How do cryptocurrencies affect international remittances?

Cryptocurrencies have become an increasingly popular means of transferring funds internationally, with the potential to disrupt traditional methods such as wire transfers and money orders. The use of cryptocurrencies in international remittances offers a number of benefits, including lower transaction fees, faster transfer times, and greater accessibility for those without access to traditional financial services.

One of the key advantages of using cryptocurrencies for remittances is the ability to avoid high transaction fees typically associated with traditional financial services. For example, the World Bank estimates that the average cost of sending remittances globally is around 7% of the transaction value. By contrast, the use of cryptocurrencies can reduce transaction costs to as little as a few cents, making it an attractive alternative for those looking to send smaller amounts of money.

Cryptocurrencies also offer faster transfer times compared to traditional methods. While wire transfers and money orders can take several days to complete, cryptocurrency transfers can be completed in a matter of minutes. This can be especially beneficial for those who rely on remittances for their day-to-day expenses, as it can help them access funds more quickly and reliably.

Finally, cryptocurrencies can help to increase access to financial services for those who are unbanked or underbanked. According to the World Bank, around 1.7 billion adults worldwide do not have access to a bank account. By using cryptocurrencies, these individuals can participate in the global financial system without needing to open a traditional bank account.