CUET_Unanimous_Whitepaper

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TEAM CODE: 64ac5070346db
Guest User | [SCHOOL]
B-DESH: BANGLADESH'S NATIONWIDE
DECENTRALIZED BLOCKCHAIN PLATFORM
POWERING SMART CONTRACT-
BASED REMITTANCES
64ac5070346db
TEAM NAME:
TEAM CODE:

1
In this era of globalization, billions of people work abroad and trillions of dollars are transferred
around the antiquated global financial system each day. Still heavily reliant on paper, there are
many issues with current payment system that cause added expense and delays, as well as make
susceptible to crime and fraud. Despite the financial industry’s resistance to change, blockchain
and its expected benefits make it worthwhile. Blockchain technology can ensure traceability,
transparency, data privacy and prevention of fraudulent in remittance inflow sector. Bangladesh
earns a lot of foreign currencies from remittances each year. But our current payment system
has many loopholes, resulting in illegal transfer methods such as “Hundi”. Hundi doesn’t
contribute to Bangladesh’s foreign exchange market. We proposed a blockchain-based payment
model including system & technical architecture, governance, sequence diagram for easy money
transfer to Bangladesh. Our business model includes several partners. Competitor analysis, cost
& revenue generation is predicted. Risks are mitigated. Prototype is under development.
Keywords: remittance, FinTech, hundi,
Blockchain is a decentralized, distributed ledger that stores data in blocks and makes data
transparent to the participants. FinTech industries are adopting blockchain technology and
expanding its scope and sustainability. On the other hand, blockchain technology ensures
traceability, transparency, data privacy and prevention of fraudulent in remittance inflow system.
Abstract

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Contents
❖ Problem Identification .........................................................................................................................3
Decline in Personal Remittance received, (% of GDP) ............................................................................3
Hundi: .......................................................................................................................................................4
Current Payment System: .........................................................................................................................5
Details of current Payment system............................................................................................................5
Limitations of current payment system.....................................................................................................6
❖ Our Objectives:.....................................................................................................................................7
❖ Solution.................................................................................................................................................7
Blockchain can help facilitate cross-border money Transfer:...................................................................7
What our system provides:........................................................................................................................8
Why Blockchain based solution is applicable in this endeavor:...............................................................9
❖ Market and Partners ..........................................................................................................................10
Market.....................................................................................................................................................10
Partners ...................................................................................................................................................11
❖ Architecture........................................................................................................................................12
System Architecture................................................................................................................................12
Technical Architecture............................................................................................................................14
Governance.................................................................................................................................................15
❖ Competition & Risk ............................................................................................................................18
❖ Revenue and Distribution ..................................................................................................................19
Financial Projection................................................................................................................................19
References ..................................................................................................................................................20

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Decline in Personal Remittance received, (% of GDP)
About ten million citizens are contributing to Bangladesh’s foreign exchange market at present.
Remittance is the second largest source of foreign currency. Bangladesh’s official website of the
Bangladesh Bureau of Manpower, Employment, and Training (BMET) reports,
Fig 1: Year-wise overseas employment (2013-2022)
The remittance sector has huge scope for contributions to the economy and GDP growth of
Bangladesh. World Development Indicators data by World Bank suggests that remittance inflow
has increased. Despite the increase in remittance inflow, the contribution of remittance to GDP
has declined overtime, according to the World bank database.
Fig 2: Personal Remittance received, (% of GDP)
409253 425684
555881
757731
1008525
734181 700159
217669
617209
104513
0
200000
400000
600000
800000
1000000
1200000
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Employment
Year
Year-wise Overseas Employment (2013-2023)
❖Problem Identification

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Though the population of emigrants working abroad hasn’t decreased, the remittance inflow
clearly has, compared to the employment overseas. This could be the result of more and more
people choosing Hundi as their money transfer system instead of traditional banking system.
Hundi:
Hundi is a verbal agreement between two parties on money transfer[1]. It is a practice of sending
remittance home via an agent. The fee is less than the traditional money transfer system and
thereby it is a popular medium. Nowadays Many people prefer hundi, as their transfer system
which doesn’t contribute to Bangladesh’s foreign exchange market.
Fig 3: Hundi process
Apart from contributing nothing to foreign currency reserve, this process has user disadvantages,
such as,
Fig 4: Disadvantages of Hundi
Despite the lack of security and trust, people tend to choose this process. In fact, A recent study,
conducted by the Refugee and Migratory Movement Research Unit (RAMMRU)[2] found that
66 per cent of Bangladeshi workers in Maldives send money through hundi. Around 64 per cent
of them do not have bank accounts. This leads us to question why people are not choosing
banking system? Are there any problems in Government’s policy making? If there is any, what
are they?
Delay Fraudulent activities Conflict about
negotiation

