Bitcoin Brings Innovation to the Money Transfer Industry

Exchanging currency reinvented

Digital Currency Map

Bitcoin is transforming the way we transfer money, providing relief for foreign workers in an industry weighed heavily by transmission fees. These services are eclipsing the Federal Direct Investment (FDI) of some low and middle income countries, and surpassing major industries. Foreign workers are forced to pay high fees for these services, because they are the only reliable channel while working abroad. Money transfer services are a narrow funnel for a substantial portion of GDP in developing countries, reaching over $436 Billion in 2014. The ability to transfer money significantly improves the lives of the world’s poorest individuals. The effect of transferring funds is directly linked to improving access to health services, educational opportunities, and increasing financial development internationally.

African countries face the largest fees with each transaction expecting to reach 20-23% in some regions. The process is painstakingly slow as services take up to a week to process. International workers without local banking services are losing the ability to send income home as charges for using these services are rising. Bitcoin transactions are validated almost instantly in comparison, and large amounts are exchanged for a fraction of the cost. Bitpesa is one of the few companies in Africa offering a bitcoin solution to an industry resistant to change.

The Overseas Development Institute investigated the rise of transmission fees in Africa hoping to find a resolution to the growing problem. Their report associated three factors that are restricting innovation in the remittance industry: a lack of competition, restrictive business policies, and a lack of transparency. Surprisingly, two-thirds of money transmission services are performed by only two companies in many parts of Africa. These opportunities are causing bitcoin innovators to enter the money transfer market with the hopes of disrupting the status quo.


Dr. JosephineThe risks posed by money laundering operations have resulted in strict laws for money transmitters. Enforcing strict barriers directed at money launderers leads to large amounts of fees that dampen funds attempting to reach their intended destination. Alleviating these fees increases household incomes and consumer consumption.

Foreign leaders discussed cryptocurrencies in depth at the Commonwealth Roundtable of Digital Currencies in February 2015. Deputy Secretary-General of the Commonwealth Secretariat, Josephine Ojiambo expressed optimism for the impact of digital currencies:

It is important to note that virtual currencies do not solely pose risks. However, the potential benefits they offer such as reduced transaction costs, certainty of payment and improved transaction processing times will need to be considered within the context of the strengths and weaknesses of existing national regulatory and criminal law frameworks.

Forbes investigated the regulation of the Somali money transfers in 2013 concluding that regulation proves to be a double edged sword:

Essentially, we can have a banking system with the current rules and regulations about money laundering or we can have a banking system that can handle remittances into Somalia. But what we cannot have is both: for the regulations are too expensive to allow the sending of small remittances into Somalia.

The future of bitcoin will be discussed pending further reports that will be presented at the Commonwealth Heads of Government Meeting in November. This is encouraging for businesses like BitPesa that have already entered the region despite any resolution. While the Commonwealth continues deliberation, Latin America is already processing transaction requests with bitcoin, and are seeing a large decrease in transmission fees.


Global Exchanges

Recent economic disparity in Latin America is driving bitcoin’s disruption of money transfer services. Digital exchanges are creating new avenues of exchanging currencies. Volabit and SatoshiTango are partnering up to eliminate the economic lag caused by unnecessary transmission fees, in Argentina and Mexico. Volabit promotes over $26,000,000 Pesos ($1.6 million dollars) have been exchanged on their platform. The level of adoption continues to grow, increasing opportunities for economic growth. Digital exchanges allow workers to exchange currencies into bitcoin before being sent to anyone in the world almost instantly. This appeals to domestic entrepreneurs observing these regions and new money transmission services are appearing in the United States.

Abra (A Better Remittance App) connects users with ‘tellers’ to facilitate money transfers and uses bitcoin behind the scenes. These human teller exchanges resolve unnecessary fees transferring money internationally. These exchanges work by users engaging with local tellers to facilitate exchanges for digital currency. Paying contracts in your local currency overseas without high exchange rates will allow stronger global markets to develop.

A manager agrees to pay a contract with a Mexican distributor for $200. Tellers are mapped by location and display their rates before offering an exchange. This competitive teller environment models familiar Uber or Lyft services and tellers are background checked before operating on the service. Users deposit money to their balance in person with cash or digitally. Money is exchanged freely between members and withdrawn from any Abra teller. These are useful for exchanging currencies in the short term. Without the ability to control your private key, it is important to not use these applications as a bank account.

