How Trump became bitcoin's unlikely savior – PaymentsSource

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As bitcoin’s spotlight fades and banks work to adapt its underlying blockchain technology for more traditional uses, it seemed that the world was ready to move on from the infamous cryptocurrency.

And then Donald Trump was elected president of the U.S.

Backing his long-running rhetoric about building a border wall with Mexico was the promise of cutting off the U.S. to Mexico remittance corridor to pressure Mexico to pay for the nearly 2,000-mile construct.

Trump?s thus-unfulfilled plan to block remittances is already proving to be an opportunity to revitalize the digital currency, allowing it to fill the gaps left if mainstream money transfer companies are forced to stop enabling cross-border payments.

IMAGE: Bloomberg News

There?s already precedent for this kind of financial maneuvering. In 2012, Wikileaks supporters in the US were able to get around the politically-motivated blockade by sending the secret-exposing nonprofit bitcoin donations.

?The more pressure the government puts on people trying to move money across borders, the more these people will have to move to alternative routes which could include bitcoin providers that do not operate within the regulatory framework,? said Gil Luria, director of research at Wedbush Securities.

Ironically, Bitcoin-based remittance providers that work under the same rules and regulations as traditional remitters will still be squeezed.

?Technically it?s the same action ? remitting money ? the only thing that?s changed is you?re using bitcoin to cross the border,? said Pablo Gonzalez, CEO and director general of BitSo, a Mexican Bitcoin exchange that has opened several remittance corridors.

But that doesn’t seem to matter to Mexican citizens who saw the peso’s value drop 15% to 20% on election day as Trump’s victory neared.

Election Day ?was our highest volume day historically with about $2 million in purchases,? Gonzalez said. ?A lot of Mexicans were panicking and buying bitcoin.?

And he suspects many people are holding onto that bitcoin still, as the peso has not recovered.

Gonzalez agrees that using the open-source Bitcoin software without intermediaries could prove an alternative route to funnel money around Trump?s blockade. But the process would require a bit of a learning curve.

Using the decentralized software as it was originally intended ?is not very pretty and it?s very complex and not ready for the masses,? he said. Although if the masses are pushed to find alternatives, that?s what they?ll do.

BitSo has not yet opened a corridor from the U.S. to Mexico. BitSo is currently testing a service with a few U.S. money transmitter partners (one in Florida, Illinois and Indiana) but the company itself is not regulated in the U.S.

All this anxiety might be for nothing, though, as Trump?s already backpedaled on numerous issues, including some of his border wall expectations.

Tony Gallippi, co-founder and executive chairman at the bitcoin merchant processor, BitPay, predicts that a Trump presidency will actually benefit the fintech industry, noting PayPal co-founder Peter Thiel‘s outspoken support of the president-elect and his role on Trump’s transition team. ?This will be better for Silicon Valley than people think,? Gallippi tweeted.

Others are less optimistic. Like Joe Colangelo, president at Consumers? Research which looks at how legislation and regulation affects U.S. consumers, who thinks it?s tough to tell where Trump will end up on fintech and bitcoin.

?In terms of a unified fintech platform, Trump has shown none of his cards,? Colangelo said. ?But to the extent the government aligns with the populist movement and demands these remittances slowed, traditional remitters are going to be far less able to resist.?

Bitcoin, as a decentralized protocol, might provide the alternative, he said.

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