Nigerian startup targets high cost of diaspora remittance with first ICO
SureRemit, a Nigerian-based remittance company, has launched the first ever initial coin offer (ICO) aimed at crashing the high cost of sending money back home from outside the country and eliminating cash agents using cryptocurrency technology.
An Initial Coin Offer (ICO) is cryptocurrencies’ equivalent of Initial Public Offer (IPO). It refers to an unregulated means by which funds are raised for a new cryptocurrency venture. ICOs are used by start-ups to bypass the rigorous and unregulated capital-raising process required by venture capitalists or banks. In an ICO campaign, a percentage of the cryptocurrency is sold to early backers of the project in exchange for legal tender or other cryptocurrencies, but usually for bitcoin.
“We are creating our own cryptocurrency called Remit,” said Olaoluwa Samuel-Biyi, co-founder of SureRemit, in a social media chat with BusinessDay. “The Remit will operate within its own ecosystem. We will focus on deepening the acceptance of our token, especially since we already have the merchant acceptance piece figured out for the long term.”
The first ever ICO was conducted by Mastercoin in 2013 – a fundraising event that ran for one month. A flood of ICOs later followed in 2016 – as much as 54 major campaigns. 2017 has, so far, seen almost double of the 2016 numbers with 92 ICOs raising about $1.25 billion globally.
There are no strict laws regulating ICOs. The campaigns are mostly bound by public vigilance, promoting practices such as blockchain technology to offer transparency. Nonetheless, it will be recalled that China which used to account for majority of the ICOs took steps to regulate the space, but to no avail. Hence, it outlawed the campaigns and ordered sponsored to return investors money.
In a Whitepaper issued last week, the SureRemit stated that the platform will ensure people who send money from outside the country to their loved ones in Nigeria or any African country have direct access to merchants that serve their recipient’s basic needs back home.
“A new token, Remit, will enable senders to purchase digital vouchers (SureGifts) that can be delivered to billions of their recipients across the world instantly via SMS or email,” the Whitepaper stated. “These vouchers can be spent directly for goods and services from SureRemit’s ecosystem of partner merchants within their community. The service will significantly reduce the cost of transfers, while ensuring that the recipient receives the appropriate value as intended by the sender.”
SureRemit offered pre-sales of its remittance-focused tokens early this week, a prelude to its scheduled January 2018 ICO. Merchants in Nigeria, Kenya, and Rwanda have access to the pre-sales launch. It also plans to launch in India and the Middle East in the second quarter of 2018.
Remittances constitute a significant chunk of the global gross domestic product of many countries and stabilise household income in the face of adverse income shocks. The World Bank data found that roughly 250 million global migrants transferred $601 billion to their home countries in 2016. More than half, $441 billion, went to developing countries. Sub-Saharan Africa accounts for $39 billion and Nigeria receives $20 billion.
Nonetheless, sub-Saharan Africa pays the highest fees, about 10 percent per $200, of any other region.
Sponsors of SureRemit believe that speed of completion of transactions with the platform can increase to just seconds – regardless of location of sender and receiver in the world.
“The Remit token will be low-cost and virtually free to utilise by immigrants all over the world. This is possible because we are building in partnership with Stellar.org, leveraging their powerful blockchain platform for low-cost, high-velocity cross-border transactions,” Samuel-Biyi told BusinessDay.
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