- Cross-border remittances are one of the main businesses that provide fuel for the global economy, which has been untapped by blockchain technology.
- The innovative ideas brought by the advent of blockchain are finally catching up with this industry as Velo protocol sets to merge both worlds.
Ripple’s XRP Ledger technology has provided cross-border payment solutions over the years. Now, it seems like its reign over the remittances world could be toppled with the bold strides made by Velo.
Velo: The “XRP killer”
Velo is a blockchain-enabled platform that aims to disrupt the international remittance market by enabling worldwide settlement. The use of smart contracts successfully serves the purpose of eliminating unnecessary third parties within the system.
The blockchain startup aims to leverage the distributed ledger technology benefits to make the cross-border payment processes efficient. VELO enables trustless direct transfers using digital credits pegged in a one-to-one ratio with any fiat currency.
The primary focus for this network is Southeast Asia where numerous countries and languages are relatively small, each having its own financial system.
Immigrant workers are presented with the enormous challenges of an unsophisticated economic network. Besides the inefficiencies that money transfer operators have such as speed, there is a clear case of exploitation as users usually pay 8-10% in fees.
Given that there are many countries with independent financial institutions, this creates multiple layers of incompetence. It starts from handing over the funds, getting the foreign exchange quotes, and converting foreign currencies to US dollars before the money is delivered. This excruciating process heightens the need to eliminate third parties.
Velo’s proposition value stands out amongst other projects such as Ripple. It is designed to replace third parties in a digitally distributed fashion. This is achieved by the creation of a verification process that allows successful participants to function as agents.
Trusted partners can operate in countries with many unbanked users and issue digital currencies corresponding to any fiat deposits. They can offer lending services combining the benefits of digital and traditional systems as well as interoperability between various markets thanks to Velo.
Businesses can also utilize the protocol to issue digital credits with inherent value.
Although Velo is currently targeted at South East Asia, it plans to become the future of cross border payments that would create a frictionless system for other parts of the world that are yet to gain financial exposure.
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