I increasingly think that the future of remittance business will rest on Bitcoin-Lightning payments layers because of the openness, low cost, ease of use, speed, instent settlement. But I am looking for some technical people with experience on this matter to explain me how does it work.
Does anybody know how to bootstrap a Bitcoin remittance Business that help people transfer money from overseas to back-home cheaply over Bitcoin-Lightning-Fedi-Cashu Layers?
912 sats \ 3 replies \ @cointastical 4 Feb
The cross-border transfer over bitcoin rails is the easy part.
What you are referring to by "Remittance" is actually fiat conversion into bitcoin on the sender's side and fiat conversion from bitcoin on the recipient's side. That's the hard part.
And by hard, I mean ... impossible (to do legally) without a very large amount of capital, due to money transmitter licensing requirements and compliance, and such.
Every remittance corridor (e.g., U.S. --> Philippines, UK --> India, and even Kuwait--> Pakistan, etc.) has numerous existing money transmitters competing in that space, making the opportunity to profit minimal for a newcomer with low volume (yet very high fixed costs, for the money transmitter licensing and compliance).
There are even certain corridors where there are existing bitcoin-based competitors (e.g., Strike's Send Globally) doing fiat (sender) -> bitcoin (cross-border) -> fiat (recipient) that make the opportunity for profit minimal for a newcomer competing in that corridor.
Today, most any person in a remittance country which has a net remittance outflow (i.e., more being sent than being received, ... e.g., U.S., UAE, etc.) can register with a money remittance service, (complete the AML/KYC steps) and then once that is done be able to send using funds from a debit card, and within minutes (e.g., an hour or less) the recipient has those funds on their phone (mobile money account), or bank account, etc.
So even the speed of a lightning cross-border payment doesn't add much to the traditional remittance (fiat -> [cross border] -> fiat) scenario.
Now where essentially nobody is going (yet) is making it so that the recipient can spend in bitcoin, rather than having to do a conversion to fiat. And that's because it is very difficult to make happen. There's the network affect working against that happening, and there are regulations in the recipient's country that might make that very difficult, etc.
At the same time, there are solutions that BItcoin-Lightning-Fedi-Cashu make possible that have never been considered or perhaps considered but not developed yet that make fiat such a useless form of money in comparison, that it seems an inevitability that at some point in the future of course those will be used in daily life. How we get there from here, I don't know.
Let me give a for-instance. A couple years back on one of @kr's podcasts, Synonym's John Carvalho (@bitcoinerrorlog) touched on an idea that he described as atomic tokens, and it's something that I had wondered (previous to hearing it described by John) why it does not yet exist.
Well .... it did exist, at least the general concept, before Bitcoin even. The original Ripple (whose brand name was sold to the current Ripple more than a decade ago) had the concept of electronic IOUs, where one approach was that I could issue IOUs redeemable 1:1 for a good I produce in quantity. The IOU could then be transferred, traded, whatever, and whomever wished to redeem (spend) that IOU with me would get the good or service that my IOU was my promise to deliver, on demand to the current holder of the IOU.
It's a real foreign concept to us ... but damn, that really solves a number of problems in countries which generally happen to be the same countries where a lot of remittances are sent.
Someone should build this:
I produce 2kg bags of corn flour (Unga), I deliver 20 bags to Mary's shop. Mary knows to not sell those bags to anyone unless they are redeeming one of my "unga" tokens. Part of the pay to my employees is in Unga tokens, knowing that they buy Unga or they have friends or family why buy Unga. So they will generally take and hold these tokens until they redeem them. This allowed me to create credit, where otherwise I might not have been able to find a lender.
Now let's say my employee lives with parents and doesn't buy Unga, and really wishes they had cash. Well that employee could put their Unga tokens on the exchange(s), and maybe takes a 3% hit but they converted the Unga token for some other token, or for cash -- whatever.
Let's say Mary ran out of Unga and wants to sell a bag of it. She can buy the token on the exchange(s), or she can pay me (fiat, or bitcoin, or whatever) to extinguish one of the outstanding tokens, giving her the right to sell it.
Now let's say my supplier is not local, and has no reason to trust that there really is a bag of Unga at Mary's shop that exists for this specific Unga token. Fraud is everywhere and this system better have protections to make sure Mary didn't sell the Unga, praying there would never be a run on Unga where Mary becomes insolvent, in terms of 2KG bags of Unga.
There are so many people idle in this developing country, who would love the opportunity to earn by serving as auditors of these atomic tokens -- visiting shops like Mary's to confirm that for the 18 outstanding Unga tokens of mine, there are 18 bags of Unga -- each one labeled with the globally unique token identifiers that are outstanding. The cost for that verification is trivial to have done, and me as the producer of Unga, I'm paying for that auditing service in my Unga token .... making it even less expensive for me (as part of the value of the token includes the profit margin I would have earned if that token were sold at retail).
Try doing something like that today and the gov't will shut it down. Creating money is the govt's privilege.
Get it started by getting Mary accept bitcoin for Unga, and the introduction of this Ungo token credit approach, is only slightly different for Mary. But the ability for fully-backed credit to be issued will do wonders for this stagnant economy.
And then your remittance becomes simply the sender simply sending bitcoin (or maybe even buying the Unga tokens or whatever that the recipient will be spending).
This is an inevitability, globally, in my opinion.
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247 sats \ 0 replies \ @piecover OP 5 Feb
Governments will always oppose individuals from creating their own tokens because they benefit from having the privilege to print money someone else have to work for, but we bypass that by simply using Bitcoin satoshis through LN-Cashu-..
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10 sats \ 0 replies \ @piecover OP 5 Feb
Excellent explaination thank you!
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3 sats \ 0 replies \ @cointastical 4 Feb
I wish I could make trivial edits after the timer expires.
The correct link for KR's podcast
And in the example where I "extinguish a token", what I am referring to is that I kept some of the 20 tokens I had issued for the 20 bags of Unga, specifically so that I could sell myself, either to Mary or to anyone -- at a later time. Or, if I had no Unga tokens, I could buy one off the exchange, and redeem that token with Mary, permitting her to sell that bag of Unga to a customer. I then could even have a new bag of Unga delivered to Mary to replenish the stock, and thus I didn't lose anything by having to pay near "shelf price" for the token I bought on the exchange as I then issued a new token when delivering another bag of Unga in which that was just at my cost of goods, not including profit and such.
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250 sats \ 2 replies \ @nikotsla 5 Feb
When you and the rest of the world understand that you don't need fiat conversion, then... remittance is simple a LN payment.
The main focus need to be on merchants, so people don't need to touch fiat, and... problem solved.
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0 sats \ 1 reply \ @piecover OP 5 Feb
Exactly, I that's what I would focus on the merchants who are the real customer
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0 sats \ 0 replies \ @nikotsla 5 Feb
User case: Some one from EE.UU want to send value to Africa
- Send a LN payment to end user
- Show end user where he could spend those sats
- https://btcmap.org/
- Some local web with a list of merchants
So, the way to collaborate with that is:
- Add merchants to btcmap
- Create a simple/static web with a list of merchants
- Write a how to for the enduser
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