While Bitcoin as a global currency still continues to receive heavy criticisms due to its inability to process small payments, it remains as one of the very few currencies that is able to secure international remittances and transactions.
At the same time, for years, Bitcoin’s ability to process secure and low cost cross border payments has been significantly underrated and undervalued. With Barry Silbert-led Digital Currency Group’s (DCG) investment in 18 Bitcoin exchanges, Bitcoin infrastructure in most regions is rapidly developing.
According to DCG, the monthly volume of cross-border payments settled via Bitcoin is increasing at an exponential rate, rising from nearly US$5 million to US$40 million from January to October of 2016.
Why have they become so popular?
In many underbanked and underserved countries like India and Kenya, Bitcoin has proven to be a cheaper and more efficient alternative to other mobile payment networks, like mPesa. DCG startups like Unocoin and BitPesa have continued to shape new remittance markets, helping individuals move away from cash to digital currencies.
Recently, even countries like South Korea which have cheap and advanced banking solutions employed new regulations for bank account and credit card registrations this year, rendering the entire process of creating bank-supported payment methods significantly more difficult.
For instance, South Korean users were previously allowed to create bank accounts in both national and commercial banks with little to no funds. However currently, users are required to spend at least US$400 on a monthly basis to create a bank account.
Tightening regulations on banking services and financial platforms have increased the userbase of popular exchanges like Korbit, which continues to lead the fintech and cryptocurrency market in Korea.
High demand for Bitcoin-payments-focused startups
With the multi-billion dollar industry of remittance struggling to deal with increasing costs and fees for cross-border payments, the entrance and emergence of Bitcoin-payments-focused startups and exchanges has never been in such a high demand.
The efforts of investment firms like Digital Currency Group in continuing to provide capital to innovative exchanges and payment service providers will lead the cross-border payment market for Bitcoin into new territories.