How Might Cryptocurrency Impact Global Development Through Remittances?

Mark Leon Goldberg: [00:12:50] And it is in this realm that these emerging technologies around cryptocurrency and blockchain have real potential to impact the business of global development and also outcomes in global development. The people who listen to this podcast, they are not of the crypto community, they are of the global development community. And it’s my intention with this conversation to try to bridge the two a little bit. So, I would love chat with you through some potential opportunities or scenarios for how cryptocurrency might impact global development. [00:13:33][43.4]

Mark Leon Goldberg: [00:13:34] To me, the lowest hanging fruit seems to be in the transfer of remittances. As I think many of my listeners will know, remittances are orders of magnitude greater than what is given in official development assistance from one country to another. Something like $700 billion are sent in remittances every year, from wealthier countries to poorer countries, compared to about $160 billion in official development assistance. Yet so much of this money is trapped in high fees associated with sending money across the border to the degree that the Sustainable Development Goals even include targets to reduce transaction costs associated with remittances to under three percent by 2030. One thing that’s, I think, just absolutely fascinating about cryptocurrencies is how cheap it is to send money across borders. And I’m curious to get your impressions on the potential of cryptocurrencies to reduce transaction costs, but also become like a sort of a meaningful platform for remittances? [00:14:53][78.7]

Garry Golden: [00:14:54] Yeah. So remittances, they’re widely discussed as as that great use case. In order to do that, you need a few things to come into alignment. One is the availability and the adoption of what are referred to as stablecoins. So with with typical cryptocurrencies like Bitcoin, Ethereum, Cardano’s, ADA and a number of others, the value of those coins goes up and down. It will make large movements up and down. And really, you know, the value of those those platforms is really much more as a liquidity pool than a than a company. So we don’t need to worry about the volatility because it’s it’s early stages and it’s volatile. Stablecoins are pegged against either traditional fiat currencies or a portfolio of other cryptocurrencies, or their algorithmically managed to always be the same value. So stablecoins are in the early stages of development, but they are receiving, I would say, an out weighted amount of attention from regulators because they represent a pragmatic way to do remittances. That gives you all the benefits of cryptocurrency: the instant settlement and the assurance that it’s going from this person to this person, without the volatility of the prices going up and down. [00:16:27][93.4]

Mark Leon Goldberg: [00:16:28] And the low fees. It’s like a fraction of a percent compared to, say, like eight percent in to send remittances places in sub-Saharan Africa. [00:16:38][10.7]

Garry Golden: [00:16:38] Yeah. So in order to do that, we need to address the regulatory barriers in terms of the know your customer KYC and the anti money laundering (AML) processes that are currently followed by the folks that that handle remittances today. And then you would also need some sort of agreement within that home country that recognizes stablecoins will be coming in as an inflow and individuals within that society then have a choice to convert those stablecoins into the local national currency, or maybe they use those stablecoins to purchase things as they would through any digital currency. So you need all sorts of things to align. And for me, the you know, the big thing here is identity and the ability to link identity to these types of payments is going to be the critical enabling force. [00:17:40][61.5]

Mark Leon Goldberg: [00:17:41] Can you can you flesh that out a little bit? [00:17:42][1.6]

Garry Golden: [00:17:43] So the the people that launched bitcoin and kind of the cryptocurrency movement tend to have a strong kind of libertarian ideology that kind of drives their pursuit right now. [00:17:56][12.6]

Mark Leon Goldberg: [00:17:56] I should say: I do not. [00:17:57][0.9]

Garry Golden: [00:17:59] [Laughs] I sit on the side and I watch, right? But they they they are — and they are not interested in empowering governments or empowering banks or empowering institutions. So privacy and the ability for someone to do a transaction and not have to link their identity has been paramount. Now that’s that’s the early wave adopters. When we go into the early mainstream adopters, those are likely to be individuals that value identity that say, “I do want certainty that this money belongs to me, and I want to leak my identity to it.” Or this is the person that sent me the money, or this is the person that I’m sending money to. So it really is just about the transition from early adopter to early mainstream users of cryptocurrencies as kind of the milestone to watch. [00:18:54][54.8]

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