Bitcoin’s Layer 2 Lightning Network is the best transactional tool to boost remittances with low network and service costs between users. According to crypto asset analyst and advisor Johan Valera Leal, this market continues to rise and promises greater adoption in Latin America.
Cryptocurrencies and the use of the blockchain continue to seduce traditional banking, users are looking for better alternatives that do not depend directly on international banking services due to their high operating costs, slow transfers and access problems.
According to Valera, Bitcoin proved to be an excellent tool in times of COVID-19, and the demand for the use of remittances is still growing, the big advantage: less commission costs, secure network service and real-time atomic swaps, a technological novelty dominated by Bitcoin.
On the other hand, Bitcoin has allowed anyone with access to the Internet to send or receive payments, regardless of where they are. “That is an advantage, since many unbanked people can access these services quickly and in some cases in a decentralized way”Valera explained.
In Latin America, various countries with inflationary economies, such as the case of Venezuela, Colombia, Chile or Argentina, remittances mean a priority solution to avoid and solve the way in which assets and digital money are transferred.
The challenges of Bitcoin
In Valera’s opinion, one of the challenges of Bitcoin in the future is to be able to relate remittance exchanges through a CBDC (central bank digital currency), which can allow for scalability from your own economic tokenization ecosystem, thus experiencing greater adoption, i.e., “transactions from Bitcoin against a digital currency backed by the Central Bank could be a great solution to the economic crisis of countries with hyperinflation”.
Crucial Opportunities Gained by Embracing Bitcoin as a Remittance Source
As is well known, sending remittances to countries with economic problems represents an important source of income for many families that depend on them to survive. In context, these remittances are sent by migrant workers who have left their countries of origin in search of better economic opportunities in other countries, mainly the United States.
In this sense, Valera pointed out that the various uses that include decentralization have allowed the scaling of new asset transfer methods, including Bitcoin, which together with the growing demand in Latin America lead to a significant boom in the number of remittances sent.
Concerns and weaknesses in sight on this remittance market
Regarding this point, Johan Valera explained that one of Bitcoin’s weaknesses as an instrument for the use of remittances is based on concerns about costs per use, including the case of withdrawals in some exchanges that focus on policies. of use and crypto regulatory activity, whose consequence of application can slow down the flow of exchange or adoption between countries, monetary or financial stability, capital control, AML/KYC, deposit security and fraud risks.
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