittances.\u201d<\/p>\n<p>To Lutskevych, Bitcoin\u2019s infrastructure is being adopted to also promote the transfer of stablecoins on top of its network, ensuring the cryptocurrency\u2019s volatility won\u2019t affect remittances. El Salvador\u2019s move, he said, promotes financial inclusion by helping cut down remittance costs.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"Adoption_out_of_%E2%80%9Cpure_necessity%E2%80%9D\"><\/span>Adoption out of \u201cpure necessity\u201d<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>In emerging markets, crypto proponents suggest adoption may be a result of \u201cpure necessity,\u201d as the transaction fees paid on most blockchain networks dwarf the fees paid to some remittance vendors. <\/p>\n<p>According to Lutskevych, it\u2019s \u201cabundantly clear in the rationale behind Bukele\u2019s campaign that made BTC legal tender\u201d that the nature of the move was to drive BTC adoption forward through remittances. Lutskevych went on to add further:<\/p>\n<blockquote><p>\u201cOne of the primary reasons why the country passed such legislation was to lower remittance costs, promote financial inclusion and boost GDP by leveraging BTC and its transfer infrastructure to promote financial inclusion.\u201d<\/p><\/blockquote>\n<p>Per his words, the adoption of new <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/technology\/\" data-internallinksmanager029f6b8e52c=\"4\" title=\"Technology\" target=\"_blank\" rel=\"noopener\">technology<\/a> is often the result of \u201cpure necessity,\u201d and that may be the case with Bitcoin and cryptocurrencies in developing nations whose populations are heavily affected by remittance costs, which according to Markus Franke, a partner at cross-border crypto payments firm Celo Labs, averages 6.38% and can often go over 10% of the amount being sent.<\/p>\n<p>Driving his point forward, Lutskevych added that the<a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/blog.chainalysis.com\/reports\/2021-global-crypto-adoption-index\"> Chainalysis Global Crypto Adoption Index<\/a> for 2021 shows that out of the top 20 countries by cryptocurrency adoption, two-thirds are \u201cdeveloping countries with a high percentage of GDP coming from remittances.\u201d<\/p>\n<p>He added that developing countries are now recognizing the value of \u201cBTC\u2019s scalable transfer infrastructure, combined with Bitcoin\u2019s sound money properties and decentralization.\u201d<\/p>\n<figure><img decoding=\"async\" src=\"https:\/\/s3.cointelegraph.com\/uploads\/2021-10\/53fe7252-8996-48b0-a822-811e92cb25bf.png\"><\/figure>\n<p>Lutskevych also noted that Bitcoin\u2019s Lightning Network capacity is up over 25% since El Salvador\u2019s Bitcoin Law came into effect, while the number of payment channels routing payments on the network also moved up significantly and began a \u201cparabolic trend right around the time of the law becoming effective.\u201d<\/p>\n<p>To him, growing peer-to-peer (P2P) trading volumes in countries like Nigeria suggest cryptocurrencies like BTC are playing a role in \u201cgetting foreign money into the country.\u201d<\/p>\n<p>Franke added to the line of thought, saying cryptocurrencies can be programmed, allowing for more complex financial operations without third parties. These features, Franke said, have seen remittance giants take an interest in cryptocurrencies.<\/p>\n<p>As an example, he pointed to MoneyGram launching USDC settlement using the Stellar blockchain, and added that the Asian Development Bank has revealed services like Ripple, Mobile Money and bKash helped \u201cdeliver faster settlement, greater operational efficiencies and more competitive foreign exchange rates during the COVID-19 pandemic.\u201d<\/p>\n<p>Amr Shady, CEO of business-to-business payment and financing platform Tribal Credit, told Cointelegraph that Mexico could be another example of a country adopting cryptocurrencies for remittances, as estimates have shown they could reduce costs by 50% to 90%.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"It_all_comes_down_to_numbers\"><\/span>It all comes down to numbers<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>If, indeed, five countries do adopt Bitcoin or any other cryptocurrency as legal tender, adoption seems likely going to keep on growing. Emerging markets rely on remittances and the use of stablecoins appears to be a viable solution to the volatility of crypto assets like BTC.