A 3D render of a gray wallet surrounded by the icons associated with various cryptocurrencies

Can Cryptocurrencies Replace Cash Remittances?

Isabella Rolz

Enrique Rodríguez is a frequent customer of Western Union and MoneyGram, both of which he uses to send cash remittances. At least twice per month, the 69-year-old Guatemalan, now living in New Jersey, transfers money to his wife, children, and grandchildren back in his native country.

“It’s a very reliable process,” he said. “With remittances, you never lose money; my wife receives the money within an hour or two at maximum.”

Rodríguez immigrated to the United States 11 years ago after he realized that the circumstances in Guatemala didn’t allow him to support his family the way he desired.

“I started sending remittances six years ago, and since, I’ve been very proud to be able to help my family from abroad,” he shared. “My wife was even able to buy a car with the amounts I’ve sent her.”

Due to the socioeconomic situation in Guatemala, many adults migrate to the United States out of a desire to open new doors for themselves. Even though Rodríguez was a professional electrician in his country, he was forced to learn other skills to find a job, which is why he now works as a handyman and in construction sites.

Every time he sends out remittances, Rodríguez gets charged a fee of between $4 and $15, depending on the company he uses and the total amount of the transaction. However, he’s not bothered by the fee because the process is efficient.

“I’m extremely grateful for it because I’ve never had any problems with scams or anything.”

People from all over the world have been sending remittances in the format Rodríguez has been using for decades. Notably, in Central America, they’ve become an essential source of income for beneficiaries in these countries, and their use has grown exponentially since the 1970s. Now, regional experts suggest that Bitcoin and blockchain technology can potentially replace remittances.

In Guatemala, where I was born and raised, over 80 percent of the population lives in extreme poverty. The average Guatemalan earns less than $3,000 per year and about 21 percent of citizens are illiterate. I thought it made no sense to hear that some suggest that cryptocurrency could succeed cash remittances, which are used mostly by people who come from vulnerable backgrounds and don’t have access to education. So, I set out to learn more about who is promoting the use of blockchain technology for this purpose and how it is being received by users of remittances.

The immigrants who send remittances to Central America have a lot in common — generally, they earn below the median annual household income in the United States, many are undocumented, and their educational level is quite low, most only completing primary school. Despite this, they still send an average of $3,000 annually to their relatives in Central America.

An estimated quarter of the Central American population in the United States is undocumented. A study by the Tomás Rivera Policy Institute, a think tank focused on Latin America based at the University of Southern California Sol Price School of Public Policy, revealed that people with undocumented status send more money than those with a legal residency of some kind. Immigrants who send money home tend to only send what they can afford to spare.

A continued exponential increase in immigration from Central to North America and the persistence of family commitments will increase remittances, data recollected by the Inter-American Development Bank suggests. Analyses suggest that family commitments in the country of origin increase the migrant’s likelihood to send money.

The pandemic triggered a historic increase in remittances sent to Latin America. Despite the crisis, remittances increased to unprecedented levels, reaching approximately $128 billion in 2021, its highest level in almost 20 years, and nearly four times higher than expected. Nearly 97 percent of remittances received in Central America are concentrated in Guatemala, El Salvador, and Honduras and are essential to the countries’ GDP. According to a study by the Inter-American Development Bank, beneficiaries from Central America who have received remittances between late 2020 and 2022 showed more significant financial improvement than those households that have not received these flows.

In parallel, Bitcoin has recently been a topic of significant attention and analysis in Central America. El Salvador, for example, made headlines for becoming the first nation to adopt it as a legal tender alongside the US dollar in the fall of 2021. Since then, Guatemala and Honduras have also made efforts towards adoption.

As Central American countries adopt the use of cryptocurrencies, can it truly be an innovative alternative to remittances? Melder, Mayen, and cryptocurrency optimists suggest it can allow users to avoid paying transaction fees and that it offers a more efficient service that reaches beneficiaries more easily. But is it really a viable option or just a hypothetical idea?

Two people who are influential in leading the Bitcoin movement in Central America at the moment are Patrick Melder and Juan Mayen, who work in Guatemala and Honduras, respectively.

In Guatemala, Melder, an entrepreneur from Houston, Texas, introduced the Bitcoin Lake Project to create a circular economy in a rural community by encouraging locals to “spend and cash out Bitcoin,” he said. Melder’s relationship with Guatemala started in 2012, when he and his family started visiting a local school called “Centro Educativo Josué School” in the country for community service purposes. Since then, he has been teaching all kinds of educational courses to children attending this school. This year, Melder began promoting Bitcoin’s implementation across Panajachel, Guatemala.

“Many of the people and businesses I talk with have families in the United States that send money back,” he said in an interview with me. “[By] using the Bitcoin lightning network, they could receive money from their family members instantly, at any time, with essentially no fees. The fees that Western Union and MoneyGram charge just siphon economic lifeblood from the local economy.”

In Honduras, Mayen, a native of Tegucigalpa, the capital of Honduras, pioneered “La Bitconeira,” an initiative to install Bitcoin ATMs across the country.

“The vast majority of Hondurans deal with cash on a daily basis,” he told me. “The idea behind this is that the man who sells food across the street and who has a smartphone, can also have a Bitcoin wallet and withdraw cash that his relatives abroad sent him.”

As Central American countries adopt the use of cryptocurrencies, can it truly be an innovative alternative to remittances? Melder, Mayen, and cryptocurrency optimists suggest it can allow users to avoid paying transaction fees and that it offers a more efficient service that reaches beneficiaries more easily. But is it really a viable option or just a hypothetical idea?

