Author: Anthony Di Iorio

A recent study out of the University of Colorado Boulder outlines the ways in which money transfers from migrant workers to families in developing countries help reduce poverty and improve their standard of living. The study was conducted in partnership with money transfer service company Western Union, and it touts the benefits that transferring money via Western Union brings to low-income communities around the world. Here are some of the highlights:

 

Communities that are recipients of remittances benefit from the influx of foreign currency, both directly and indirectly.

 

a) Recipients will often reduce their work hours or drop out of the workforce altogether, usually in order to get an education or care for young children or aging relatives.
b) Older recipients are able to retire and enjoy a better quality of life.
c) This diminished local workforce often results in higher wages for other members of the community.
d) Spending on local goods and services, as well as personal savings, increases, indirectly benefiting the rest of the community by creating better employment opportunities and supporting higher wages.

 

Remittance flows have become the second largest, and most stable, source of foreign currency and development assistance worldwide.

 

Official development assistance used to be the largest contributor but, in the past 25 years, it has been outpaced dramatically by foreign direct investment (FDI) and remittances. FDI can be extremely volatile and unstable, depending on global financial markets, but remittances have seen steady and stable growth.

 

• Most remittances flow to middle income countries (71%) with just 6% flowing to low-income countries
• Remittances to low income countries, however, now represent 8% of the GDP (up from 2% in 2008), compared to 2% of GDP for middle-income countries. Thus, the impact of remittances is felt more acutely in low-income countries.

 

The general trend worldwide is toward lower official transmission rates, according to a World Bank report in September of 2014.

 

The global average transmission rate fell below 8% for the first time in Q4 2014, to 7.9%, down from 8.93% in Q3 2013. The average remittance cost declined most sharply for East Asia.

 

The Philippines as a case study

According to the study, every ₱100 spent by households generates ₱223 of additional output. On average, each Western Union affiliate office transmits ₱23.2 million in remittances ($552,941 USD), enough to support an additional 85 full-time jobs, usually in the area where the WU office is located. (272,949 = 1 f/t worker)
Overall, remittances through WU offices in the Philippines are then calculated in the study as:

• 25% of all remittances for the country
• generating approximately 720,825 full-time jobs

Apart from banks and Western Union, informal remittances contribute another 30-40% of foreign currency that flows into the Philippines.

 

A Bitcoin Perspective

The most interesting thing about this report, from a bitcoin perspective, is the overall conclusion that remittances offer a net gain for recipient communities. There are some potential drawbacks, but the study concludes that the positives outweigh the negatives.

 

Imagine if even one half of those Western Union remittances had been sent using bitcoin.

In the Philippines, sites like coins.ph and rebit.ph make it safe and simple for Filipino recipients to receive and convert bitcoins into pesos. According to the Rebit website, they charge no fees on their transaction.
Fees may be charged to exchange your BTC for pesos, depending on how you choose to receive your money:

“These fees are paid directly to the provider you select. For example, Cebuana Lhuillier cash pickup will charge an additional PhP240 for a PhP10,000 transfer. Meanwhile, a bank account deposit within Metro Manila is free. As you fill in the rebittance form, the pricing display on the sidebar changes to show you what the total cost of the transfer will be.” – rebit.ph

 

Using this model, let’s see what would happen if even half of those Western Union transfers had been made in bitcoin:

According to the study out of University of Colorado Boulder, each Western Union office, on average, handles ₱23.2 million in remittances. Half of those remittances equals ₱11.6 million. Transferring that ₱11.6 million in bitcoin would have saved ₱812,000 (@7%) in fees. (I based this percentage on the average quoted in the study.)
According to the study’s calculations, ₱272, 949 in remittances = 1 full-time job created. That means approximately two more full-time workers could have been hired (1.97) at each Western Union location if just half of those transaction had been made in bitcoin. Nationally, that works out to about 167,450 additional jobs!

