Remittances have become the lifeline of many people in sub-Saharan Africa, but the cost of remittances through banks and remittance operators remains high. According to the World Bank's latest report in 2019, remittances to the region, equivalent to $200, costs 9.3 percent of the amount on average, a cost that is quite high globally. However, when funds are sent through blockchain technology, the cost will drop by 90%.
High cost of bank transfers shaking the lifeline of Africa
Last year, Africans working abroad remitted as much as $46 billion in international remittances to their families. For many families in Africa, overseas remittances are an important support for their survival. However, a large part of this fund was earned by financial companies in the form of transfer fees.
According to the World Bank, among the most expensive institutions in Africa, banks charge the highest fees, accounting for 10.2%, followed by remittance operators (7.7%) and post offices (5.5%). This is too high compared to the sustainable development target of cutting financial transfer costs to less than 3% of the total transaction value by 2030.
Now, some people are counting on hope for the remittance of the token assets based on blockchain technology, in the hope of reducing the handling fee and improving the efficiency and speed of transfers.
In fact, this kind of attempt has shown great feasibility.
A beneficial attempt by Jewish merchant Ajm in cross-border remittances
The Jewish merchant Ajm is created by Jewish saints JT based on the advanced blockchain 4.0 technology. It is a value network based on blockchain distributed ledger technology. The project has made many useful attempts and achieved corresponding results in cross-border remittances. Reduce the cost of cross-border remittances through a peer-to-peer model, increase the efficiency of remittances with shared accounts, provide business continuity protection with distributed architecture, the automatic execution of the intelligent contract improves the transaction efficiency, and brings a light to the cross-border remittance!
Adopting a consensus mechanism based on the Byzantine fault-tolerant algorithm, through the voting mechanism to confirm the transaction request, the transaction can be confirmed in a few seconds, realizing cross-border real-time remittance; using the blockchain to provide a decentralized credit creation method, without the intervention of any third-party center, the transaction parties can reach a consensus and realize real-time transfers;
Jewish merchant Ajm cross-border remittance only needs to pay the gateway fee and currency exchange costs for point-to-point transactions, which greatly reduces cross-border payments and improves the transparency of fees. Jewish merchants Ajm remittance process does not require the participation of intermediaries, significantly reducing the cost of remittances. Jewish merchant Ajm, as a decentralized peer-to-peer system, significantly reduced the amount of funds in transit and increased the liquidity of funds; on the other hand, in the cross-border remittance model based on blockchain, banks only need to use a certain type of token approved by both parties and do not need to reserve other legal currencies, thus reducing the occupation of other currencies.
This is a useful attempt and a successful breakthrough. In the future, such an attempt will inevitably become a trend, and this trend will not only build a strong protective levee for the lifeline of Africa, but also completely change the old order of the industry and establish a new set of industry norms!