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Towards a Truly Decentralized Blockchain Framework for Remittance

Author

Listed:
  • Kevin Coutinho

    (L1X Foundation, Perth, WA 6005, Australia)

  • NeerajKumari Khairwal

    (L1X Foundation, Perth, WA 6005, Australia)

  • Pornpit Wongthongtham

    (School of Physics, Maths and Computing, Computer Science and Software Engineering, The University of Western Australia, 35 Stirling Highway, Perth, WA 6009, Australia)

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.

Suggested Citation

  • Kevin Coutinho & NeerajKumari Khairwal & Pornpit Wongthongtham, 2023. "Towards a Truly Decentralized Blockchain Framework for Remittance," JRFM, MDPI, vol. 16(4), pages 1-18, April.
    • Handle: RePEc:gam:jjrfmx:v:16:y:2023:i:4:p:240-:d:1122144
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    References listed on IDEAS

    as
    1. Friederike Rühmann & Sai Aashirvad Konda & Paul Horrocks & Nina Taka, 2020. "Can blockchain technology reduce the cost of remittances?," OECD Development Co-operation Working Papers 73, OECD Publishing.
    2. Andoni, Merlinda & Robu, Valentin & Flynn, David & Abram, Simone & Geach, Dale & Jenkins, David & McCallum, Peter & Peacock, Andrew, 2019. "Blockchain technology in the energy sector: A systematic review of challenges and opportunities," Renewable and Sustainable Energy Reviews, Elsevier, vol. 100(C), pages 143-174.
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