 

I also spoke with Philip Agyei Asare, a Bitcoin advocate in Ghana, and asked him if it was just as easy for average Ghanaians to buy, transfer, and sell bitcoins as it is for them to use Western Union and other traditional remittance agencies. He assured me it was; in fact, many Africans also use bitcoin to shop online.

“[People] just need to be educated on how to use the platform [and then be able to educate] the people in diaspora because they will be sending in money to their family and loved ones in Africa,” he said.
Asare is doing his part to help educate: He has been invited to speak on the topic of “Bitcoin in Africa” at the [Bitcoin Consumer Fair in Atlanta] (http://bitcoinconsumerfair.com/) this April. (If you would like to support his efforts to attend, you are welcome to send tips/donations to his address: 1BNht8bCmbZVkmR2FJQaWh7Gmcr2qLZCod).

Some final thoughts…

 

There are two lines in the report that stood out for me:

1. “The Central Bank and other bankers dislike any proliferation of informal remittance agents who transfer funds through informal channels for lower fees than formal banks and transmission services can charge. However informal transmissions may begin to slow as the cost of formal remittance cost declines.” Perhaps what we can take away from this statement is as follows: Banks and other formal remittance services are having to play catch-up when it comes to charging less for remittances now that other informal channels – like bitcoin – are offering cheaper and faster alternatives.
2. “As the [cost percentage] rate of formal services declines, senders will increasingly utilize formal mechanisms, due to higher convenience and security, compared to informal channels.” Unless the informal channel you are using is Bitcoin, of course, with its highly secure protocol. The flipside to this statement in the study is that people are looking for low-cost, secure ways to send and receive money. Here is where bitcoin is able to make inroads.

As for expecting people to return to using traditional transmission services just because their fees go down a bit, that might be wishful thinking on the part of the Central Bank and Western Union, especially if they could understand just what sort of impact the savings could have on the local economy.

 

Disclaimer/note: Referencing coins.ph and rebit.ph does not mean that I endorse either website, or that one company is any better than the other. I chose to use rebit.ph in my example simply because I found the website a bit easier to navigate and the answers to my questions were clear.

From a New York apartment (with the Freedom Tower posing ironically as a backdrop) Charlie Shrem beamed into the Toronto Decentral meet-up on Wednesday evening. He talked about his history with BitInstant and his plans for the future in front of the standing-room only crowd, and answered questions for an hour. Here’s are some of the highlights of what he said.

 

On his Bitcoin beginnings:

Shrem first became interested in bitcoins when he heard about its ability to send value over the Internet without having to trust a third party. He didn’t think it could possibly be secure so he set out to “break” the protocol. Of course, like so many others who first got into bitcoins this way – he couldn’t.
As the price of bitcoins started to rise (and fall and rise again!), he realized that the most important thing for him to do was to get them into the hands of as many people as possible, as quickly as possible. That was how BitInstant was born.

 

On the banking industry:

“I think I’ve been kicked out of every bank personally – and corporate – in New York City,” said Shrem with a laugh.

 

On BitInstant and its legacy:

Shrem reflected on the cumbersome, time-consuming process of buying bitcoins before BitInstant. In its heyday, BitInstant provided access to bitcoins at a million different locations worldwide – 700,000 in the USA alone – and employed twenty employees. Then, in June 2013, FINcen regulations had made it impossible to continue operations, and Shrem was forced to shut BitInstant down.
“We were already onto our Bitcoin evangelizing at that point. I really wasn’t too sad about it. We didn’t owe anyone any money,” Shrem reminded the crowd. Not too many defunct bitcoin companies can make that claim.

 

On the Bitcoin Foundation and its “pivot” toward core development:

Shrem recalled the early discussions in 2013 he had with Gavin Andresson, Roger Ver, and Eric Voorhees in Austria. Silk Road had been garnering a lot of negative press for bitcoin and they talked about the need to have better information and representation for Bitcoin.
A little while later, after talking with some other people, “Standardize, Protect, Promote,” became the goal of the Bitcoin Foundation.
Shrem agreed that the scope of the Foundation had become too wide over the past few years and it needed to narrow somewhat. The idea of focussing strictly on core development isn’t exactly what the Foundation originally set out to do, but it’s what it needs to do now. He stressed that the Foundation isn’t the only “voice of Bitcoin;” it represents its members, not the whole Bitcoin community.

