Western Union, MoneyGram May Lose $400m to New Bitcoin App, Chivo Wallet
El Salvador’s latest Bitcoin app, the Chivo Wallet, could ensure that money service providers such as Western Union and MoneyGram lose around $400m in remittance commission.
According to a report by CNBC, these remittance service providers could start losing customers and money.
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CNBC’s MacKenzie Sigalos said the loss in remittance commission could be close to $400m a year.
She said, “If you want to send $10 from Canada to El Salvador via Western Union’s app = $3.24 fee; Muun [to] Chivo wallet = $0.10; Chivo [to] Chivo = free. Present Bukkele’s new bitcoin wallet could cost co’s like Western Union $400m/y.”
According to CoinMarketCap, remittances account for a $6bn industry, almost 23 per cent of the country’s GDP. And money service providers like Western Union or MoneyGram are the chosen method of remitting funds to the countryAccording to official data, about 60 per cent of remittances are through companies and 38 per cent are through banking institutions.
Bitcoin is a digital asset designed to work in peer-to-peer transactions as a currency. Bitcoins have three qualities useful in a currency, according to The Economist in January 2015: they are “hard to earn, limited in supply and easy to verify.” Per some researchers, as of 2015, bitcoin functions more as a payment system than as a currency.
Bitcoin, along with other cryptocurrencies, has been described as an economics bubble by at least eight Nobel Memorial Prize in Economics Sciences laureates at various times, including Robert Shiller on 1 March 2014, Joseph Stiglitz on 29 November 2017, and Richard Thaler on 21 December 2017. On 29 January 2018, a noted Keynesian economist Paul Krugmanhas described bitcoin as “a bubble wrapped in techno-mysticism inside a cocoon of libertarian ideology”, on 2 February 2018, professor Nouriel Roubini of New York University has called bitcoin the “mother of all bubbles”, and on 27 April 2018, a University of Chicago economist James Heckman has compared it to the 17th-century tulip mania.