<\/p>\n<p>Projects like <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/social-mediaa\/\" data-internallinksmanager029f6b8e52c=\"1\" title=\"Social Media\" target=\"_blank\" rel=\"noopener\">Facebook<\/a>\u2019s Novi are already using stablecoins to facilitate cross-border transactions, with the project\u2019s marketing efforts having a heavy focus on remittances. Central bank digital currencies (CBDCs) may offer similar cheap transactions that will help users move money across borders at a low cost.<\/p>\n<p><strong><em>Related:\u00a0Asian CBDC projects: What are they doing now?<\/em><\/strong><\/p>\n<p>The problem with these two solutions is the central entities behind them who can easily start discriminating, and for example, geoblock users. Decentralized blockchains are working on scaling to accommodate thousands of transactions per second, bringing down remittance costs. Add in stablecoins, and the only thing blocking mass crypto adoption could very well be the specific knowledge needed to navigate different blockchains and understand how addresses work.<\/p>\n<p>User-experience improvements have for long been moving addresses and blockchain navigation to the back while helping users focus on payments. Once the use of blockchain technology happens behind the scenes at a low cost, remittances will inevitably turn to crypto. Yet, those transactions may be years away.<\/p>\n<p><template data-name=\"subscription_form\" data-type=\"law_decoded\"><\/template><\/div>\n<blockquote><p><strong><span style=\"color: #ff6600;\">If you liked the article, do not forget to share it with your friends. Follow us on\u00a0<span style=\"color: #ff0000;\"><a style=\"color: #ff0000;\" href=\"https:\/\/news.google.com\/publications\/CAAqBwgKMLG0nwswvr63Aw\" target=\"_blank\" rel=\"nofollow noopener noreferrer\">Google News<\/a><\/span>\u00a0too, click on the star and choose us from your favorites.<\/span><\/strong><\/p><\/blockquote>\n<blockquote>\n<p style=\"text-align: center;\">For forums sites go to <span style=\"color: #ff9900;\"><a style=\"color: #ff9900;\" href=\"https:\/\/forum.buradabiliyorum.com\/\" target=\"_blank\" rel=\"noopener\">Forum.BuradaBiliyorum.Com<\/a><\/span><\/strong>\n<\/p><\/blockquote>\n<blockquote>\n<p style=\"text-align: center;\"><strong>If you want to read more <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/news\/\" data-internallinksmanager029f6b8e52c=\"2\" title=\"News\" target=\"_blank\" rel=\"noopener\">News<\/a> articles, you can visit our <span style=\"color: #ff9900;\"><a style=\"color: #ff9900;\" href=\"https:\/\/en.buradabiliyorum.com\/general\/\" target=\"_blank\" rel=\"noopener\">General category.<\/a><\/span><\/strong><\/p>\n<\/blockquote>\n<p><span style=\"color: black;\"><a style=\"color: #ff9900;\" href=\"https:\/\/cointelegraph.com\/news\/crypto-remittances-see-adoption-but-volatility-may-be-a-deal-breaker\" target=\"_blank\" rel=\"noopener\">Source<\/a><\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>&#8220;# Crypto remittances see adoption, but volatility may be a deal breaker &#8221; Cryptocurrency adoption has been growing for a number of reasons. In emerging markets, research suggests crypto remittances are a factor, although some argue that the idea of using cryptocurrencies for these transactions is nothing more than a purist\u2019s dream. The CEO of&#8230;<\/p>\n","protected":false},"author":1,"featured_media":355989,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"fifu_image_url":"https:\/\/images.cointelegraph.com\/images\/1200_aHR0cHM6Ly9zMy5jb2ludGVsZWdyYXBoLmNvbS91cGxvYWRzLzIwMjEtMTAvMzhmMjI2YWQtZWVlMi00ODkxLTkyYTctNTk2M2Y0OTI5NGVlLmpwZw==.jpg","fifu_image_alt":"","footnotes":""},"categories":[1],"tags":[74862,74863,77388,75541,74355],"class_list":["post-355988","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-general","tag-bitcoin","tag-cryptocurrencies","tag-remittances","tag-volatility","tag-adoption"],"_links":{"self":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/355988","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/comments?post=355988"}],"version-history":[{"count":0,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/355988\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media\/355989"}],"wp:attachment":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media?parent=355988"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/categories?post=355988"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/tags?post=355988"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}