The rising adoption of cryptocurrency not only brings innovation but also disrupts existing industries that we rely on. Between cryptocurrency itself and the blockchain technology behind it, there are dozens of industries that will be disrupted.
We’ll examine some of the major ways how cryptocurrency is disrupting the global economy. The three industries likely to feel the impact the most are remittance, micropayments, and banking. Take a closer look at each of these industries and possible cryptocurrency disruption.
The Remittance Industry
The remittance industry is currently valued at around $500 billion. It is a huge industry as migrant workers and immigrants send money back to their families. They rely on remittance companies like MoneyGram, Western Union, and RIA to send that money safely and ensure their families receive it.
For the convenience of sending money to another country, these companies charge the users fees. Some charge the person sending the funds while others charge the person receiving them, and yet others charge both. Those fees can add up, and the fees increase as the amount you send increases.
How Crypto Disrupts This
Cryptocurrency disrupts the remittance industry by offering a more affordable alternative. As mentioned, the current remittance companies charge a fee based on the amount of money sent, so the more you send, the larger the fee. By contrast, cryptocurrency transaction fees do not depend on the size of the transaction. The fee is the same no matter how much you send. More importantly, all of the fees, even for smaller remittance transactions, are typically lower.
As another bonus, cryptocurrency typically offers a much quicker alternative to traditional remittance options. Depending on the remittance service you use, it can take days or even a week for people in another country to receive the money. By contrast, cryptocurrency transactions can be instant or near-instant.
Currently Available Options
For now, many people choose to convert their funds to USDT (Tether) then send them along to relatives. Yes, there are conversion fees to convert in and out of USDT, but there would also be conversion fees with the remittance services, and these fees are less.
After converting the funds to USDT or another crypto, it is as simple as creating a transaction. USDT is a popular choice because it is tied to the value of the USD and, therefore, more stable than other cryptos and closer to the currency already involved in the transaction.
There are also already several startups focused on the remittance industry, such as Bitspark and Rebit.
The Micropayment Industry
To get a feel for how cryptocurrency can disrupt the micropayment industry, take a moment to refresh your memory on the issues of the industry. This largely comes down to merchant fees and payment processing fees. Store owners typically pay a fee for each transaction using a card, with an average fee of about 2.3%. This fee means that the profits simply don’t justify the fees when it comes to smaller transactions. That’s why so many stores have a minimum purchase for using a card to pay.
How Crypto Disrupts This
The major impact of crypto on the micropayment industry comes from the low fees. With the right cryptocurrency, the fee for a $10 purchase may be just a fraction of one cent instead of a full 2.3%. This makes microtransactions worth it for retailers to accept.
By opening up the ability to accept microtransactions, retailers and service providers can offer more convenience to customers. We already mentioned that stores could let people make small purchases with cards. In terms of services or subscriptions, the profitability of micropayments opens up options for smaller time-frames. For example, instead of a monthly $10 fee to access articles on a website, the website could charge just $0.05 or $0.10 per article. Currently, this isn’t an option because of fees.
Currently Available Options
Businesses can take advantage of this by using stablecoins. Stablecoins tied to the USD, like USDT or PAX, will be worth approximately 1 USD. This makes it incredibly easy for merchants to accept payments in the stablecoins, as there is no tough conversion math to complete.
One current option that takes this to the next level is BAT (the Basic Attention Token) and the Brave internet browser. Brave lets you choose to view ads and earn BAT in return. You receive it in the form of microtransactions, as your rewards are in small quantities that add up over time.
The Banking Industry
You could argue that both of the above disruptions are part of the banking industry. Still, there are also plenty of other ways of how cryptocurrency will disrupt the financial system and the banking industry. This is one of the biggest potential disruptions due to the numerous use cases.
Some of those overlap with the benefits we already mentioned, including the low fees for transactions, low conversion fees, and quick transactions.
How Crypto Disrupts the Industry?
There are many examples of cryptocurrency disruption in the banking industry, including the following:
Banks charge significantly more than cryptocurrencies for transfers and currency conversions, so cryptos deliver savings.
Crypto transactions can take seconds or be instant. By contrast, bank transfers, especially international ones, can take days or weeks. This is particularly important in terms of clearance and settlement of payments.
Increase Transaction Throughput
The ability of cryptocurrency to increase the number of transactions per second goes hand-in-hand with its ability to offer quicker transactions. Many cryptos were developed specifically to deliver transaction speed and throughput.
People Can Avoid Traditional Banks
Cryptocurrency and crypto wallets let people avoid traditional banks instead of storing their funds online or in hardware or paper wallets. Some people may (rightly) express concern about volatility if you store your money as crypto online, but stablecoins offer a solution. Remember that they are pegged 1:1 with fiat. This means you could convert your USD to USDT and store it in a wallet. You wouldn’t have to pay the maintenance fees of traditional banks. There are also stablecoins for other major currencies.
Providing Access to the Unbanked
The fact that you don’t necessarily need a traditional bank is particularly important when it comes to unbanked. These are the billions of people around the world who can’t open a bank account for some reason, whether it’s lack of access or lack of proper ID. Cryptocurrency offers an alternative for these people, letting them store their funds digitally instead of having a lot of physical cash on hand.
Protection Against Inflation
By converting savings to a stablecoin, people who live in areas with weak currencies can also protect against inflation. The Venezuelan bolivar is the perfect example of a situation you want to avoid.
Cryptocurrency can also offer another way for companies or organizations to fundraise. ICOs (initial coin offerings) are a great example of this and tend to be simpler than raising funds via venture capital.
A New Method of Lending
You can also use cryptocurrencies and the blockchain for lending. This offers more security and doesn’t require a middleman, thanks to the use of smart contracts.
KYC and Preventing Fraud
The blockchain can even help with the identification aspects of banking by creating methods that let people verify their identity in a way that cannot be faked. There are already many projects underway working on these solutions.
What Other Industries Will Crypto Disrupt?
When you consider the blockchain in addition to crypto, the possibilities for disruption are limitless. Experts also predict that crypto will disrupt:
- Government, including voting
- Health care (specifically patient data)
- Market forecasting
- Real estate
- Supply chain management
- Internet of Things
Where Does 7b Fit Into This?
You can use the 7b crypto app to take advantage of these various disruptions. For example, you can use it to convert between your crypto of choice and USDT before sending money to someone else in another country. That way, you’ll take advantage of low fees and quick transactions.