One of the biggest appeals of cryptocurrencies is their ability to make incredible profits from their increasing and decreasing values. Consequently, trading platforms like Bitlevex are gaining in popularity, especially during bullish cycles like the one we are currently experiencing.
However, the future success of cryptocurrencies lies mainly in their mass adoption. The more people get exposure to blockchain technology and its benefits, the larger the impact of this ecosystem becomes. As such, partnerships with established companies with multi-million user bases are particularly important in the grand scheme of things.
In this post, we explore the recent partnership of money transfer platform Moneygram with the blockchain-based payment network Stellar. We will go through the advantages of the Stellar network and explain why this partnership and others like it directly contribute to a faster and more cost-efficient global monetary network.
What is Moneygram?
Founded in 1940, Moneygram is a US-based cross-border payments company, considered to be a giant in this niche. Only second to Western Union, people all around the world use it to transfer money to each other all around the globe. Moneygram’s services are offered in over 200 different countries, which is proof of the incredible global reach the company has.
Services include direct bank transfers, cash pick-ups, and even a digital app where users can easily transfer funds between accounts. However, while the popularity of Moneygram is undeniable, it also comes with a severe drawback. Its services are considered to be some of the most expensive on the market.
Consequently, the latest partnership with Stellar is an interesting development, considering the main advantages of this blockchain payment network.
What is Stellar?
Stellar is a decentralized payment network that is specifically designed to provide fast and cheap transfers of value. Its blockchain can be used to tokenize real-world assets and used to send them abroad using its lightning-fast network of validators.
Created by Jed McCaleb, one of the co-founders of the Ripple network, Stellar is meant to accommodate retail users with cheap and fast transactions. The Stellar Lumens (XLM) native token of the network is mainly used to pay for transactions on the network and transfer of value.
The Stellar network is capable of up to 1000 transactions per second and doesn’t use a mining consensus mechanism. As such, the Stellar network consumes 99% less electricity than popular coins like Bitcoin and Ethereum. This solves the high energy requirement of other cryptocurrencies’ protocols and makes it 100x faster than Bitcoin.
However, what is really interesting in this narrative is the low transaction prices that the network provides to its users. A transaction on the Stellar network costs 0.00001 XLM. Considering that 1 XLM amounts to less than $0.5, the transaction costs on Stellar can be regarded as negligible.
This makes it a top player for microtransactions and international money transfers, two niches where high fees can be extremely disadvantageous to the user.
How does the Stellar + Moneygram partnership benefit the users?
We previously mentioned how Moneygram is suffering from high fees, driving its users to the competition. The company had already attempted to enter the blockchain world by partnering with Ripple and XRP in 2019. However, this partnership was cut short after Ripple was sued by the SEC for selling unregulated securities, with the lawsuit still pending.
Recently, Moneygram announced a partnership with Stellar, who is a direct competitor to Ripple. This shows us that the money transfer company is looking at better alternatives to provide more secure and cost-effective methods for remittances.
By partnering with Stellar, Moneygram will integrate its services on the blockchain, offering money transfers in various fiat currencies like the USD, GBT, or the Japanese Yen. Additionally, it will support USDC, the stablecoin issued by Coinbase, which migrated from the Ethereum network to Stellar in early February 2021.
What can be expected in the future?
In the past year, we have seen a multitude of payment networks enter the cryptocurrency ecosystem. One of the major advancements in this regard was when PayPal announced that its digital wallet would support a select number of cryptocurrencies. This was one of the major events in the current bull run that triggered the rising prices of Bitcoin and other coins.
With more e-wallet companies adding cryptocurrencies to their portfolio and using blockchain for their transfers, we can see a clear benefit for the users. Individuals will be able to access a decentralized form of money, both more secure and cheaper to use for global payments than traditional fiat money.
Remittances will become cheaper, driving the competition to lower their prices and make international transfers more affordable for everyone. Soon, we hope to see money transfer fees fall drastically, maybe under the $1 mark.
Conclusion
While cryptocurrencies are incredible investment assets, the technology behind them is what will eventually bring them into the mainstream. Partnerships between blockchain networks and established companies should increase the reach of cryptos and provide users with a better, more efficient monetary system.
