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Bitcoin start-ups in Asia take aim at remittances market

Updated May 12, 2018

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HONG KONG: A man uses the Ethereum ATM on Friday. Ethereum is one of the world’s popular virtual currencies.—AP
HONG KONG: A man uses the Ethereum ATM on Friday. Ethereum is one of the world’s popular virtual currencies.—AP

HONG KONG: Bitcoin, battered by warnings about volatility and bubble-like appreciation, may have found a way to play a niche role in a big market: overseas money transfers.

Used as a transfer mechanism rather than a currency, bitcoin circumvents banks’ transaction fees.

Start-ups such as Bitspark in Hong Kong, and Bloom, Payphil, coins.ph and Satoshi Citadel Industries’ (SCI) remittance unit Rebit in Philippines, are trying to turn that into a business model.

Explore: What is bitcoin? A look at the digital currency

Reduced liquidity on cryptocurrency exchanges and regulatory uncertainty are, for now, limiting monthly bitcoin-based remittances to millions of dollars in a multibillion-dollar market, the start-ups say. But if cryptocurrencies mature, they say, traditional businesses will be in for some serious disruption.

“Bitcoin is so much better as a mechanism to send money around the world,” said George Harrap, chief executive of Bitspark, a company that performs transfers for dozens of remittance shops in Hong Kong, Philippines, Indonesia, Vietnam, Pakistan, Nigeria and Ghana.

“There’s a lot less overhead that you need to do.”

Many of the start-ups, such as Bitspark, do not deal directly with individual customers, but instead provide the “back end” transfer mechanism for remittance shops.

The businesses estimate how much money they will need for a day, buy bitcoin in advance and immediately sell it for the currency in the receiving country. That means they do not hold cryptocurrency for any meaningful length of time, and customers’ transactions are resolved in minutes, rather than days.

Kate Corporal, 28, a Filipina working at an international company in Incheon, South Korea, said she saved “huge” amounts sending money home using Rebit compared with traditional services.

“One thing I can guarantee is that the money I intended to send and the money that my family received was exactly the same,” Corporal said. “Using bitcoin is really helpful for many Filipinos ... as every single cent that we send can be very significant.”

Reduced demand for cryptocurrencies in smaller economies often means bitcoin prices are lower, so sending $100 to Indonesia or the Philippines via bitcoin results in the equivalent of more than $100 at the other end.

Published in Dawn, May 12th, 2018