Money remittance can be expensive, difficult and time consuming. However, currency market Coincove hopes to change this for its Latin American customers.
Using the Localbitcoins platform, Coincove allows its customers to take their fiat money to a local bitcoin dealer in-person.
From there, Coincove translates their currency into a USD value on its website so that customers can move money to different countries around the world.
Entry and exit nodes
The company plans to allow users to see the BTC value of their accounts in the future, but right now bitcoin is simply the conduit or 'pipe' through which the money moves. Tomas Alvarez, CEO of Coincove, told CoinDesk:
"We are basing Coincove in local marketplaces, and using them as entry and exit nodes."
To start, the company has chosen four countries to operate in: Argentina, Mexico, Spain and Chile.
"We picked Argentina because they tend to be a forward-looking country, and their current economic situation makes them more willing to try new ideas," said Alvarez.
"Mexico, Spain and Chile were picked because they have important Argentinian communities that need to be linked economically to their homeland."
Coincove has some serious competition in the money remittance industry. Alvarez pointed to "really established ones like Western Union and MoneyGram as well as newer ones such as Xoom," as his company's biggest rivals.
Many of the big remittance players have had issues in Argentina. Yet, this is exactly where Coincove hopes to succeed.
"Another reason we picked Argentina is that all these services have been seriously restricted or completely shut down, which allows us to enter a market relatively free of competition."
Coincove sees some risk in using local bitcoin markets. This is especially true given that a lack of liquidity may create price points that don't represent bitcoin's market value.
"On a system-wide level, we worry about bitcoin liquidity in local markets. The exchange rate people can expect when they come in and out of the system relies on a healthy choice of local exchangers," he said.
"Fortunately, since the conception of our idea a few months ago, we have seen the local bitcoin communities in our target countries grow at a fast pace."
Regulation is also a concern for Alvarez, given that his company is operating in several different countries and hopes to expand in the future. "Our greatest concern is the regulatory environment," he said.
"None of the countries we have picked have passed any ruling regarding bitcoin. We are convinced that this legal situation won't last long and that eventually most countries will pass laws covering bitcoin."
They will be pitching their business to investors during Boost's Demo Day in February 2014.
Rio De Janeiro image via Shutterstock