A recent analysis published by the American cryptocurrency company Coinbase detailed how the use of cryptocurrencies might help Americans save millions of dollars in remittance expenses.
As stated by the cryptocurrency corporation, the disjointed nature of the global financial system presents challenges for citizens of the United States who depend on remittance fees. (1)
It also discusses the fact that the value of remittances, which are the monies that people send to their families and friends who live in other countries, is not universally acknowledged or appreciated.
According to Coinbase’s research, the amount of friction experienced during the transmission of remittances has an effect on both the sender and the recipient.
In the meantime, Americans are at the top of the list of those who send money transfers to other countries.
As a result, they endure the most excruciating agony as a result of the friction. They not only have to deal with unneeded expenses, but they also have to deal with delays in the transfer time.
Banks receive an average of 10.8% from inhabitants of the United States, money transfer businesses receive 6.2%, and post offices receive 5.5%.
The national average for the cost of fees is 6.18 percent. This increases the annual cost of remittance fees for Americans up to roughly $12 billion, which is the average amount spent.
Coinbase says:
It shouldn’t cost you money to transmit money; that shouldn’t be the case.
The use of cryptocurrency might save Americans billions of dollars in remittance fees
Thus, this is where cryptocurrency steps in to save Americans from the suffocating effects of remittances.
According to a report by Coinbase, crypto assets such as Bitcoin and Ethereum could assist people in the United States reduce the cost of sending money within the country, which is a factor in the high remittance rates.
When compared to the existing method, the cryptocurrency company said that employing crypto could save a significant amount of money and cut expenditures by 96.7%.
When compared, the average cost to send Bitcoin from one wallet to another wallet is $1.50, but the average cost to send Ethereum from one wallet to another wallet is $0.75. Remittances can take anywhere from one to ten days, so not only do you save money on transaction costs, but you also save time and have more flexibility.
Using crypto, which has an average wait time of roughly 10 minutes per transaction, allows Americans to save time and experience transactions that are completed quickly.
This is because the standard finance system, which is the foundation upon which international wire transfers are built, necessitates the participation of several intermediaries and can only be utilized during “regular” banking hours.
There is no lag when using crypto. No set times. There are no “conventional” obstacles. Also, it is open and available at all times, day and night, 365 days a year. At the end of each day, nobody flips the “closed” sign on the blockchain over.
It is important to note that these international remittances, which have a combined worth of $781 billion, serving as a type of social insurance. In addition, the fund can be used to generate more income, and it can also facilitate expansion.
Almost a quarter of all remittances, or an estimated two hundred billion dollars, come from the United States.
In addition, Coinbase mentioned how these remittance costs are a crucial lifeline for areas that do not have access to traditional banking services.
Money sent back home can be put toward important expenses like housing and medical care, such as groceries and utilities. Education is another area that these donations support.
“Yet, the procedure for making international transfers is startlingly long and costly. According to the findings of the study, international monetary transfers using cryptocurrencies are “much quicker and over 96% cheaper, dramatically alleviating the strain placed on communities that seek to provide assistance for their families and friends located outside of the country.”