Bitcoin Isn’t Ready for Prime Time as a Worldwide Remittance Replacement
(GigaOM) One of the key advantages of Bitcoin as a payments mechanism is that it is free. This is one of the reasons that international remittance is often brought up as a potential key early adopter use case for Bitcoin.
According to the World Bank’s research, the worldwide average cost of remittance is about 8.85 percent of the $514 billion sent each year. Taking that price to zero, or close to zero, is a big savings for immigrants sending money home, and one of the opportunities that many have identified as an opportunity for Bitcoin startups.
Bitcoin works great for moving money across borders because it is fast and free. Since most remittance starts in the United States, Europe or other developed countries, it is reasonably easy to initiate a Bitcoin remittance. Although there is some initial friction in setting up an account with an exchange, it is relatively easy to buy bitcoins with U.S. dollars or euros or yen. The friction is mostly for Know Your Customer and other anti-money laundering procedures, but is a one-time process. Since most remittance is done on a repetitive basis, that friction shouldn’t be a major impediment to adoption.