 

On Scammers:

Shrem praised the Bitcoin community for calling out scammers when they see them. He used the recent outcry over Paycoin as a good example of this sort of community monitoring.
Shrem also praised Moe Levin, TNABC organizer, for not revoking Josh Garza’s invitation to speak at the conference, for the sake of openness and transparency, and thought the situation played out just right in the end.

 

On his new project, ActionCrytpo:

Shrem said he was impressed by the transparency and openness on on-chain gaming sites. “One great bitcoin utility is gaming,” he said. The Internet gaming and gambling industry is rife with scams and cheats, but by using the blockchain and time stamps, that negative part of the equation is eliminated.
With ActionCrypto, people can buy an option on the future price of bitcoin at a particular point in time. The blockchain deals with everything; it’s totally transparent and no-one can cheat, he says.
So far, ActionCrypto has been making inroads around the world in countries like Canada, Singapore, Indonesia, Turkey and a variety of EU locations – just not in the US. “All US addresses are blocked,” says Shrem, citing regulatory concerns.

 

On going to jail: “A good place to be to talk about Bitcoin!”

While going to jail for any length of time is not on anyone’s wish list, Shrem seemed content with the way his case was resolved. It could have ended up a lot worse, he pointed out: at one point he was facing the prospect of up to 30 years in prison. “This time next year, it will all be behind me,” he said.

 

On the future of Bitcoin: Price, adoption, and regulation

Shrem’s recurring advice on bitcoin was “Buy and hold!” He pointed out that he has already seen many ups and downs over the years with the price of bitcoin – “This is about my fifth bubble” – and reminded the audience that “the price is not a sign of the economy” of bitcoin.
He expressed his faith in the Bitcoin community’s ability to grow the Bitcoin economy through education and advocacy. The biggest roadblock to adoption, he said, was misinformation. Plenty pf people have heard about Bitcoin at this point, but don’t know anything about it. He said that we need to (1) give people a reason to use it and then (2) make them use it without even knowing it.
Companies that play wth the utility of Bitcoin are the ones that will drive Bitcoin into the mainstream, Shrem said. Micropayments and remittances and anything that reached out to the underbanked of the world are key areas for companies to build on.

 

Want to hear more about Charlie Shrem’s perspectives on his trial, his politics, Mt Gox and Mark Karpeles, and the future of Bitcoin in the USA? Watch the full meet-up interview here on decentral.tv

Updated: Tuesday, January 20

Last Wednesday at the Decentral meet-up, part of the discussion touched on the idea that while it’s getting much easier to SPEND bitcoins, buying bitcoins is still a pretty daunting task.
Sure, there are a few bitcoin ATMs sprinkled around the world, (including one here at Decentral), and there’s also LocalBitcoins as an option. But what if you don’t live in a city with a BTM? What if there isn’t a LocalBitcoins trader handy? Or if you don’t feel like schlepping across town to find the BTM or the trader?

 

This lack of access to coins was lamented as a real barrier to adoption. Why would anyone in the Western world go to the trouble of sourcing out bitcoins when fiat money is so darn handy? And using PayPal for online purchases or accepting payments? Piece of cake!

 

Philosophical arguments aside (and yes, those definitely came up!) I thought I’d try to challenge this premise by going right back to the roots of setting up a bank account, a PayPal account, and an account on an exchange. Since I’ve never tried to set up a new bank account with a new bank online, and it’s been 10 years since I set up my PayPal account, I decided to start from scratch. I’m not much of a techie, so I figured, if I can sort my way through the processes, anyone can.

