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People moving away from their home country to reside in a foreign country – or, in other words, immigration – has existed in reality all over the globe from time immemorial and this phenomenon is not expected to stop in the near future. While that might or might not be problem for people, the means of sending money back home has also been an issue for a very long time.
Thanks to money transfer companies, mobile operators, post offices, and banks, this problem has been alleviated to some extent. Why ‘some extent’? These global methods of sending money back home are not a hundred percent effective. A recent survey by Clovr showed that food and general upkeep are the major reason for sending money back home. While these current methods help to get the money to the designated recipients, they cut out a substantial amount of money from each transfer made between countries.
According to the World Bank report as of June 2018, banks charge as high as 10.41% on each transfer made across borders. Money transfer companies and post offices charge about 7% and mobile operators charge 3.20% on each transaction, irrespective of the amount. From that data, it is safe to conclude that a substantial amount of the money sent home doesn’t really get home; instead, it is redirected to corporate profits. Worse, sending money to countries in Africa from the United States attracts an additional 15% to the normal fee. At the end day, only a part of the money intended for food and upkeep actually gets home. I guess it goes without saying that there is a need to create a more effective method of sending money back home. True, the $500 sent may not get home but a method that transfers a close value will be a better choice compared to the existing methods.
A good fit, at least at the moment according to the survey, is sending money through cryptocurrencies, which is being used by 15.8% of all surveyed participants. The intended value is converted to a crypto coin and then transferred through crypto wallets; the coin, when received, will be converted to fiat currency or used for direct purchase. This method is both cheaper and faster, making it the most effective way to transfer money across borders.While that may sound like a good idea, questionable regulatory mechanisms and price volatility has been the bane of this 21st century digital currency.
Another problem facing the crypto verse is its complexity. A greater percentage of the 707 respondents surveyed (45%), especially women (62%), were found in the category of those who are not at all familiar or just slightly familiar with cryptocurrencies and, the underlying technology, blockchain (63% of all surveyed). These results correlate with another survey from several months ago. How do people use something they do not understand? A billion dollar question yet to be answered.
Besides being unfamiliar with crypto technology (37.8%) and scared of its sustainability (27.6%) and security (22.8%), a set of respondents are concerned that the digital coins may be of no use to them as not many companies are crypto-friendly (35.9%). While this is a logical concern, it should be, in fact, the least of our worries as more companies will be compelled to join the trend when a greater percentage of the world’s population embraces these digital coins as ‘normal’ currencies.
As we wait on the jury to decide on the sustenance of these new cryptocurrencies, we hope that some of these drawbacks will be mitigated to pave way for a more efficient method of sending money back home or just making fast and secure transactions in general.