Unbanking the Banked
Our current global payment system relies on a complex network of banks and financial institutions, but do we need them? One company says no and they are taking serious steps that could make banks in their industry obsolete. Remittance company, Bitspark announced recently that they would be switching from Bitcoin to BitShares because it is better suited for the company’s business.
Bold Plan to Revolutionize the Remittance Industry
Due to the flexibility and power of the BitShares platform, Bitspark has revealed a bold plan to revolutionize the remittance industry by “removing banks from the equation”. The remittance industry is an old business and one that accounts for billions of dollars of cash flow into developing nations. However, in many of these developing nations less than 20–30% of the citizenry have bank accounts. The other 70% of the population that is without access to a bank or financial services has been deemed “the unbanked”.
In order for the unbanked to receive funds they must use a money transfer shop; however, this presents several challenges because the system must have adequate geographical coverage of MTOs and these MTOs rely on a complex web of banks to transfer and rebalance funds.
The issue revolves around access to local currency and the network of banks needed to transact. An MTO sender may have a significant cash balance whereas the receiving MTO may have a large digital balance. Traditionally they would be forced to go through banks in order to rebalance. This is where Bitspark sees an opportunity to streamline the process by removing banks all together.
Bitspark is proposing the use of pegged cryptocurrency such as BitUSD to rebalance, citing the following example:
“A Bitspark Sendy (mobile app) user has a digital balance of 100 BitUSD in their app and would like to make some money. They visit an MTO and offer to sell their digital 100 bitUSD to the MTO for $101 in Cash. The MTO accepts this offer and exchanges $101 in cash for 100 BitUSD. The MTO now has reduced their cash on hand and also received a digital balance to be used for future transactions.”
This eliminates the need for a bank to provide liquidity. Bitspark is removing the difficulty associated with accessing liquidity denominated in the local currency, intending to eventually create a pegged fiat cryptocurrency for every national currency in the world with zero counterparty risk and exchangeable for virtually no cost. The same methodology can be applied when rebalancing a “cash poor” recipient MTO. The Sendy user would sell their cash and receive BitUSD.
This can effectively ‘unbank the banked’ whereby MTOs can operate and no longer need the use of a bank account to conduct business.
Currently, most money transfer providers such as Western Union, rely on proprietary systems and methods, eliminating virtually all interoperability between service providers. By providing an API that can be partially integrated into a system, MTOs can use Bitspark to access liquidity without abandoning their existing systems.
Bitspark, in yet another forward-thinking move, has put great emphasis on developing a great mobile app. Bitspark customers can use the Bitspark Sendy app to top up, cash out and send and receive payments. Mobile payments are a major part of the Bitspark business plan going into the future.
“It is often said the next billion internet users will all be on mobile and being able to bridge the gap between traditional bricks and mortar MTOs and their users via Sendy has been an increasingly bigger focus for us.”
The new payment method will be rolled out slowly for specific currency pairs so that Bitspark’s remittance users will have the access to all of the world’s 180+ currencies in 12 months. Bitspark has assured users that existing Bitcoin deposits and payment methods will persist for a time while the transition is carried out.
Bitspark and BitShares Leading the Way to Unbanked
“Our focus is on the transition to the BitShares Blockchain for the rest of 2017 and will be fully operating in time for Bitspark’s most recent project with the United Nations”. Bitspark is partnering with the United Nations Development Program in Tajikistan to study the potential for blockchain remittances as a solution to improve financial inclusion in the country.
The mission to unbank the banked has begun, Bitsparks and BitShares are leading the way.
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