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What is Bitcoin and How Does it Affect the Remittance Industry?

Updated on Apr 12, 2022
Man touching bitcoin

At its simplest, Bitcoin is either virtual currency or reference to the technology. You can make transactions by check, wiring, or cash. You can also use Bitcoin (or BTC), which is a form of encoded electronic signature that allows you to buy or sell goods and services.

Bitcoin has come far in a relatively short time. All over the world, companies, from REEDS Jewelers, a large jewelry chain in the US, to a private hospital in Warsaw, Poland, accept its currency. Billion dollar businesses such as Dell, Expedia, PayPal, and Microsoft do, too. Websites promote it, publications such as Bitcoin Magazine publish its news, forums discuss cryptocurrency and trade its coins. It has its own application programming interface (API), price index, and exchange rate.

Problems include thieves hacking accounts, high volatility, and transaction delays. On the other hand, people in third world countries may find Bitcoin their most reliable channel for giving or receiving money.

How Does Bitcoin Work?

The Bitcoin money is actually an electronic signature that is encrypted with 16 distinct symbols and is decoded to complete the transaction. The transaction gains its security by running on a peer-to-peer computer network, also called a blockchain, that is similar to Skype or to BitTorrent, a file-sharing system.

This blockchain is like a vast public ledger, where "miners" confirm the transactions to be legitimate and cue them on the chain as "blocks". Incoming blocks are broadcast to the peer-to-peer computer network of users for validation. In this way, all users are aware of each transaction, which prevents someone from stealing your money and also prevents double-spending, where someone spends the same currency twice.

What Does Bitcoin Give You?

The bitcoin process is not only faster than the regular system but also cheaper, since you don't need to hire third-party members, such as bankers or accountants to transact your deals. The blockchain ledger is decentralized, which means that you can settle international deals without messing around with exchange rates and extra charges. The ledger, in general, and bitcoin, in particular, is free from government interference and manipulation, so there's no Federal Reserve System to hike interest rates. It is also transparent, so you know what is happening with your money. You can start accepting bitcoins instantly, without investing money and energy into details, such as setting up a merchant account or buying credit card processing hardware. Bitcoins cannot be forged, nor can your client demand a refund.

How Does Bitcoin Affect the Remittance Industry?

Bitcoin money can instantly and easily be transferred across the globe, although it may be decades until it wins universal trust. Reports show that the currency is secure - maybe even more secure than regular money - and bitcoin reports calculate that it's 250 times cheaper to use than forex agencies, high street transfer firms and certainly banks!

There are 11 BTC providers who have started BTC remittance services. These include BitPesa, Abra, and Ribbit. You may want to investigate these companies before using them. BTC regulations for remittance vary from state to state and from country to country. You'll want to know about these, too.

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