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Current Payment System:
The traditional KYC process, with substantial duplication of efforts, can take up to 30-50 days.
Here, an example of remittance flow from Saudi Arabia to Bangladesh is given according to
current payment system.
Fig 5: Current Payment system
Details of current Payment system
1. When the sender wants to send money to another country, they typically approach a bank
or money transfer operator. In this process, the following actions are taken:
AML/KYC activities are
conducted to ensure
compliance with anti-money
laundering and know your
customer regulations.
Funds and fees are
collected.
Transfer inquiries
and disputes are
confirmed and
supported.

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2. The bank or money transfer operator employs the following methods to move money across
borders:
3. Once the transfer is initiated, the beneficiary is informed and can approach a bank or money
transfer operator.
4. Depending on the existing relationship, the bank or money transfer operator may perform KYC
procedures.
5. The amount owed in the local currency is paid to the beneficiary.
6. Periodically, in compliance with local regulations, the bank and money transfer operator submit
reports to regulators containing transaction details such as sender and beneficiary identification,
currencies involved, and transfer information.
Limitations of current payment system
1. Inefficient onboarding: The collection of information about the sender and beneficiary relies
on manual and repetitive processes, leading to inefficiency.
2. Vulnerable KYC: There is limited control over the accuracy of information and supporting
documents, and different institutions have varying levels of maturity in implementing proper
Know Your Customer (KYC) procedures.
3. Cost and delay: Payments can be expensive and time-consuming, depending on the chosen
route.
4. Error prone: Information validation is conducted on a per-bank or per-transaction basis,
resulting in a high rate of rejections.
5. Liquidity requirement: Banks are required to hold funds in nostro accounts, leading to
additional costs associated with opportunity and hedging.
6. Limited Control: Similar to the previous point, limited control exists over the accuracy of
information and supporting documents, with varying levels of implementation across different
institutions.
7. Demanding regulatory compliance: Meeting regulatory requirements for reporting can be
challenging due to the involvement of multiple data sources and channels, often requiring costly
technology capabilities and complex business processes supported by multiple operational teams.
Utilizing the SWIFT network,
which is a part of the
international financial
messaging system.
Facilitating transfers
through correspondent
banks if they are not
connected to the SWIFT
network.

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❖ Our Objectives:
Evaluating the problems with current payment system, we set 7 following goals for our project.
❖ Solution
Blockchain can help facilitate cross-border money Transfer:
Blockchain is a universal ledger present in a distributed network which is accessible to everybody
in the network. Thus, each node in the network will have a complete copy of the entire database
or the ledger and any modifications to the same will have to be duly verified by other nodes /
parties to validate on the modification done. Thus, it requires a consensus of nodes to agree upon
the state of the ledger for it to be valid. This would mean that direct transfers can occur instantly
now and without fear of manipulation even for cross-border payments, because there are no
intermediaries or correspondent banks involved. The underlying concept of distributed ledger
makes it possible for the banks to have a bilateral, visible, and immutable transfer of value,
adjudicated by the settlement agency
Simplify
Transaction
Reduce
Time
Required
Reduce
Transaction
fee
Mitigate
Fraudulant
Activity
Mitigate
intermediate
party
Ensure
data
privacy
We propose a decentralized
Blockchain Platform “B-DESH”
Powering Smart Contract-Based
Remittances, to mitigate hundi.

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What our system provides:
Fig6: Money transfer by mitigating intermediate parties.