 

(Note: I could also have gone into the process of applying for a new credit card but chose not to go through that whole thing too. Suffice to say, the last time I got a card, it took a good week and a half to get it delivered and the PIN number – mailed separately – got lost in the mail.)

 

For now, let’s imagine I live in Northern Ontario. There are no BTMs and the nearest LocalBitcoin trader is a dogsled ride away. But there is a bank down the road and I have a decent Internet connection.

 

Scenario 1: Get an online bank account.

To get a bank account at one major Canadian bank, here is what they want me to do:

That’s a lot of personal information. And some of it has to be mailed, depending on the option I choose.
So I go through the process of applying for my account. That part is pretty quick and easy. Verfying my account, however, requires that I ALREADY HAVE an account at another bank. Otherwise, I have to go into a branch in person. So much for getting all set up strictly from the comfort of my living room.

 

Scenario 2: Set up a PayPal account:

Some of us at the meet-up talked about the ease of using our existing PayPal accounts to make and accept payments. Again, philosophical arguments aside, I decide to investigate how easy it is to work with PayPal, starting from the account sign-up stage.

Signing up with PayPal is also pretty easy. I just use my email address for verification, and it takes about 5 minutes.

So I now have my new bank account and new PayPal account.

 

Scenario 3: Set up an account at a bitcoin exchange

First, I open a new account on the QuadrigaCX exchange and it takes about 5 minutes. Now, if I want to buy bitcoins, I need to fund my account; that is, I need to put money into my Quadriga account so that I can use the money to buy bitcoins. Quadriga offers a few ways to do this:

If I want to get my bitcoins, I’ll need to transfer money from my bank. Getting my money transferred right away using INTERAC Online will cost me at least $5 and I’ll need to get verified. These are the documents Quadriga asks for in order to get verified.

• My phone number
• Scan of a Passport or Drivers license (Must be in colour)
• Scan of a bank statement or utility bill showing my name and full address
• Photo of me holding the ID that I have provided

Once I email or upload these documents to the site’s secure server, it can take up to 48 hours for them to get verified. That is a bit of a set-back if I want to buy bitcoins today.

 

Scenario 4: Set up an account at a digital currency retailer

Undeterred, I also open an account with Harbor.ly. The verification process at this digital currency retailer is pretty simple as well, but if you aren’t comfortable using social media as third-party authenticators, this site might not be for you.

Next, I have to hook my Harborly account up to my bank account. Once again, like QuadrigaCX, it’s going to take up to 48 hours to get a new account verified.

So, yes, getting set up online to buy bitcoins can have a bit of a delay while your account is verified. Keep in mind that most of these processes are part of KYC compliance requirements.
On the other hand, the amount of personal information that I handed over to the exchange and retailer is comparable to setting up a bank account and a PayPal account.
It’s also going to take about a week for me to get my new bank card in the mail. There are plenty of delays no matter what you’re trying to do.

 

All set up and ready to get me some BTC

Now, let’s look at costs:

• Harborly charges 1% on transactions
• QuadrigaCX charges 0.05% on all completed trades.

With QuadrigaCX, once I have my account verified and funded, it only takes me a few seconds to buy my bitcoins. And if I want to sell my coins and transfer the money to my bank account, it usually takes a few hours for an e-transfer to go through.

Let’s look at what it costs to move money around with PayPal. It has a pretty complicated fee schedule. Here is what it would cost me to receive $500 from somewhere within Canada:

Whoa. In my case, I have several US clients. That costs even MORE to get paid by them.

But now, let’s look at how long it takes to actually GET funds. Some banks will hold deposits on new accounts for up to 5 business days. When I get paid by clients using PayPal, it takes 3-5 business days for funds in my PayPal account to show up in my bank account. So there is still a significant waiting period involved there.

