funds flow for bitcoin based remittances · 1. fiat-to-fiat using bitcoins for transfer (which...

Bitcoin Remittances Types of Bitcoin Remittances

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Bitcoin Remittances: Flow of Funds

User from USA wants to send US$ 100 to someone in Philippines

USA Philippines



Bitcoin Remittances: Different Types

There are three types of Bitcoin based Remittances

1. Fiat-to-Fiat using bitcoins for transfer (which these slides will discuss)

2. Bitcoin-to-Bitcoin (end payout is Bitcoin)

3. Bitcoin-to-Fiat using bitcoins for transfer, but end payout is Fiat



User logs on to www.some-name.com



http://www.some-name.com


Registration entails filling information about yourself into the forms




The information provided during registration is then checked against various checklists and the IDs are

validated.




Its time to fund the account!

User can then opt to use their bank account to fund their online remittance account for say US$ 250. This funding can be done

via ACH.




To initiate a Remittance from US to Philippines, the user fills out all of this information online: Beneficiary Information (who the

person is, their mobile number, email and address).

Amount to send $100




The system then informs him that $250 has been credited (after 2-3 days of ACH) and his transaction

is good to go…

Remitter




Another way of making this transaction happen quicker is for either the Sending or Receiving MTO to prefund the account based on ACH information provided (Xoom for example does

this for all their ACH based transactions). The MTOs are essentially underwriting the risk of the transaction against NSF.

Remitter




The User accepts this information and a Transaction ID number is generated for the User.

Transaction is now booked.

Remitter




Equivalent Bitcoins for US$ 100 are calculated. For this example, let us assume the amount is 0.5 BTC

Remitter




The MTO now has an account with a Bitcoin exchange and is able to purchase 0.5 BTC (which equals US$ 100) immediately.

The purchased Bitcoin goes into the “Sending” MTOs wallet.

0.5BTC



Bitcoin Exchange


Because the transaction has been booked by the Sender (User), the faster the Bitcoins can be bought and exchanged the better it is. The 0.5BTC is transferred into Sending MTO’s

Bitcoin Wallet into the Receiving MTO’s Bitcoin Wallet



Sending MTO Bitcoin Wallet

Receiving MTO Bitcoin Wallet


Because the issue is of trust, the best way to confirm the transaction is to scan the blockchain (some Bitcoin Remittance

companies take this approach, others don’t). From the blockchain you would be able to see 0.5BTC transaction from

Sending MTO’s Wallet to Receiving MTO’s Wallet.




The back-end systems then communicate with each other. Transaction details exchanged are (but not limited to): remitter information, beneficiary

information, IP, $ Value, Transaction ID, address, telephone numbers, other comments, etc.

This is usually communicated via API.

Receiving MTOSending MTO




Receiving MTO pays out 0.5BTC equivalent, (US$ 100) to the Beneficiary in Philippines in Philippines

Pesos.No copyrights! :) Feel free to share. Faisal Khan & Company (www.FaisalKhan.com)


PhilippinesReceiving MTO


The back-end systems of both the MTOs will talk again, this time the Receiving MTO will update its own records and the records of the Sending MTO, giving details on the completion of the transaction.



Receiving MTOSending MTO


The Sending MTO then updates its database that the transaction has been completed and notifies the

Remitter AND the Beneficiary.



USASending MTO


One common question asked is What happens to the Bitcoins received by the Receiving MTO?

In most cases, these are sold back into either local or international exchanges to top-up their pre-fund accounts from which they are paying out.


Bitcoin Remittances: Exchanging Bitcoins


Another method to is for the recipient MTO to scan the blockchain once the coins have been received into their wallet and only then conduct the transaction further.

Sometimes Multi-sig wallets are used for this purpose.


Bitcoin Remittances: Scanning the Blockchain


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