This article is from es.cointelegraph.com and the original article can be read here
According to studies by Chainalysis and Statista, Venezuela, Argentina, Colombia, Brazil, Chili, Peru and Mexico are among the economies with the highest adoption of cryptocurrencies for sending remittances in Latin America.
Thus, more and more those who join this technology which has managed to eliminate intermediaries -governments and financial entities- to carry out these money transactions. Becoming a more viable option than sending traditional remittances, with low commission costs, fast and private.
In this line, Leo Elduayen, CEO of Koibanx, an Argentine fintech that helps to integrate financial solutions from the blockchain world with the traditional financial system, in dialogue with Cointelegraph, gave his opinion regarding the issue of the use of cryptocurrencies and Bitcoin (BTC) in sending remittances in the region.
Before the question made by Cointelegraph about what his opinion was about whether Bitcoin and Cryptocurrencies are useful for sending remittances, and why.
The CEO of the Argentine company explains that most people use platforms that use the SWIFT network -they are the ones used in most banks worldwide- to send bank money from one region to another, in his opinion this type of transfer system “is not very efficient.”, because it has high commission costs per operation, they need intermediaries and to be carried out it requires a long time between when one person sends the money and another receives it.
He also adds that with the use of cryptocurrencies and Bitcoin (BTC), this does not happen the same.
“The costs are much lower, both for the Bitcoin network and with respect to any other network such as Lighting Network, Algorand, some layer 2 of ethereum, etc. International remittances, as long as they are sent and received in cryptocurrencies, do not need any intermediary since users could make the transaction directly. These transactions can be carried out even between agents or people who do not even know each other since there is the possibility of using smart contacts which will look for a sender who wants to send crypto “X” and a recipient who wants to buy/receive that crypto “X”.
He also adds that: “The duration times are very low: in the case of Bitcoin, which is the protocol that takes the longest, each block is processed every 10 minutes and this is without taking into account layer 2 such as the Lighting Network, where it happens in seconds . The same thing that happens in networks like Ethereum and Algorand.”
In addition, He stressed that whenever operations are carried out without intermediaries, this will be “totally pseudonymous and decentralized”, that is to say, nobody knows to whom each wallet corresponds to.
To this he adds that the difference between using, for example, services such as Western Union or bank transfers and using cryptocurrencies to send value across borders, is that in the case of Western Union, it charges up to 5% commission -in Argentina-, while with the BTC or another digital currency, “costs in the order of cents so that it is credited at the same time (or even instantaneously) and regardless of the amount that the user wants to send”, he explained.
Is it safe to use cryptocurrencies to send remittances? What care should be taken?
In this scenario, the entrepreneur of the software company states that: “By sending certain cryptocurrencies, stablecoins or whatever through blockchain technology, we are accessing the possibility of transacting without borders in the most secure way possible.”
Likewise, the CEO highlights the fact that blockchain technology has certain specific characteristics that make the information immutable.
“Blockchain has some concrete characteristics. Your information is immutable: this means that if, for example, you have 1000 usdt in your wallet, no one can change that value unless you make a transfer or purchase of another asset. And there is a distributed/decentralized custody: Nobody owns 100% of the network, since different users store different nodes of the network that contain updated copies of the information. So the information is immutable and unhackable.”
And he urges you to be cautious when carrying out these transactions.
“We must be very careful when placing the address of the wallet to which we will send crypto and also select the correct network in which the transaction will be made. In case of placing one of the two things wrong, the money transacted is lost and is not recovered precisely because the information is immutable”.
And he adds that this risk is what has led many people to look for platforms that offer this type of service.
”That is why many times users prefer the “peace of mind” of even contracting the service through a company, but that company does use the blockchain network to send them, in order to, in this way, access better costs and terms but without having to manage security control and operation with the responsibility that this entails. Some companies that already provide this type of service in Latam are Bitso, Bitex and us, Koibanx. Like everything, it is cultural, the user is becoming more and more friendly with technology and we are on the way to a decentralized operation without a doubt”.
To conclude, Elduayen expresses his opinion about the use of cryptocurrencies for Latin American remittances, and in relation to this he believes that:
“Digital remittances are migrating towards crypto adoption without a doubt, In Mexico (whose route with the USA is one of the largest remittance routes in the world) more than 15% of digital remittances use the blockchain as a processing backbone. As governments increasingly aim to adopt and implement measures to “take” cash off the street and digitize the economy, the outlook for crypto remittances looks very promising.” concluded the CEO of the blockchain financial software platform company, Koibanx.