$51B leaves the US in the form of remittance -- imagine all of that being USD->BTC->USD instead. The daily trade volume would be astronomical compared to today's.
You can issue your own assets on the blockchain now, tie them to fiat and make a p2p money transfer startup. Mastercoin, Counterpartyd, counterwallet.co are an example of what you could create and hire competent crypto engineers so you aren't cleaned out (counterwallet.co makes bold client side security claims yet don't offer browser extensions). Make your asset issuing company as transparent as possible, holding reserves as insurance in bitcoin or with a trusted 3rd party http://www.coindesk.com/new-hong-kong-bitcoin-exchange-offer...
Sell and redeem your asset for local peso deposits in Mexico. The vast diaspora will use their accounts at home to buy the asset then sell them p2p in the US to their community network. Traders all over Mexico can change the asset to cash p2p using your business as guarantee the assets are worth something. No correspondent banks to worry about. Now somebody in the US can load up your version of counterwallet.co, click on p2p trade and buy your asset from somebody local either for cash or bitcoins to send to their family back home or directly to a cash out service in Mexico that just delivers money.
I see some problems with this. Okay, moving bitcoin is effortless* and almost free. That part works great, but what happens at each end?
Exchanging between bitcoin and local currency is somewhat difficult and incurs fees. In fact, in the US one of the key reasons it is difficult is that government is naturally trying to close off this potential loophole, because that's what organizations of this nature do -- really this brings us back to the issues of control that are raised by the original link.
It would be interesting if this kind of increasing pressure on financial gateways led immigrants to start demanding payment in bitcoin, but there's no sign of that happening yet. They need to be familiar with it first.
Immigrants have an extremely limited selection of places to spend bitcoin in their home countries. Though if the demand existed, then the market would grow. Ironically, the most developed bitcoin economies are the US and Europe. In the US, there is a pretty wide selection of goods available, thanks to big retailers like Overstock and Newegg, but even there, one is still limited to a small subset of stores.
* edit: I should add that, with the current state of the software, it's not the safest way for an average person to handle large amounts of money. Obviously, there's lots of potential for improvement there.
Three years ago, smartphones were rare in Mexico. I had to go to a specialty dealer who unlocked AT&T iPhones to get mine.
This year, I've been shopping for phones again in Mexico. Every network and every shop is full of nothing but smartphones. Almost all monthly plans come with data. Accessory shops with cases and covers and headphones and stuff exist in every town.
Mexico's bitcoin infrastructure is ready to take over the money transfer business if the government and the banks make it hard or expensive to go through official channels. All it will take is enough expense to make it worth learning to use bitcoin. The network of small entrepreneurs that would do the actual cash exchange already exists: Mexico is a land of small shops and informal businesses.
Erecting arbitrary barriers is more likely than ever to create a black market.
Money transfers internationally incurs fees too. And if the US banks close the opportunity to do it at all, that incurs an even higher cost for people who need to support their family for example (forcing them to e.g. take trips to hand over cash).
It's not going to happen overnight, but if USD transfers gets too expensive and difficult, it's a natural outlet. And I'm sure illegal money transfer services will spring up to (have a pile of drug money in Mexico and want to move it into the US without the complexity of moving the cash? Sell money transfer from the US to Mexico)
Although the problem right now is that for remittance to work you need to be very certain that the amount you're sending is going to be equivalent to the amount being received. It wouldn't be unusual for BTC to have periods of extreme volatility (compared to regular currency exchange). You'd also hit issues because the IRS won't classify BTC as a currency, so there's a whole world of tax pain waiting to be uncovered.
How the IRS classifies BTC is irrelevant for people sending BTC out of the US, unless they make a huge paper profit in the window from buying the BTC and sending it. But that can be done minutes apart.
Extreme volatility is also irrelevant if the alternative is for your money-less family in some other country to receive no money, or once the hoops you have to jump through to do it legally with USD gets too difficult.
The risk of volatility, legal hassles, and so on is a cost. You can price it by asking how much people would be willing to pay to avoid it. There will be some price where it's a wash.
I don't know what that price is, but if it's higher than what banks and money transfer companies are charging, Bitcoin is the more expensive alternative.
> The risk of volatility, legal hassles, and so on is a cost. You can price it by asking how much people would be willing to pay to avoid it.
Actually, to price it, you need to find out how much you would need to pay someone to take on that risk (i.e. the cost of hedging the risk). If people's willingness to pay to avoid the risk is higher than the cost of hedging it, then you have a profit opportunity.
Lately the volatility is not that bad really. There are some price corrections upwards at times, but most people don't mind to be there. They are accompanied by downwards swings too, but it's not an orders of magnitude thing. In fact Bitcoin stayed in the $400-$700 price band since months moving quite slowly.
Actually that's normal. People overestimate BTC volatility because the price goes wild during periods of intense press interest, and so of course there's a big population of people who are only paying attention to Bitcoin during these times. In quieter times when the media spotlight is elsewhere the price usually settles into a somewhat specific band and stays there until the next press cycle.
I find it interesting how people talk about markets: increases are "price corrections" and decreases are "downward swings" implying that that they are temporary and will come back up.
This isn't Bitcoin specific but getting both in two adjacent sentences was a good opportunity to comment on it.
Where remittance ends, forex begins.