Recently, Western Union tweeted a video discussing their history of sending money and their willingness to potentially incorporate cryptocurrencies in the future.
In the video, Western Union’s Global Money Transfer President Odilon Almeida boasted their use of 130 different currencies. He added that “if we, one day, feel like it is the right strategy to introduce cryptocurrencies to our platform, technology-wise, it’s just one more currency”. He did highlight that “cryptocurrency may become one more option of currency or assets, around the globe, to be exchanged between people and businesses”.
There's a lot of hype around cryptocurrencies.— Western Union (@WesternUnion) December 17, 2018
Good thing we've been transferring money digitally for nearly two decades. Bring on the #blockchain: https://t.co/Z1fzoH2ujV #WUFintech pic.twitter.com/DFUVYq9vOi
Then in the accompanying article, Western Union highlights “that cryptocurrencies have so far failed to achieve broad acceptance because they have yet to master three things: governance, compliance and volatility”. The article expands that Western Union “devotes substantial resources to all of those three challenges” and believes that makes them “better equipped to solve for such variables”.
Providing value to consumers
At the end of the day, Western Union, other money transmitters, and cryptocurrencies are all trying to provide additional value to consumers by facilitating the transfer of money around the globe as fast and as cheap as possible. However, the major difference is that Western Union and other money transmitters have significant infrastructure costs and overhead, which must be factored into their prices in order to keep their company profitable and running. Cryptocurrencies not only optimize that infrastructure requirement by enabling peer-to-peer transactions rather than relying on intermediary parties, but also crowdsources resources via economic incentives to further reduce costs to consumers as much as possible.
This tweet will not age well. The reason why there's a lot of hype is because #blockchain & #cryptocurrency make legacy centralized solutions like Western Union obsolete. It's like comparing the fax-machine to email. User has full control removing fees & risk of using 3rd party. pic.twitter.com/pwQMLQE2VU— Mark Mason (@StayDashy) December 19, 2018
This enables cryptocurrencies to offer faster and cheaper services than traditional money transmitters will ever be able to offer with their current infrastructure. In the article, Western Union does mention that they have “partnered with Ripple Labs to test whether sending payments by blockchain was faster and less expensive” and said that the “tests are ongoing”. Nevertheless, a lot data currently exists, such as BitInforCharts.
The data shows that cryptocurrencies, especially Dash and Bitcoin Cash, offer much lower fees than traditional money transmitters, as shown in Mark Mason’s tweet. Additionally, money transmitters take at least 24-48 hours to be delivered, while cryptocurrencies are usually delivered within minutes, if not sooner. However, Western Union does have a valid concern that cryptocurrencies are still limited in use when compared to fiat, but this is rapidly changing.
Dash enhances cryptocurrency’s advantages with usability
One of Dash’s competitive advantages is that it is quickly gaining more merchant adoption, which makes its much easier to use. Without merchant acceptance, individuals receiving money sent via cryptocurrencies would still have to find centralized exchanges to convert into a usable fiat currency. Dash allows individuals to simply use Dash directly at merchants; so for example, Venezuelans can spend Dash they receive from family abroad at one of 2,500+ merchants. Dash has been able to gain such rapid acceptance partly thanks to its DAO governance system that enables individuals to get compensated from the Dash network for educating consumers about Dash. This is greatly advantageous over volunteering since individuals need to make income to live and volunteers would simply not be as efficient due to the need to split time with an income generating job and relying on third party funding leads to misaligned interests.
Additionally, Dash has been able to implement innovations such as InstantSend, which allows transactions to be locked in less than 2 seconds for $0.01-$0.02 USD and is about to become even cheaper with Automatic InstantSend. Plus ChainLocks gives more security against 51% attacks. These innovations make adoption more likely by giving greater confidence to merchants and consumers than other cryptocurrencies are able to offer, which takes Dash one step closer to being a stronger competitor against current methods of sending money abroad.