How Blockchain Technology Affects Offshore Investing

Caye International Bank

Blockchain Offshore InvestingOffshore banking and investing are constantly changing. New laws, new economic situations, and new technology impact the way that offshore banks interact with clients, appeal to customers, or protect wealth.

One of the biggest factors changing the landscape of offshore investing is blockchain technology. However, before you can explore its impact, it’s important to understand blockchain technology.

Understanding Blockchain Technology

Blockchain technology is also known as distributed ledger technology. The programming code of blockchain technology is inherently open. It is decentralized, so there is no single governing body that controls the data or has the final say.

Instead, the blockchain is a digital ledger. When a transaction is completed, the data confirming that transaction becomes part of a larger block of information. Every 10 minutes in the case of the bitcoin blockchain (more frequently for others), that block is added to a chain of similar blocks, known as a blockchain. Once that happens, the data becomes a permanent open ledger. The public can see what transactions were made, so there is no need for a bank or a governmental organization to verify the data. No centralized collection of data exists, and there is both total transparency and complete privacy.

This technology is most closely associated with cryptocurrencies like Bitcoin, but it can operate outside of these currencies as well. In short, it is a revolutionary way to complete financial transactions.

Blockchain Could Reduce the Costs of KYC Protocol

One of the bigger challenges for offshore banks and investors is the changing nature of disclosure laws. In particular, this revolves around the protocol for KYC, or “Know Your Customer”. There is an increasing focus on governments regulating the offshore investments of their citizens. For Americans in particular, this can make it tough to find offshore investment opportunities that still net great tax and profit potential. It can be tough to jump through lots of hoops, many of which are aimed at preventing terrorism funding or the laundering of money.

Through blockchain technology, it will be easier than ever to skip the logistics of the KYC protocol. If data is open and transparent, then clients can retain their privacy while clearly upholding the letter of the law. This means that investors have more opportunities offshore, and at the same time it allows banks to bypass some of the more frustrating KYC protocol and paperwork.

Cryptocurrencies with International Exchange Rates

Right now, some of the most popular cryptocurrencies using blockchain technology include Bitcoin, Ripple, and Ethereum. At this point, however, there are no set exchange rates for cryptocurrencies. Technically, these currencies are accepted on a global scale. Nonetheless, it is not an established investment that can be easily converted into true currencies.

In the future, it may be possible that there is a universally accepted cryptocurrency that is used for many types of offshore investments. If someone in France wants to invest in Central America, they could use their cryptocurrency. This could make it far easier to invest offshore, because investors wouldn’t need to worry about exchange rates.

Every time you convert assets into a new currency, you pay a fee. With an internationally accepted cryptocurrency, that would be a thing of the past. In terms of making offshore investing more appealing to the world, a currency backed by blockchain technology would be very beneficial.

Reduced Costs Thanks to Greater Transparency

Offshore investing is no longer something that is reserved for the extremely wealthy. Nonetheless, a lot of potential investors are worried that they lack the funds to invest internationally. There are some costs involved, typically for overhead and for data oversight, that can be discouraging. One of the ways that blockchain banking could impact offshore investing is by making it more affordable.

To start, investors won’t have to spend as much with each transaction. With no governing body, transactions could be low-cost or even free. Plus, greater transparency means that banks would not need to pay as many overhead costs. There will be less work involved because adhering to international tax codes and wealth declarations would be eliminated thanks to the open architecture of blockchain banking. Increased transparency can, in a number of ways, make offshore banking and investing much more affordable.

This is a win-win situation for both offshore banks and their customers. Customers will get better services for less money, and banks will have fewer overhead costs and more potential customers.

Focusing on the Technology Rather Than Individual Cryptocurrencies

Some believe that the possibilities of blockchain technology is being exaggerated. Yes, it can revolutionize the world of finance. However, it is important not to place too much significance on any one form of cryptocurrency. Instead, it makes more sense to appreciate the blockchain technology as a whole.

Individual cryptocurrencies are rising and falling quickly. This makes individual cryptocurrencies highly volatile, and that can make some possible offshore investors leery. It is far more important to look at the technology advancements that blockchain in banking can provide in the long term. By making global interactions more straightforward, and by increasing transparency while retaining anonymity, blockchain technology is a big advantage for offshore investors and international banks alike.

Blockchain Banking Could Attract More Offshore Investors

Offshore investing doesn’t need to be an exclusive club. Individuals and businesses of all types can benefit from investing offshore. After all, offshore investing can be a way to prevent tax erosion, and it offers much needed diversification for millions of portfolios around the world. Exploring new opportunities means a chance for bigger profits or just increased financial security and safer estate planning.

While the benefits are plentiful, many prospective investors still focus on the risks. It is certainly true that risks are a part of any financial move or investment. Through blockchain technology, however, some risks can be eliminated. There is greater transparency and a reduced reliance on a single governing or monitoring body. This can be a big plus for many investors who appreciate the open nature of this revolutionary technology.

There is a misconception that blockchain technology eliminates the need for banks. Nothing could be further from the truth. Incorporating blockchain technology into banking can streamline certain financial processes, attracting more customers and offering more investment opportunities to individuals and businesses alike.

Caye International Bank headquartered on Ambergris Caye, an island in Belize, provides its customers with the opportunity to invest in new markets. Contact the financial experts at Caye today to get the assistance you need to find out how to secure your assets privately and securely through offshore private banking.

This article is copyright © 2018 

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About this author:

Luigi Wewege

Luigi Wewege is the Senior Vice President of Caye International Bank, published author of The Digital Banking Revolution, has co-authored economic research which was presented before the U.S. Congress and currently serves as an Instructor at the FinTech School as well as a Speaker at the Silicon Valley Innovation Centre. He holds an Italian MBA with a major in International Business, as well as a BSBA with a triple major in Finance, International Business, and Management - cum laude from the University of Missouri-St. Louis.

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