Innovative solutions are transforming an industry primed for disruption. Case strives to eliminate the barriers to participating in a global economy. Solving economic disparity in developing countries is becoming an increasing discussed issue. Bitcoin provides a money transfer system that developing countries can use to safely exchange funds. We’ve discussed the importance of financial inclusion in a previous blog post and we continue to monitor the impact made by cryptocurrencies. Follow our mailing list for more innovative features of bitcoin.

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Bitcoin Brings Innovation to the Money Transfer Industry

A Growing Interest in Bitcoin & the Blockchain


Exciting technology and business personalities are exposing a wider audience to bitcoin. Experience in cryptography and blockchain technology are growing increasingly important for advising decision makers on crypto-currencies. These new faces come from diverse financial, business, and regulatory backgrounds. The Obama Administration’s newly appointed Deputy U.S. Chief Technology Officer, Edward Felten, has experience discussing the nuances of bitcoin in a public forum.

A Princeton professor and cryptography proponent, Edward Felten was appointed the White House’s Chief Technology Officer on May 11th, 2015. His research has led to many aspects of the Bitcoin protocol, with a focus on mining behavior and Game Theory. Published articles regarding crypto-currencies reflect Felten’s opinion on various digital currency topics:

  • In 2013, Felten co-authored a 20 page research paper exploring the economics of bitcoin mining. The paper examines a bug in an early bitcoin version, that caused a fork on March 2013, and the lessons that were learned. The detailed report examines the structure of the Bitcoin protocol and the effects of a 51% attack.
  • As the Director of Princeton’s Center for Information Technology Policy, Felten published blog articles discussing the importance of cryptography and bitcoin.
  • Felten held the position of Chief Technologist for the Federal Trade Commission. While at the FTC, Felten authored a report to congress urging to increase transparency in data collection. Additional papers co-authored by Felten show a wealth of knowledge on the topics of privacy, computer security, and technology law and policy.

Richard Branson’s Blockchain Summit on Necker Island


Richard Branson hosted the Blockchain Summit last week to an audience of Bitcoin executives, columnists of popular media outlets, and financial advisers. Bitfury debuted a light bulb that mines bitcoin demonstrating alternative applications of the technology. Tweets indicate the event covered Property Rights, Elections, Digital Identities, and Internet of Things applications. At the end of the summit, Branson was dubbed an honorary member of the Digital Chamber of Commerce for his contribution to the Bitcoin community. As the sun set on the Blockchain Summit legislators finalized drafts for businesses using bitcoin and other digital currencies back in the United States.

Updates to Legislation Shows INTEREST in bitcoin BUSINESSES


California, New Jersey, and New York released proposals regarding crypto-currency legislation, reigniting the debate of how much regulation is necessary in a decentralized environment. After many months of discussions and testimonies from various industries and experts, regulators are beginning to realize bitcoin’s innovative and disruptive potential. Conversations about bitcoin are shifting toward blockchain technology and many are trying to separate the two to create personal blockchain networks. The attention toward blockchain technology sheds light on misconceptions of bitcoin that still need addressing.

The value and confidence of the blockchain derives from the amount of verified transactions and the computing power of the bitcoin network. Each transaction validation expands the ledger and strengthens the value of bitcoin as a reward is given to miners performing validations. The amount of computing power required by the network increases over time as difficulty rises and the ledger expands. The limited supply of bitcoin also creates a growing incentive for miners to validate transactions.

The Bitcoin protocol hash-rate is approximately 336,000,000 GH/s. That amount of computing power can not be replicated to gain an overall consensus to manipulate the blockchain. Creating a new blockchain without bitcoin has higher risks of failure because the threshold of computing power to validate those transactions would be much lower. Financial markets see the strength of bitcoin and have created innovative uses of the technology using colored coins.

NASDAQ recognized the strengths of an immutable ledger, and are now testing a market to distribute colored coins for private equity. We are excited to see the new uses for the blockchain to create new markets across the world. The impact bitcoin has on those without banking services demonstrates the need to encourage these discussions and inform government bodies of the importance of promoting innovation.

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A Growing Interest in Bitcoin & the Blockchain