 

UPDATE: Another way to get BTC online right away

I also tried buying some bitcoins on QuickBT. If you really want to get your hands on a small amount of bitcoin ASAP, you can buy up to 0.2BTC almost instantly. All you need is a wallet address (if you don’t have one, they provide a links to Blockchain.info and Coinkite), a phone number, and an email address.
I entered my wallet address and got an instant quote:

Then I entered my phone number, received a PIN code, and paid online from my bank account via INTERAC. (Note: I couldn’t use my new bank account yet since I still had to wait another week or so for my new bank card.)

Moments later, I had my bitcoins and a confirmation was emailed to me.

By far, this was the quickest and most convenient way to get started with bitcoins. The only drawbacks are that (a) you can only buy a small amount in any given day, and (b) it will cost you more (about 10.5% in fees) than waiting a few days and buying through sites like QuadrigaCX or Harborly.

 

My conclusion:
I will grant that since most of us have bank accounts and some of us are already hooked up with PayPal, the pressing need to set up an account at a bitcoin exchange isn’t really there unless we really want to get our hands on some bitcoins. Of course it is easier to stick with what you know. But if you are willing to wait a day or two to get verified on an exchange like QuadrigaCX or Harborly – or get started in minutes on QuickBT if you are willing to pay a bit more – there are definite benefits. It’s not really as onerous a task as you might have thought.

 

When you compare the effort involved in setting up an online bank account to setting up an account on a bitcoin exchange, it’s not all that different. The main difference, of course, is that you probably already have a bank account. In the end, however, I’ve found it has saved me both time and money to move funds around in bitcoin, so it seems to have been well worth the small initial effort.

 

For another interesting discussion on this topic that has more of an international/American bent to it, check out this Reddit thread that, coincidentally, popped up over the weekend:
http://redd.it/2ss6ee

So – how do you buy your bitcoins?

Wednesday, Jan. 21st. 7pm

Wednesday, Jan 14th. 7pm

Things have been getting all festive here at 64 Spadina. If you’ve walked by Decentral lately, you’ll have probably noticed a sparkly wreath festooning our neon bitcoin logo, flanked by prancing reindeer in the window.

There’s another wreath hanging above the newly wrapped Bitcoin ATM in the lobby.

And everyone is just downright cheery in the office. But that’s not uncommon.

At the front desk, beside our bowl of candy canes, you’ll find Nancy, our super-helpful office angel, ready to answer your questions, help you with the BTM, or sell you some bitcoin swag. She also has a stack of Simple Coin Cards for sale – perfect for stocking stuffers!

At last week’s meet-up, we held a year-end party with refreshments and decorations and lots of bitcoin conversation. There was a great turnout and the second floor party room was packed with friends and family.

The next two Wednesdays fall on Christmas Eve and New Year’s Eve, so there won’t be meet-ups held on those days. But we all look forward to seeing you again on January 7th at 7 pm for the first meet-up of 2015. As always, we encourage you to register for free in advance for our meet-ups.

If you are planning on stopping by Decentral, please take note of our holiday hours:

• Closed on December 24th, 25th, 26th, and 28th and January 1st
• Open on Dec. 27th from 10:00 -3:00
• Regular hours on Dec. 29th and 30th (9:30 – 5:00)
• Closed Dec. 31st
• Closed on January 1st.

From all of us here at Toronto Decentral – Happy Holidays!!

My son goes to university up north. Every time we want to bring him home for breaks, I look into a few travel options: flights (convenient but pricey), coach bus (cheaper but less pleasant for him), or driving the eight hours each way (ugh). This week, I decided to look into buying a return flight for him using bitcoins.

 

Using BTCTrip.com was pretty simple. I’ve bought tickets on Expedia and CheapOair many times in the past so I’m used to buying airline tickets online. The user experience on BTCTrip is similar to these sites so the whole experience felt very familiar. For someone like myself, who is just starting to get into buying things with bitcoins, this familiarity made me feel comfortable with the process.

