Is Crypto Remittances a Scam or Revolutionary? | Hacker News Reader

Is Crypto Remittances a Scam or Revolutionary?

12 pointssukiyuki10 comments

There are a few legit companies making decent progress this direction. As an immigrant from an undeveloped country, I love this idea. However, I would like to discuss the legality of their frameworks in the destination countries.

There are a few YC companies doing crypto remittances, notably

CocoMercado Afriex Lemonade Finance Palla

Conceptuallly, what they are doing makes sense to me - sending BTC across the border instead of SWIFT. Great. The big promise is explained at length in Techcrunch’s article titled “bootstrapers guide to bitcoin remittances”

The Offramp is the problem:

But when it comes to crypto -> fiat on recipient’s bank account, here is where it gets problematic for me (i.e. the Offramp).

1. They are using a sketchy local broker. Illegal, unlicensed, BUT this works great, since you can focus on the remittance part of the business while someone else solves the crypto liquidity part of the business.

2. They themselves provide the offramp and get a license for crypto in the destination country. Legally, thesis great, but I don’t see how this is feasible from the business / growth perspective. Basically, your remittance business can grow only as fast as you can grow your bitcoin selling business in that destination country. I don’t see how these sorts of businesses succeed

3. They work with an official crypto exchange in that country. This makes sense, but then you can only operate a business like this in a few countries where you actually do have a licensed crypto exchange AND whether or not that exchange will work with you is a big question

4. They work with Binance for liquidity. But this doesn’t make any sense, since Binance will settle by sending you fiat via wire anyways, so then you’re just using SWIFT under the hood, so why not just do crypto from the very beginning?

Ultimately, if there is a legal way to do this that doesn’t get rid of the benefits, these companies can become big. But it seems like all options either require them to 1) be illegal or “grey” legally 2) give up any benefits brought by crypto. Thoughts?

Interesting in hearing about how it could be both legal AND better than SWIFT - what would the required set up look like here?

all options either require them to 1) be illegal or “grey” legally 2) give up any benefits brought by crypto

Very well said and I agree. One clarification is that there seem to be some countries where everything is grey because the laws are impossible to follow as written; in those places maybe the risk of crypto doesn't matter. See also https://www.saveonsend.com/bitcoin-blockchain-money-transfer...

The problem with crypto remittances, and what will be the problem with all crypto until it is solved is the following:

One cannot easily buy goods and services with crypto and this is by design. Society today allows countries to have currency controls as a means to solve the impossible trinity problem [0]. If countries allow transactions in crypto and those gain even a small amount of share, the government loses all control over monetary policy since they no longer have currency controls.

The implications of this:

*Every crypto 'transaction' still needs to go in and out of fiat. Once you're at the point where you're converting fiat to crypto, SWIFT doesn't seem that bad in comparison.

*Every crypto transaction carries exchange rate risk (or stablecoin treasury risk)

*End users likely only see an abstracted version of the transaction where they don't even realize it's going in/out of crypto, so you as a company are just competing on price (and there's millions of more fun grifts than trying to create a price-competitive crypto remittance service)

Ultimately if crypto is going to win in remittances, somebody needs to find a way to make it so compelling for both remittance and domestic transactions that all of Mexico, The Philippines, or China uses it illegally and the government just has to put up with it (a la Uber).

[0] https://en.wikipedia.org/wiki/Impossible_trinity

You might find it helpful to compare this to 'move fast and break things' business models, especially 1 & 2, because it can be very similar

Think about Airbnb, Uber, Bird, Lime, DoorDash, and many similar startups. Legal pain points are moved outside the organization as much as possible. There may be positive disruption and benefits, but there may also be social ills and incentivization of bad behaviour

this is a really could way to think about it - moving the legal responsibility outside the organization, instead of trying to solve everything in one big move

Crypto for remittances is a great option for us personally. Transferring funds internationally is a mess to say the least, and it only gets worse as the amount you're transferring scales.

nice. which country? and are there non crypto base remittancecs that do it instant transfers?

Interesting. How about selling crypto TO a local broker in exchange for fiat transferred to your companies bank account in that destination country. The crypto broker may or may not be fully licensed BUT you're just his customer, so I feel like this would be okay legally.

The issue is that crypto is still not generally accepted as a payment, plus crypto is already riddled with fees at almost every step, and the smaller the amount the less feasible it is to send.

Crypto Remittances Is a Revolutionary New Technology

I know what you're thinking: "This is just another bullsh*t scam, right? These people are banking on the fact that I'm too dumb to see through their thinly-veiled attempt to take my money, right?" Wrong. This is the real deal.

Here's the thing: contrary to what you might think, you don't need the biggest brain in the room to understand how this technology works. You don't even have to be a genius at math (although if you are, I'm sure it helps).

The reason people have had so much trouble deciphering whether this is a scam or not is simply because they haven't been able to wrap their heads around the concept of crypto remittances with any degree of accuracy. It's like being told about some faraway place—something that seems impossible. And yet, here we are.

What I've learned after extensive investigative journalism on this topic is that some has actually gained a foothold in a number of industries by offering this newfangled technology. It's been used in both private and public sectors, but it's also made its way into consumer markets as well.

this gotta be a bot, right?

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