A new bitcoin startup, winner of the San Francisco Launch Festival, aims to build a global network for remittances.

The last day of the Launch Festival, held in San Francisco from March 2nd to March 4th, saw the announcement of the event’s winner. This was Abra, a new bitcoin remittance company, which calls itself “the world’s first peer-to-peer digital cash money transfer network” using bitcoin.

Using bitcoin for remittances is not a new idea. Bitcoin remittance companies are being established all over the world: for instance, CoinFox recently wrote about a bitcoin remittance channel linking Hong Kong with Indonesia and a remittance service that allows to send money to Kenya. Usually, bitcoin companies enter partnerships that allow locals to receive bitcoin-powered remittances in the same brick-and-mortar location where the services of American Express and MoneyGram are offered. 

Abra adopts a different approach. It plans to create a network of tellers who would convert bitcoins into fiat currency and vice versa. Anyone with a smartphone can become a teller. Having received money, via a bitcoin wallet, directly on their phone, the teller will then give cash to the intended recipients in their country. The teller is free to charge any fee, and if they do, a part of this fee is paid to Abra. The developers hope for market forces to maintain fairness: if the fee is too high, recipients would choose another teller. According to the company, that will be easy: a database of nearby Abra tellers is available through any smartphone as well.
The founder of the company, Bill Barhydt, sees it as his mission “to replace bank driven financial inclusion with consumer driven financial inclusion”. He specifically targets billions of unbanked people. At the Launch Festival, he referred to the example of Haiti where, after the recent earthquake, people were unable to get money from abroad because the buildings where they picked up that money were destroyed and because many IDs were lost in the disaster.

“If Abra had existed at the time, it would’ve solved all of those problems. How? Because you can use Abra from any smart phone, anyone in Haiti could have acted as a virtual ATM to receive money”.  

The news led to a mixed reaction on Reddit. While some worried about legal issues, most noted that being a teller in a developing country with high rate of crime can be very dangerous. The user Bitcoinballerina remarked: “There is a reason why money services businesses dealing with cash are centralised in a building, it's not because they are lazy, it's for security”. And the countries that need remittances the most are also, according to Redditors, the most dangerous ones. The user T62A said: “i have to trust a teller in mexico will actually give my girlfriend the money in person? And if i am an abra teller in mexico, do i have to trust the guy coming for the money will not try to rip me off?”

The company plans to launch in May when it builds up a world-wide database of tellers.

Bill Barhydt has worked for Goldman Sachs and Netscape Communications. He is now the chairman of Boom Financial, a cross-border mobile banking service for immigrants.