Digital assets offer financial freedom, which has made them an alternative for undocumented migrants to send money to their families. Migrants use cryptocurrency gift cards as a method to send remittances since they do not need identification to acquire them.
Many unbanked people have used digital assets, especially Bitcoin, as an option to have their money available anywhere. An example is the migrants who leave their native countries in search of a better life.
They find a barrier in their search for a better future when they are undocumented. The lack of papers means that they cannot have access to traditional financial systems. This situation does not allow them to perform various financial activities, including sending money to their families.
Migrants Take advantage of Bitcoin’s Benefits
Arcane Research, a company providing analysis and research in the field of cryptocurrencies, says that digital assets are very useful for immigrants. This type of digital money allows them to make international cash transfers, which are tax-free, inexpensive, and fast. Also, it does not have the typical bureaucracy of the remittance market, which has a value of USD 500,000,000.
The study entitled “The state of crypto: the P2P market”, which the firm published on October 22nd, describes undocumented migrants’ use of peer-to-peer markets. It states that migrants turn to them to acquire Bitcoins and thus be able to send money to help their families.
Gift Cards Are the Main Medium that Migrants Use
Migrants consider that one of the limitations to access a traditional financial service is the lack of documents that prove their identity. For this reason, this group uses gift cards as their preferred payment method on exchange platform.
These cards do not require the user to go through the know-your-customer (KYC) process, which implies that users prove their identity. This allows migrants to evade these banking limitations for not having the necessary identity documentation.
The report states that this payment method is very popular in North America, which is one of the main reasons behind the expansion of Paxful. In this global market, it is possible to trade Bitcoin safely with millions of users, using more than 300 forms of payment.
From Gift Cards to Cash
Matt Ahlborg, the founder of the metrics website Useful Tulip, explained to Arcane Research the process of sending money through gift cards.
The executive said that the person has to buy a gift card from a local store, photograph the card and send the screenshot to relatives in another country. Then, they exchange those gift cards for bitcoins on Paxful and convert them into the local fiat currency. To do that, they sell the cryptocurrencies to a buyer in the local market through a P2P platform.
Even though the procedure seems somewhat embarrassing, it is more efficient and inexpensive than traditional options.
Bitcoin as Alternative for Remittances
Venezuela is a clear example of how people can use cryptocurrencies to send money across borders when the political or economic scenario is difficult.
Ariana Entralgo, a Venezuelan who resides in Argentina, said that she used to send money to Venezuela through services promoted on Instagram. She sent a deposit to a person, confirmed, called Venezuela, and ordered a transfer to a bank account, but then she moved to Bitcoin.
Through LocalBitcoin, Ariana buys bitcoins from traders in Argentina, then changes the location on the platform to Venezuela. There, she sells her digital assets to Venezuelan traders, placing her father’s bank account to receive the deposit.
This process takes from 30 minutes to two hours depending on how fast the traders do the process. Besides, it has the advantage of not having to pay high fees.
According to the Arcane Research report, 43% of Bitcoin trading in Latin America takes place in Venezuela.
Venezuela has almost no major remittance services available, so Bitcoin is a viable option for Venezuelans living abroad for sending money to their families.
By Alexander Salazar