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Why Blockchain based solution is applicable in this endeavor:
No. Question Explanation Blockchain
Needed?
1 Is there any need for
a shared common
database?
This process enables the stakeholders(banks)
to access data instantly. So, the process gets
quicker. According to the World Bank, one of
the main objectives of the General Principles
for International Remittance Services is to
enhance transparency in the remittance market.
Using blockchain we can ensure transparency.
yes
2 Are there multiple
parties involved?
Yes, in current system steps are,
• Bank of the country from where money
is transferred.
• US bank (intermediate)
• Bank of the receiving country
(Bangladesh bank or local bank)
yes
3 Do parties involved
have conflicting
incentives and is there
a lack of trust?
There could be a conflict. But compared to
conventional methods, the blockchain method
is more secure. For a refugee, he can’t trust the
bank. In conventional methods, it's a hassle to
do the governmental work needed for money
transfer. Using blockchain will mitigate the
medium. This will increase efficiency and
reduce the transfer fee.
yes
4 Are the rules of
government
participants uniform?
No, Bangladesh banned cryptocurrency. For
the risk of money laundering. So, we mitigate
money laundering to establish crypto.
Transaction limit, licensing, is not the same for
all users.
yes
5 Is there any need for
an objective,
immutable log?
Yes, Transaction list should be recorded. And
can’t be changed. For transparency and
security, it is needed.
Negative side is that data can be stolen.
yes
6 Do the rules of rules
of transactions not
change frequently?
There is no definite way of transaction then, No
7 Should transactions
be kept public?
No, permissioned blockchain is needed. Data
privacy and public security. Private blockchain
is needed.
yes

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❖ Market and Partners
Market
With the advent of blockchain, several companies and startups have begun adopting
cryptocurrencies like Bitcoin to offer remittance services. Four firms are frequently mentioned:
BitPesa, Abra, Stellar, and Ripple. In a sector highly dominated by Western Union and
MoneyGram, these new players are offering a different money transfer service, trying to solve
multiple issues such as the high transfer costs, the limited money distribution methods, limited
brand options, limited ways to deal with money, etc. At the moment, the fastest developments are
happening in Southeast Asia, in particular the Philippines and Vietnam, but some African countries
– like Kenya, Tanzania, Nigeria, and Uganda - have entered the market.
In the last years, a large number of blockchain based remittances start-ups were established in most
parts of the world, particularly in Southeast Asia, each one with a creative solution to cross-border
transfers. Here some notable examples:
Source: JRC Science Hub

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Partners
To work smoothly, we need coordination and collaboration between multiple partners and
stakeholders including the regulators, Businesses and marketplaces. The roles, responsibilities and
incentives of these partners are discussed below:
Type Partner Roles & Responsibilities Incentives
Strategic
Partner
National Data
Security Council,
Bangladesh Bank,
BRAC
1. As a strategic partner, ensuring
compliance and help building
awareness on blockchain
remittance systems
2. Enforcing digital security
standards to incentivize consent
and privacy management. 3.
Monitoring data practices of
companies and taking measures in
cases of mishandling data or
frauds.
Advance its mission to
improve the digital
security infrastructure
and ensure data
protection of citizens.
Technical
Partner
ICT Division
Bangladesh
1. Offering technical assistance in
capacity-building and providing
infrastructural support for
implementation of blockchain
technology in remittance system
2.Enhancing transparency in the
remittance market.
3.Technical support to mitigate
data theft.
Implementing the
Action plan under the
National Blockchain
Strategy 2020.
*(National Blockchain
Strategy: Bangladesh
(2020), Information and
Communication
Technology Division)
Growth Partner Businesses and
marketplaces
1. Offering special offers or
discounts per transaction.
2. Running ads among mass
people for engagement
Brand Awareness,
Transaction
transparency, Negative
marketing for Mediums

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❖ Architecture
System Architecture
Fig 7: System Architecture

