Why #Transmission project can become #Uber in world currency transfers?
Currency transfers have become one of the largest global directions of cash flow in the world: at the beginning of 2017 the total volume of such transactions exceeded $150TR. and the volume of all transfers of private individuals was estimated at $3TR in a year.
According to a World Bank study (Remittance Prices Worldwide / PRW for June 2017), the weighted average costs for implementing such transactions are 5.57% of the transaction amount.
Surprisingly the most “expensive” way of conversion with transfers is a bank transfer — about 10%, but at the moment it remains the most popular and sought-after way of transfers thanks to a developed system of infrastructure, offices around the world and territorial coverage. Also important role in this sector belongs to large global specialized players such as Western Union and Moneygram.
The traditional model for the implementation of such transactions involves a complex currency movement transfer of money to the bank’s branch, the exchange of one currency for another (if necessary), the transfer of funds between the two banks by correspondents, and the transfer of the currency by the bank to its account.
This usually requires a certain time from one to several banking days and costs the client as was noted above with significant expenses making up about 5–10% of the transferred amount.
The #Transmission system looks at this process differently.
We proceed from the understanding that the money resources needed for customers in different currencies are already exist in the actual locations and the form they need — another currency in the form of assets on the crypto exchange, and the actual transfer of money representing the transfer of electronic bits should be bypassed to the client In the minimum reasonable amount.
This is possible due to Transmission’s system new concept, which consists in the fact that the funds you need in the fiat or cryptocurrencies already in the location/country you need on the crypto-exchange you are interested in (in other words, funds already exists in all locations where our system is open to our service users). We creating money or its modern embodiment in the form of currency as a means of exchange: we accept your currency in exchange for the one that interest you or the recipient in any location covered by the work of our services. So basically we are washing away borders and barriers for international transfers.
You exchange with our service or its other client directly bypassing all possible delays and additional costs for currency transfer and conversion. The only fair basis for such an exchange in our opinion can only be the market average exchange rate fixed at the current time of the global money market.
At the same time, the service fee for transmission services lags incredibly low (no more than 1% of the transaction size). And this is our main principle of work, we do everything so that our customers pay minimum reasonable costs.
Undoubtedly such a concept requires the construction of a modern, efficient financial and analytical system, the best solution for the implementation is the use of Blockchain technologies. In addition to the extensive financial architecture that encompasses and connects all the major financial centers of the world into a single network, it is necessary to introduce a finely tuned algorithm for managing the liquidity of #Transmission system funds around the world.
What is the average exchange rate of the global money market that Transmission provides to its customers?
It is very simple. The current Forex market exchange rate where the leading banks and major players of the market exchanging their financial assets. This “real” rate takes into account the demand and supply of money market participants, inflation, the level of interest rates in the countries of the world, and the monetary policy of their central banks.
For example, if the current direct market cross rate of the dollar to the euro is 1.165 usd == 1 euro, then by transferring usd through the largest US banks for the exchange rate offered to the client, the bank offered to the client will be about 1,19–1,195 usd for 1 euro. That is, the need to convert the currency leads to an additional loss of the client about 2–2.5% of the final amount in euros compared to the exchange rate.
A similar situation has developed in the area of buying sales of crypto-currencies: most small and novice investors interested in investing in crypto-currency assets that do not have the status of a professional participant in this market and the necessary tools for exchange when buying or selling crypto currency and getting a currency are forced to pay for it a whole list of commissions in the aggregate reaches 5% -7% of the transaction amount.
To put it more simply, if the rate of the currently popular crypto currency Ethereum on the Bitfinex exchange is 220 usd == 1 eth, then in actual fact the investor will spend usd 231–235 for 1 eth.
What does Uber have to do with it?
#Uber is one of the most successful and rapidly growing global IT company with a capitalization of about $60B and revenues of $6.5B.
This is an example to be mimicked and a landmark for many. One of the leaders of the global taxi market with a total volume of over $110B with a market share of at least 15–20%, not having its own vehicle fleet and the main production assets.
The company is an aggregator operating on one of the most promising markets of the modern era — the taxi market demonstrating an annual high growth rate of up to 10–20%.
The #Uber model is exactly what was reflected in the concept of business Transmission in the segment of global money transfers. Recall, the size of this market is $3TR per year. And these are only traditional fiat currencies, and there is still a popularity-growing market for crypto-currencies with a growth potential of 30–50% per year and there is a segment of regular international transfers of small and medium-sized businesses to their counterparties.
So let’s look at the numbers:
- The current valuation of the private transfer market is $3.000B per year.
- Estimated market share that can capture the most successful service of about 10% of the market or $300B a year.
- With an average commission of 1% of the value of transactions, the potential annual revenue of the service will be $3B, and if you take into account additional revenues from commissions of the crypto-currency market and regular payments of small business companies is about $5B per year.
- The capitalization of unprofitable #Uber business at an annual income of $6.5B is estimated at $60B.
That means that capitalization of #Transmission business and the growth rate of active service users can present a surprise to the traditional players of the transfer and conversion market in the near future.
At the same time, the companies that carry out transfers and conversions has many fundamental advantages:
So if the operational business of #Uber is unprofitable due to high competition and the need to reduce the cost of transportation below the cost of business, the business associated with currency transfers is profitable and capable of generating net income streams almost from the very start of the project.
How will we change the scope of money transfers in the modern world? The answer to this question will be in the very near future ….