HONG KONG/SEOUL (Reuters) – Bitcoin, battered by warnings about volatility and random appreciation, may have found a way to play a niche role in a big market: overseas money transfers.
New sites such as Bitspark in Hong Kong, and Bloom, Payphil, coins.ph and Satoshi Citadel Industries (SCI) join Rebit remittances in the Philippines, trying to become a business model.
Reduced liquidity is cryptocurrency exchanges and regulatory uncertainty are, for now, what limits the monthly remittances based on bitcoin to millions of dollars in a market of billions of dollars, say the start-up companies. But if cryptocurrencies mature, they say, traditional companies will suffer serious interruptions.
“Said George Harrap, executive director of Bitspark,” a company that depends on the remittance stores in Hong Kong, the Philippines, Indonesia, Vietnam, Pakistan, Nigeria and other countries like Ghana.
Many of the start-up companies, such as Bitspark, do not deal directly with individual clients, but rather provide the back-end transfer mechanism for the remittance stores.
The companies estimate how much money they will need for a day, buy the bitcoin in advance and sell it immediately for the currency in the receiving country. That means they can not keep the cryptocurrency any longer, and customer transactions are resolved in minutes, rather than in days.
Kate Corporal, 28, a Filipina who works for an international company in Incheon, South Korea, said she saved “huge” amounts of money sending money home using Rebit compared with traditional services.
“One thing I can guarantee is that the money I intended to send and the money my family received was exactly the same,” Corporal said. “Using bitcoin is really useful for many Filipinos … since every penny we send can be very significant.”
$ 100 to Indonesia or the Philippines through Bitcoin results in more than $ 100 at the other end. Without bank fees, stores say they can charge their customers 25 to 75 percent less.
But Hong Kong and Singapore, where competition is high and low, are 1-2 percent, compared to 10-15 percent in South Korea.
Reput sends money to the Philippines from South Korea, Japan, and Canada and is looking to expand into the Middle East.
The giants Western Union and Moneygram, which dominate the current market, are testing Ripple’s XRP, a cryptocurrency smaller and more centralized than bitcoin.
But the transformation of the industry does not seem imminent.
The value of all bonds held worldwide is approximately $ 160 billion, approximately two-thirds of the Asian remittances market and one-third of the global market, according to World Bank estimates. That means that local exchanges of cryptocurrencies cannot cope with the cash flow of large companies.
“As soon as you’re making $ 10-15 million a day, the liquidity becomes after year and you’re wondering, ‘how am I going to do this,'” said Prajit Nanu, executive director and co-founder of InstaReM, Who remits money to more than 60 countries.
Start-ups avoid having bitcoin for more than a few minutes due to its volatility.
Bitcoin now trades around $ 10,000, 10 times more than a year ago, but half of its peak in December, a common twist for the emerging asset class.
“We started in 2014, when bitcoin crashed from $ 1,000 to $ 200- $ 300 and luckily our business model was not based on speculation,” said SCI co-founder Miguel Cuneta.
“We are really using a transfer mechanism,” he added. “We are converting it as soon as possible.”
Cuneta says the central bank of the Philippines last year. The support of South Korea to ban the cryptocurrency trade was encouraging but said it was necessary for Seoul and elsewhere.
In Singapore, the launch of Toast stopped using bitcoin for remittances, so it could get a license. Now he is transferring money to the world of finance, a product offered by the rival hand of bitcoin, Ether, and others.
“If you bought cryptocurrency as part of a money transfer mechanism it is very difficult to get your remittance license in Singapore or anywhere else because regulators are still not sure how they will govern cryptocurrency,” said Aaron Siwoku. , founder of toasted bread.