money

Since the exponential growth of cryptocurrency, and Bitcoin in particular, the many benefits of blockchain technology are finally starting to become understood. One specific section of society that would benefit greatly from blockchain capabilities are those working and residing in the emerging markets.

A large proportion of individuals living in developing countries still have no access to everyday financial services. Often referred to as the “Unbanked”, communities must instead rely on slow, expensive and highly bureaucratic money transfer providers. Before understanding how the innovation of blockchain technology can benefit emerging nations, it would be pertinent to first understand the issues experienced by those without access to banking facilities.

The Issue: International Remittance

According to a United Nations Development Programme report, there are still more than 2.7 billion people living on $2.50 per day or less. Think about that next time you go and buy your daily Starbuck’s Cappuccino. This figure greatly constitutes citizens living in the developing world.

As a way for family members working overseas in first world nations to send their earnings back home, they must use the services of a third party intermediary. Notably this will normally consist of a banking institution (if the receiver has access to a bank account) or a money service business such as Western Union or Moneygram. Therein lies the problem.

A lack of private sector competition and cross-border infrastructure has resulted in decades of substantially high remittance fees.

The International Fund for Agricultural Development claim that the average cost of sending $200 to the Southern African continent still amounts to a staggering 14.6%. For a region that receives approximately $60 billion in annual remittances – this is a significant amount of money that is being withheld from those in need. Furthermore, such payments can often take days to arrive.

There are also issues pertaining to charitable donations failing to reach the intended final destination, which is often the result of corrupt organizations providing no accountability as to how they distribute the funds.

The solution: A global payment gateway with underlying blockchain technology

The aforementioned issues can be solved by introducing a payments system that functions through a decentralized blockchain. To address the matter of expensive remittance fees, distributed ledger technology has the ability to process borderless transactions in a matter of seconds, incurring costs of only few cents.  This is in stark contrast to the double-digit average of using a traditional payment remittance provider.

Moreover, each and every transaction is available to view on the public blockchain ledger, which provides consumers with complete transparency. It is not necessarily a requirement for blockchain technology providers to replace the current status quo, more so there are lucrative opportunities for financial institutions and money service bureaus to instead embrace and adopt it in to their cross-border models.

Platforms like Kvantor have the capacity to completely revolutionize the emerging markets remittance sphere through their HyperLedger protocol. In doing so, both developed and developing nations will be able to benefit from cross-border transactions in the seconds and fees in the cents. Moreover, by utilizing the features of an innovative consensus model, coined to be called a Proof of Asymmetrically Apprised Authority (PoAAA), cash transfers can be independently audited through a transparent ecosystem.


Author: Arsen Bakhshiyan, CFO Kvantor

(KVANTOR is a platform which facilitates borderless transactions and seamlessly integrates with banks and FinTech providers who are disenfranchised and are looking for alternatives to traditional channels, such as SWIFT.)

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