Hedera Hashgraph and Shinhan Bank of South Korea have provided a concept proof for international remittances on Hedera Network using stablecoins. This setup allows sending international remittances within seconds. The cost for sending the money is quite low compared to what senders pay to send the same amount through the traditional remittance channels.
The New Solution
The average remittance transaction fee on this network is just $0.0001. The average time the transaction takes is less than 5 seconds. These details are big improvements on the fees and time taken by the traditional remittance systems. Hedera announced on Monday that its aim is to evaluate if stablecoins can be issued and distributed for real-world financial applications. The goal is to lower the fees and reduce the time it takes to send the money to other countries. It will also make the transactions traceable.
High-Security DLT Network
Hedera Hashgraph maintains a high-security DLT network with stake proof. The new concept it is showing takes advantage of its Consensus Service and Token Service. Shinhan Bank will mint won backed by stablecoins. International banks that are part of this pilot project will provide stablecoins in local currency. Clients receiving KRW stablecoins can redeem them with stablecoins pegged to the local currency, making it exchangeable with local official currency.
Blockchain offers an excellent technology solution to reduce the fees associated with international remittances. A remittance of $200 through banks in 2020 costs an average of $13.02 or 6.51 percent. This cost is projected to go down to $6 or 3 percent by 2030.