Towards a Truly Decentralized Blockchain Framework for Remittance

Abstract

Blockchain is a revolutionary technology that is constructively transforming many traditional industries, including financial services. Blockchain demonstrates immense potential in bringing substantial benefits to the remittance industry. Although the remittance industry has crossed the mark of USD 600 billion in 2021, remittance cost is still substantially high, around 6% on average, indirectly limiting financial inclusion and promoting de-risking. The involvement of multiple intermediaries in global remittances makes cross-border payments more expensive. Many projects, including Ripple and Stellar, employ blockchain technology to provide alternative infrastructure for cross-border payments. However, the decentralization of blockchain networks in both solutions is debatable. This paper examines the market characteristics impacting remittance cost, a prominent factor driving the evolution of the remittance industry. A truly decentralized blockchain framework viz. LayerOneX, which provides remittance services at a reduced cost, is proposed in this paper. Devices with low computation and memory capacity can act as transaction validators in this solution. A universal wallet across homogeneous and heterogeneous blockchains is proposed to facilitate fast and inexpensive remittance services. Thus, a novel framework for true decentralization of blockchain-based remittance services, resulting in reduced cost and, therefore, better financial inclusion, is proposed in this paper.

The Frameworks of Cross Border Cryptocurrency Transactions Between Two Countries

“…Cross-border payments are typically carried out via the costly SWIFT payment networks, in which local banks in two different nations exchange payment order messages. The SWIFT payment system is characterized by huge fees and transaction delays [1]. Nowadays cross-border transactions are also completed using digital currencies issued by central banks and cryptocurrencies.…”

“…RELATED STUDIES Several literatures have been published recently concerning the digital currency, blockchain technology, and digital exchange systems. Blockchain system is a ledger based digital technology in which each node stores respective records and if one user needs to alter, delete or add some records, it will get reflected in all the other nodes after the synchronization and re-evaluation of hash [1], [7], [8]. This act as consensus mechanism which prevent double spending [9] as well as driving force towards successfully adoption of cryptocurrency technologies at large [10].…”