Remittance is commonly held up as one of the ‘killer’ use cases for Bitcoin – a cheaper and faster way to send money cross boarder.
This week Luis Buenaventure, co-founder of Rebit.ph, shed some light on the practical issues faced by “rebittances” companies at the moment. In his post on Medium Buenaventura notes in reference to the cost of rebittances:
“The first and last miles are where all the costs are”
As with most industries, the costs which are hardest to reduce are at the on and off ramp points. This is particularly the case with remittances, with massive networks needed to allow remitters and remittees to enter and exit the system.
Some have used this article as an example of why Bitcoin changes little in the remittence space. In spite of the sobering message the article presents, Buenaventura notes in reference to Bitcoin’s impact on the industry:
“From a cost perspective, it’s the difference between building a huge server farm versus pay-as-you-go hosting on Amazon AWS, [it’s] a true game-changer.”
This is a very salient point. Using the Bitcoin blockchain, the cost structure of running the ‘middle mile’ has now changed – dramatically. In fact, the cost and more importantly the time required to move value cross border has fallen to near zero. In many ways this is similar to the 90s when the internet was seen as a threat to the publishing industry. Many pundits noted that the industry was secure from competition because incumbents had huge distribution channels that couldn’t easily be replicated. Then social happened and companies like Buzzfeed were born. The same will likely be true for remittence, with new channels already slowly developing.
In spite of the fact that Bitcoin hasn’t crushed the old remittence industry (yet), the wave is coming and in all likelihood the change will come in a way we haven’t yet anticipated.