04 / 12 / 21

Cryptobucks knows the secret to why crypto is the best option for cross border payments that you need to see

crypto secret

Cryptobucks knows the secret to why crypto is the best option for cross border payments that you need to see

Well, because it is borderless! But that’s quite less of an explanation, so let’s dive right in.

Basically, these transactions are executed using blockchain networks, and therefore, they completely eliminate the need for intermediaries, which does not only lowers the transaction speed but costs hefty amounts in terms of fee. It should be noted that these intermediaries do not just refer to individuals as they include any financial institution that moves your money, including banks and FinTech organizations.

Let’s explore a painstaking scenario where you happen to be in the US but you want to send remittances to your family based in Africa. You would first have to provide a list of details to the bank and the funds could take anywhere between 4-10 days before they finally show up in the recipient’s account. Moreover, the transaction fee would be quite high as well.

In the case of cryptocurrencies, you would be holding your tokens just a click away and can initiate a transfer by simply entering the recipient’s wallet address and they can have the funds in minutes, if not seconds, due to occasional network congestion.

Deloitte, one of the largest accountancy firms in the World, conducted research on blockchain technology and found that using this decentralized technology could help reduce the transaction fee by at least 40% and if used in an even optimized fashion, the fee could be reduced by 80% as well. That’s massive, given what we pay these days to the banks.

Apart from that, since there is no minimum deposit for opening a crypto wallet on most of the platforms, there is practically no barrier to entry in this niche, and anyone with internet and laptop/mobile phone can start using cryptocurrencies within minutes.

It should also be noted that currently, the regulators are quite keenly researching on methodologies to curb financial frauds and money laundering. However, since there could be plenty of aliases and complexities in the traditional banking model, the situation is quite different in the crypto sphere as these transactions are data-rich. It implies that each transaction has metadata that contains end-to-end information as to who held the coin and where it is being transferred. Although it does not reveal the ID of actual users, the provenance of ownership of tokens can be maintained and flagged wallet addresses can be tracked easily. In an attempt to lower the fraud probability, many platforms have now made it a compulsory step for their members to undergo Know Your Customer so they know whom they are doing the business with.

P.S. Since cryptocurrencies are volatile and undergo sudden fluctuations, there are several stablecoins that you can send instead of going with Bitcoin or Ethereum. They retain their value so even if your recipient does not withdraw them for a prolonged time, the value would not fluctuate.

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