Cross-border remittance was expected to be bitcoin’s killer app. It was a simple equation: the global remittance market is huge, and the people sending money to friends and family across borders pay high transaction fees that could be reduced with bitcoin transactions. Compliance costs and underdeveloped start-up ecosystems in developing nations have stymied the opportunity.
The first thing that caused over-optimism in regards to bitcoin's potential was a belief that tiny transaction fees would translate into low-cost remittance processing. While the low bitcoin transaction fees represent the cost of actually processing a payment, many companies in the bitcoin space have found that the technical costs are often trivial compared to the regulatory ones. In fact, even established players can struggle with the cost of compliance. In 2013, Western Union took a hit to profit margins as a result of the investment needed to keep up with new and existing regulations, and even its increased focus on digital payments rather than cash transfers has brought mixed results in the years since.