To tap the remittance economy, Buttercoin, a Bitcoin exchange is planning to open its offices in India and in six other countries in nine months’ time. According to an estimate by the World Bank migrants will send about $515 billion to relatives in developing countries like India by 2015.
Customers do not have a Lot of Choices
Currently only few services providers like Western Union are catering the requirements from the customers in developing countries. However, they are charging quite significant amount in each transaction; for instance, Western Union charges around 10 percent for transactions in the market. The customers are looking for a better alternative like Bitcoin where there would not be any such deduction.
Bitcoin Will Provide Frictionless Transactions
Bitcoin promises for frictionless transactions. Moreover, as it is an international currency, it can be used anywhere at any part of the world, it will definitely be able to meet the requirements from the people who send their money to their homes in developing nations from the developed world. Bitcoin will allow anonymous and irreversible transactions without the need for a third-party facilitator like a bank.
However, the major advantage that user would be able to cash in is that customers will have to pay significantly less than what they pay to the companies that provide money transfer services. Apart from India, Buttercoin plans to open its operations in six countries in nine months’ time wherein they are mulling a plan to open a local Bitcoin exchange in each country.
The Operation in Compliance with the Local Laws
The company has admitted that when it enters a market, it will collaborate and coordinate with local money transfer businesses to have legal compliance in the host country. However, that will not mean that the local partners will have any cut in transactions; rather, they will be paid 50 percent cut of Buttercoin‘s fees in exchange for having the proper licenses and relationships with regulators.
Remittances Play Vital Role in Developing Economies
Remittances play vital role in the economies of many countries like India and contribute to economic growth and to the livelihoods of less prosperous people. An estimate from the World Bank shows that remittances totaled US$414 billion in 2009, of which US$316 billion went to developing countries. Nearly 192 million migrant workers send remittances to the developing countries which according to it in some cases can be as high as a third of their GDP.
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