Most Popular
1. Banking Crisis is Stocks Bull Market Buying Opportunity - Nadeem_Walayat
2.The Crypto Signal for the Precious Metals Market - P_Radomski_CFA
3. One Possible Outcome to a New World Order - Raymond_Matison
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
5. Apple AAPL Stock Trend and Earnings Analysis - Nadeem_Walayat
6.AI, Stocks, and Gold Stocks – Connected After All - P_Radomski_CFA
7.Stock Market CHEAT SHEET - - Nadeem_Walayat
8.US Debt Ceiling Crisis Smoke and Mirrors Circus - Nadeem_Walayat
9.Silver Price May Explode - Avi_Gilburt
10.More US Banks Could Collapse -- A Lot More- EWI
Last 7 days
US Presidential Election Cycle and Recessions - 18th Mar 24
US Recession Already Happened in 2022! - 18th Mar 24
AI can now remember everything you say - 18th Mar 24
Bitcoin Crypto Mania 2024 - MicroStrategy MSTR Blow off Top! - 14th Mar 24
Bitcoin Gravy Train Trend Forecast 2024 - 11th Mar 24
Gold and the Long-Term Inflation Cycle - 11th Mar 24
Fed’s Next Intertest Rate Move might not align with popular consensus - 11th Mar 24
Two Reasons The Fed Manipulates Interest Rates - 11th Mar 24
US Dollar Trend 2024 - 9th Mar 2024
The Bond Trade and Interest Rates - 9th Mar 2024
Investors Don’t Believe the Gold Rally, Still Prefer General Stocks - 9th Mar 2024
Paper Gold Vs. Real Gold: It's Important to Know the Difference - 9th Mar 2024
Stocks: What This "Record Extreme" Indicator May Be Signaling - 9th Mar 2024
My 3 Favorite Trade Setups - Elliott Wave Course - 9th Mar 2024
Bitcoin Crypto Bubble Mania! - 4th Mar 2024
US Interest Rates - When WIll the Fed Pivot - 1st Mar 2024
S&P Stock Market Real Earnings Yield - 29th Feb 2024
US Unemployment is a Fake Statistic - 29th Feb 2024
U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - 29th Feb 2024
What a Breakdown in Silver Mining Stocks! What an Opportunity! - 29th Feb 2024
Why AI will Soon become SA - Synthetic Intelligence - The Machine Learning Megatrend - 29th Feb 2024
Keep Calm and Carry on Buying Quantum AI Tech Stocks - 19th Feb 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Could Stellar Lumens be a Challenger to Bitcoin for International Payments?

Currencies / BlockChain Feb 19, 2018 - 03:27 PM GMT

By: Boris_Dzhingarov

Currencies

Bitcoin has clearly cemented its position at the top of the cryptocurrency pecking order.

The last few years have seen its status grow immensely, to the point where many people (wrongly) see cryptocurrency and Bitcoin as inseparable.

In the last year or so, Bitcoin’s price has skyrocketed and many new investors have benefitted hugely. If you’d bought a single Bitcoin at the start of 2017, you’d now be about $7000 better off.




Aside from speculation, one of Bitcoin’s most important uses has been in global remittances. Many people have found cryptocurrency to be a great way of sending money overseas without running into many of the problems associated with traditional methods.

Until now, Bitcoin has been a popular choice for this task. But as the blockchain and cryptocurrency market grows and expands, we’re increasingly seeing new platforms, like Stellar Lumens, that could be much better suited to this job.

First, let’s take a look at why Bitcoin has become such a popular way of sending money abroad.

Bitcoin for remittances

In the past, people who wanted to send money abroad had to rely on centralized systems like banks, Western Union, and more recently services like PayPal.

While these methods worked, they also presented quite a few problems. They tend to charge large fees for cross-border payments, along with high rates for currency conversion. The average cost of a global remittance is about 7.09% of the total amount.

These methods also take time. On average, sending money overseas this way takes about three to five days to complete. That’s without even mentioning the security and bureaucratic issues involved in sending money across multiple jurisdictions, often to complete strangers.

In developing countries with unstable banking systems and problems like inflation, there are yet more reasons not to trust banks and local currencies.

Cryptocurrency (and usually Bitcoin due to its high status) provided a great solution to many of these issues. It removes many of the fees associated with international payments, and there’s no need to worry about currency conversions. It’s a decentralized, global system, which removes many of the hurdles involved with other methods and can vastly cut down on transaction times.

In places like Venezuela and Zimbabwe, Bitcoin has been a much-needed way to store, send, and receive money without relying on banks on the verge of collapse or highly volatile currency. For the two billion unbanked people in the world, Bitcoin has been a gift.

But it’s not perfect

While Bitcoin has done an admirable job of rising to the occasion, it isn’t perfect. Increasingly, users have complained about high transaction costs and long waits for transactions to complete. Fees fluctuate a lot and can be as high as $50, which means small transactions would make no sense.

At busy times transactions can take days, which puts Bitcoin on par with banks.

There’s no need to be too harsh on Bitcoin over this. Bitcoin works as a currency, but it isn’t designed specifically to handle overseas payments and remittances.

It’s paved the way for new platforms which specialize in this job and can offer more streamlined services, better adapted to the task at hand.

Stellar Lumens

Stellar is a blockchain based platform for sending money overseas, and it could be the answer to a lot of the problems Bitcoin users are experiencing.

It’s a global, decentralized network which allows fast, cheap, and secure transactions to take place across international borders. Stellar lets users make cryptographically secure payments which get around many of the risks involved in using more traditional methods. Stellar can process payments in seconds, which puts it ahead of existing platforms.

It’s also well-suited to micropayments —small amounts of money which can be a nightmare with centralized platforms that require minimum fees (which can be larger than the payment itself). This makes it a good choice for small purchases or emergency payments to family abroad.

The Stellar price is currently ranging around$0.42 to $0.48 and looks set to rise fast. With big ICOs using the Stellar blockchaininstead of Ethereum’s, the profile of the platform will surely grow.

Stellar marks a new approach to using cryptocurrency in global remittances. While Bitcoin has proven itself to be a reliable way of sending money abroad - and certainly better than banking systems – it’s a multi-purpose currency that doesn’t specialize in international payments.

That’s where Stellar comes into its own. It’s built for global transfers, freeing it from any competing interests or goals. As more and more people around the world turn to cryptocurrency as a safe and efficient way of sending money abroad, platforms like Stellar could be on course to replace Bitcoin as the top choice for this.

By Boris Dzhingarov

© 2018 Copyright Boris Dzhingarov - All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in