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Can virtual currencies help lower the cost of remittances?

Dilip Ratha's picture

One of the key messages I took away from TED Global 2014 was that virtual currencies (such as Bitcoin) are a reality, and it is only a matter of time - as little as 5 years, according to some people - before we'd all be using these currencies. The application of virtual currencies to the transfer of money across places and countries seems very promising as it could be nearly costless and instantaneous. Yet I feel that regulators are not prepared for such innovation in the field of cross-border remittances, in part, because they have not had the time to familiarize themselves with these instruments, and in part, also because the implications of virtual currencies for the formulation and implementation of monetary and exchange rate policies are yet to be examined.

So when I came across a series of Q&A style explanations from Faisal Khan, through Linkedin, I thought it would be useful to post it on this blog, to begin a new series of discussion on virtual currencies.
You can access Faisal's write-up here.


Submitted by Faisal Khan on


Thank you for sharing my brief article. I whoeleartedly agree with you that Regulators do not understand virtual/crypto-currencies. Heck it is difficult for even folks in the payments space to get their heads around the whole idea of virtually generating currency, open-ledger, mining, blockchain, consensus, double-spend issue, etc.

Most of the regulators in the developing world, have looked at virtual currencies as a "threat". Such myopic views and the knee-jerk reactions that followed (look at India, Bangladesh, Vietnam, Thailand, etc.) have led to an uncalled for bias against the various cryptocurrencies. The blockchain for example holds enormous potential. If you look at cryptocurrency companies like Hyperledger, Stellar, Ripple, these companies have the power to change the way cross-border remittances are done today. With a consensus based network, using Ripple, you can do an end-to-end transfer (including settlement of funds between the two banks) in less than 5 seconds. That is absolutely unheard of today.

I am a firm believer that the best use cases out of Bitcoin are yet to be developed. We've only just begun scratching the surface.

Regulators need to be put through an exhaustive awareness program that would make them see the various crypto currencies as technology and monetary enablers, rather than an existential threat to their monetary system.

We must live and learn. By continuing to be obtuse and stubborn, will only delay the inevitable.

Faisal Khan
Payments Consultant

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