Governments around the world have been looking at adopting, regulating and even banning cryptocurrencies since the inception of Bitcoin. Ever since, the crypto ecosystem has been a rocket ship ride to the moon and back (multiple times). Today, it seems that more people than ever have hopped on for the ride.
We’ve also seen a massive shift toward digital platforms across all industries as a result of the pandemic. Political leaders globally have followed suit by taking steps to move their economies in the same direction.
One of the most recent examples is El Salvador, which made headlines by becoming the first country to adopt Bitcoin as legal tender (a move that has since been protested by its citizens). In the initial announcement, the country’s president directly connected crypto as a competitor to remittances, noting this would increase the amount of money low-income families in El Salvador receive from remittances by the “equivalent of billions of dollars every year.”
To be an effective form of cross-border payment flows, digital assets must overcome innate challenges that already dampen their adoption ability regardless of a cross-border use case.
Remittances — the act of individuals sending money to support their families and communities back home — make up a significant component of GDP for many countries. In fact, global remittances totaled roughly $700 billion in 2020, $540 billion of which is noted to have been sent to low- and middle-income countries, according to the World Bank. El Salvador received nearly $6 billion of that. Cryptocurrencies, on the other hand, are estimated to currently make up less than 1% of the volume of global cross-border remittances.
Is cryptocurrency an effective replacement for remittances? No, at least not yet.
The demand for each of our services is a market-specific story, and it’s not uncommon for recipients to still pick up cash despite having real-time digital and cash pay-out options…
