In the wake of the FTX collapse, crypto critics and skeptics are out in full force, and many are doubting the usefulness of crypto. However, FTX’s collapse should not be misconstrued as symptomatic of a failed crypto experiment or the end of digital assets. The fundamentals of crypto as a technology and the problems it is designed to solve remain unchanged. One of the first and most obvious use cases that crypto can disrupt is remittances.
According to the Remittances Prices Worldwide Quarterly report issued by the @World Bank in June 2022, the average cost of global remittances via bank wire or money transfer is 6% of the amount sent! For millions of expatriate workers, this is a significant cost and a hindrance to socioeconomic development and global #financial_inclusion targets. Reducing these costs by a mere 5% would result in savings of up to $16 billion per year. The United Nations’ Sustainability Development Goals (SDG) have set a more ambitious 50% reduction target to lower it to 3% of the amount sent by 2030.
The impact crypto could have on the MENA region is even more pronounced when you factor in the high inflows and outflows out of the region. Remittances make up the largest source of external resource flows to the region, accounting for 61% of total inflows in 2021. Global remittances to South East Asia, where a majority of the expatriate worker population in the Gulf Cooperation Council (GCC) are from, grew by 6% reaching $157 billion. Therefore, reducing the cost of these remittances would have a significant economic positive impact on these regions.
As a crypto native, even the UN SDG’s 3% target seems unnecessarily high. In crypto, we can already transfer value at a fraction of these costs, often significantly below 1%. Sending stablecoins like USDC or USDT can be done directly between any two people in the world. It is simply a superior technology and an exponentially more efficient method for transferring value.
Despite the recent collapses of some industry players, crypto is still a technological breakthrough that solves real-world problems.
Despite the recent collapses of some industry players, crypto is still a technological breakthrough that can enhance financial inclusion for millions of people around the world.