Remittance vs Lending (Day 250)

Image credit: Photo by William Iven on Unsplash

Back in 2018, through a mutual friend, I met a serial entrepreneur who started a new project in the remittance business using blockchain technology. He has connections to the decision makers of a major bank in Asia and received a M.O.U. to allow him to handle the payments, and his plan is to digitize the existing payment rail that is accepting transfers from supermarkets in the U.S. and replace that with an easy-to-use mobile app.

But remittance is such a complicated universe to navigate. It requires money transfer license in the U.S. on a per State basis, and it requires the receiving bank to recognize and handle the transfers and currency conversions. Each country has different regulations and requirements. It's a difficult business to navigate even for the mega corporations like IBM, Ripple, and Stellar.

As an IndieHacker, the odds are stacked against us in projects like remittance. While the blockchain technology can remove the barriers of transfer, but the on-ramp and off-ramps of converting from and to fiat currencies are still controlled by the legacy banks, the governments and the regulators.

IndieHackers probably have an easier path to success with (p2p) lending projects. While the early days these lendings failed due to lack of underwriting and any kind of risk assessment, it is later solved by using collateralization. Even though it's not as powerful and efficient as the credit based lending, it works really well with the trustless nature of the blockchain.

Both lenders and borrowers can agree on the terms in a smart contract and let blockchain handles the transactions and the servicing of the loan. It takes away the need of having a bank as the central authority for transactions; by removing the middleman and the fees, lending becomes attractive as the lenders can earn way better interest rates as well as the borrower can get an instant access and often times better borrowing rates.

But the real power of lending won't be unleashed until there is underwriting and credit being part of the equation. This will be the next big revolution coming to blockchain in 2021 and the Molecule Protocol wants to be a part of that solution. By partnering with Bloom, we can bring the traditional credit to the blockchain and 10x the DeFi ecosystem by connecting the KYC/AML and traditional finance with the public blockchain technology.

To learn more about the Molecule Protocol and how you can integrate that in your Dapp using the APIS project, please feel free to PM me on Twitter