 

When I landed on the colourful BTCTrip.com site, there were the familiar info fields: to, from, dates of travel, number of passengers etc. When I compared the price of the plane ticket to the ones being offered on CheapOair, I was pleased to see that the prices were indeed cheaper. Bonus: My teenaged son can sleep in – there was a flight available for the middle of the day! (He’d have had to roll out of bed and trek out to the airport by 7:00am with CheapOair for the same price!)

 

I also looked into the price of a hotel stay on New Year’s Eve in Montreal so he and his brother could go catch a IIHF World Junior hockey game. Like other online hotel booking services, I could sort by hotel amenities and locations. There were plenty of options and I was able to find a room in our price range. So far, so good!

 

Once I purchased my flight, there was a brief, disconcerting moment as I got an email saying that they hadn’t been able to process my payment yet. I eventually realized that the delay was due to the confirmation process – of course – but it would have been helpful if that bit of explanation had been included in the alert, especially for those of us who are still learning the ins and out of bitcoin. The good thing was that customer service sent me a prompt and friendly reply.

 

Shortly thereafter, my e-ticket arrived and I forwarded it to my son. Excellent! It’s easy to see why BTCTrip has so many endorsements on their site.

 

Later that same evening, Martin Fernandez, founder and CEO of BTCTrip, was the guest speaker at the Decentral Meet-up in Toronto. He was very enthusiastic about the future for the online travel industry. He sees a day when the blockchain and smart contracts will play a major role in booking flights and hotels, where consumers can use online services like BTCTrip to cut out layers of middlemen and make bookings themselves. When these sorts of transactions are possible, he predicts that the costs of travel will decrease significantly for consumers.

 

Now that I’ve had my first pleasant experience buying airfare with BTCTrip.com, I only hope that these exciting new advancements will happen before my daughter starts university as well, in a couple of years!

Wednesday Jan. 7th, 7pm.

Wednesday, Dec. 17th. 7pm to 10pm.

This Wednesday, our meet-up will be full of festive cheer and fun with refreshments, decorations, and – of course – lots of bitcoin conversation.

While you’re here, check out some of our cool BTC merch – like coins, pins, t-shirts and Simple Coin Cards. (Great for gift-giving!)

Sign up for free on the Decentral Meet-up site.

As part of its bid to become the premier news and information site with video content related to cryptocurrencies and decentralized tech, decentral.tv is launching Decentral Talk Live, a daily show about bitcoin, blockchain technologies, and all things decentralized. Interviews with prominent personalities, innovators, and entrepreneurs will be the key focus, along with product reviews and general news and discussion of current events in the cryptocurrency and decentralized tech space.

 

Hosted by Anthony Di Iorio and Ethan Wilding, Decentral Talk Live will also feature an assortment of guest hosts including specialists in legal, accounting, security, and tech development from the Decentral space. The first installment will feature Patrick Murck, the executive director of the Bitcoin Foundation as he answers questions from Anthony and Ethan, as well as guest host, Michael Perklin. Next on the schedule is a series of interviews focusing on various bitcoin ATMs, including BitAccess, Lamassu, and BitX. Look for more episodes when Decentral Talk Live talks with Jordan Kelly of Robocoin, Dmitry Murashchik of Mycelium, Matt Schlich of ZapChain, and many other well-known names in the bitcoin community.

 

New episodes will air weekdays at 3:00 pm EST on decentral.tv.

 

Decentral.tv is a 24-hour interactive internet dashboard that’s packed with video segments, curated news and information, a Twitter feed, interviews, feature programs, charts, and customizable exchange tickers. It delivers globally relevant content with news about decentralized and disruptive technologies around the world. Its most prominent feature provides a playlist of quality videos, including live broadcasts of the weekly Decentral Toronto meet-up events, as well as other unique and curated programs.

Located in the heart of downtown Toronto, Decentral is a home to disruptive and decentralized technologies. It offers co-working space and a bitcoin teller machine, and numerous tech companies are headquartered here.

For media and partnership inquiries or to suggest news and story ideas, please contact Christie Harkin or Anthony Di Iorio at info@decentral.ca or call +1-416-831-9593.