I was determined to find a person who has used Bitcoin instead of remittances, and I must admit that it was extremely difficult to find — very few people are actually using this cryptocurrency in my country. I searched through Facebook groups, Twitter, and contacted the few people I know who use Bitcoin in Guatemala, but I struggled to find someone who used the cryptocurrency to send remittances. After a few weeks, it occurred to me to ask Melder, who suggested I speak to Andrés Guzmán, a businessman with a college degree from Guatemala City who became familiar with cryptocurrency remittances when its implementation began in the country.

"I’m very interested in technology,” Guzmán said, “and I thought, ‘Well, let's give this new thing a chance. What could happen to us if it’s cheaper to send and receive it this way?’”

Considering the costs of sending a transaction another way, he decided to take this alternative.

"I started by sending them a little, because if we lost it, it was not much, but we tried it, and we loved the ease of the Bitcoin network," he said.

Since then, Guzmán said his family has felt more comfortable receiving monetary transactions in this fashion.

“I do see Bitcoin as a feasible option that replaces remittances in Guatemala,” he said. “It’s worth betting on technology.”

On the other hand, María Pérez, a housemaid who was born in a poor community in the outskirts of Guatemala City, has been receiving remittances from her brother, who lives in the United States, for 18 years. She’s satisfied with this procedure because it’s reliable, and she can deposit it directly into her bank account.

“I’m not sure I would switch to the Bitcoin system because it’s something I don’t trust, and the money I receive has been achieved through the efforts of my migrant brother,” she said, reluctant to take the risk of losing the money that her relative abroad has worked hard for.

Pérez isn’t the only one who mistrusts the idea. Manuel Torres, a manager of a restaurant in El Salvador, told me that he noticed locals don’t use Bitcoin because they think it is complicated. Similarly, his compatriot, Elvis Polanco, who owns a store in El Salvador, shared with me that she has noticed that on many occasions, people opt out of using cryptocurrencies for remittances — “not because they don't want to have it, but because they don't know how to use it, and that’s why they’re wary of obtaining Bitcoin.”

“I’m not sure I would switch to the Bitcoin system because it’s something I don’t trust, and the money I receive has been achieved through the efforts of my migrant brother,” she said, reluctant to take the risk of losing the money that her relative abroad has worked hard for.

Kym Brown, a senior lecturer in the Department of Banking and Finance at Monash University in Australia, said that for the average person from Central America who lives on the poverty line, the main problem with replacing remittances with Bitcoin is that they don’t understand the risks.

“The number one danger of Bitcoin is its high volatility,” she said. “If you have a person earning around $3,000 a year and they have some revenues from someone who sent them Bitcoin, if it drops in value, [the loss can be significant]. These people need to eat. I recommend not to use it.”

Similarly, Jeff Frankel, a professor of Capital Formation and Growth at Harvard University, suggests that cryptocurrencies aren’t well designed to fulfill any of the classic functions of money because they are extraordinarily volatile in price.

“This volatility is not surprising, in that they are backed neither by reserves nor by the reputation of a well-established institution, such as a government or even a private bank or other trusted corporation,” he said.

For those who don’t have a bank account or have limited banking services, sending and receiving money doesn’t have to happen via cryptocurrency; a mobile money service like Africa’s M-Pesa can be safe and affordable. Established in 2007, the company allows users to withdraw or deposit in a local currency. By texting the amount they need and afterward meeting with an agent, who acts as a human ATM and works for a bank or a company, people living in several countries across Africa are able to successfully transfer money. Additionally, it doesn’t require the client to own a smartphone, which is expensive — just a regular cell phone that can receive and send text messages.

Andrei Kwok, a senior lecturer in the Department of Management at Monash University in Malaysia, suggested that another alternative is the introduction of digital and financial literacy programs for locals of these developing countries. When understood correctly, using cryptocurrencies might diversify alternative services and improve accessibility for the underbanked.

For example, Melder in Guatemala has already started teaching locals about the subject. His goal is to educate young people on the monetary and technological aspects of Bitcoin at the Centro Educativo Josué School. “I knew that starting with children was the key to teaching the community about new technology,” he said. “That’s why I chose to immediately work with the school and develop a Bitcoin Curriculum that I teach every week.”

His coursework teaches them how to set up a full Bitcoin node and its importance. “And how by doing this, they are part of the largest decentralized, most secure computer network in the world,” he added.


After studying the subject for several months, interviewing experts from different parts of the world, and speaking with Central American residents, I don’t believe that the region is ready to scrap traditional remittances, mainly because they’re a significant part of the economies of these countries. For cryptocurrencies to replace the use of remittances in Central America, it would take many years, and require a lot of enthusiasm from people who want to learn about the subject for this to happen — enthusiasm that isn’t necessarily there.

However, cryptocurrency has ballooned in popularity internationally. It’s not a bad idea to gradually introduce the topic, or to promote educational initiatives. But these courses should be accountable, and rather than solely pushing for adoption, they should be clear about the disadvantages and limitations of cryptocurrency — especially for a vulnerable population for whom volatility and unpredictability mean much more than just a “bear market.”

Isabella Rolz is a bilingual journalist that covers the Central American region, poverty, and social issues. Her work has been published in The Washington Post, The Guardian, The Daily Beast, Univision, Clarín and other media outlets.