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Component Description(System Architecture)
1. Trust between the sender and a bank or money transfer operator is established through
traditional Know Your Customer (KYC)[3] processes or a digital identity profile &
exquisitely a biometric record. A wallet ID is created for them upon registration and
verification of KYC. The documents are stored in the Private IPFS cloud and returns the
hashed value of the ID of document. It is stored in the smart contract. The biometric record
is to prevent fraudulent activities like- money laundering with multiple accounts. So even
if someone uses multiple account to transfer black money, the person can be tracked.
2. A smart contract serves as a digital agreement[4] that encapsulates the obligations and
conditions for transferring funds between the sender and beneficiary. It eliminates the need
for intermediaries and provides transparency and security in the transaction process.
3. The process of currency conversion is facilitated by liquidity providers operating on the
ledger. These providers ensure that the sender's currency is converted to the beneficiary's
currency at fair and current exchange rates, enabling seamless cross-border transactions.
4. Regulators can actively monitor transactions in real time and receive specific Anti-Money
Laundering (AML) alerts through the implementation of smart contracts.[5] This allows
for enhanced regulatory oversight, detection of suspicious activities, and timely
intervention if necessary. Regulators acts as the lightning nodes such as-non-member
banks, fintech firms, merchants, or a government body etc.
5. By leveraging smart contracts, the transfer of funds occurs in real-time, minimizing
transaction fees, and guaranteeing timely delivery without relying on correspondent banks.
This streamlines the payment process and reduces delays and additional costs associated
with intermediary banks. The smart contract cuts out the transaction fee accordingly. A
portion goes to the government and a portion to banks, eliminating the need of intermediary
banks.
6. Funds are automatically deposited into the beneficiary's account through a smart contract,
ensuring efficient and reliable delivery. Alternatively, funds can be made available for
pickup by the beneficiary after their identity has been verified through the KYC process.
7. A comprehensive transaction history is recorded on the distributed ledger, providing a
transparent and immutable record of all transactions. This ledger can be continuously
reviewed by regulators, allowing for thorough auditing, analysis, and monitoring of
financial activities to ensure compliance with regulations and detect any potential
fraudulent or illicit behavior.

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Technical Architecture
Component Rationale
Blockchain Framework:
Hyperledger Fabric
We use Fabric's TLS (Transport Layer Security) & Certificate
Authorities (CAs) for secure communication between endorsers and
clients. It provides endpoint authentication, ensuring secure interactions
with the intended targets. No cryptocurrency is needed as this is a
permissioned blockchain.
Besides, it provides:
- Scalability and high transaction throughput.
- Privacy and confidentiality for sensitive remittance data.
- Modular architecture for customization and integration.
- Secure and trusted network with permissioned blockchain.
- Smart contract automation for efficient processes
Database component:
MongoDB:
Our approach involves storing public data on our dedicated server
powered by MongoDB. As a business-focused platform, we strictly
collect only essential user information, ensuring privacy is safeguarded
and unnecessary data is avoided. This approach eliminates any privacy
breaches. In addition, we implement a permissioned blockchain solution
for on-chain data. This means that organizations cannot access any user
data without explicit user consent. Users retain full control over their
data, and only by actively selecting specific documents can financial
institutions gain access to view those selected documents. This further
reinforces data privacy and user control. Also-NoSQL flexibility, Fast
query performance, JSON integration, Space efficiency, Scalability, and
high availability.
Consensus Mechanism:
Practical Byzantine Fault
Tolerance (PBFT)
- Hyperledger Fabric incorporates the Practical Byzantine Fault
Tolerance.
- Byzantine fault tolerance for reliable remittance transactions.
- Consensus among trusted participants in the network.
- Finality of confirmed transactions for immutability.
- Resilient to malicious actors and network failures.
- Efficient and fast transaction confirmation.
- Ensures agreement even with potential Byzantine behavior.
- Enhances trust and integrity in the remittance system.
- Well-suited for enterprise-grade deployments
System Protocol: IPFS: - Decentralized storage: IPFS distributes data across nodes for
blockchain.
- Immutable and tamper-proof: IPFS ensures secure and unchangeable
data storage.
- Data redundancy: IPFS replicates data for availability, even with
offline nodes.
- Enhanced privacy: Private IPFS selectively shares data, protecting
KYC document privacy.
- Cost-efficient: Private IPFS reduces infrastructure costs with
distributed storage.
- Interoperability: IPFS integrates seamlessly with diverse blockchains.

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Governance
Technology
Infrastructure
Governance
The full nodes are the super nodes that contain the
entire copy of blockchain which makes up private
IPFS. The nodes that act as the regulators are the light
nodes, containing the subset of full nodes.
DeFI Platforms are used for automated alternative to
traditional financial intermediaries like MTOs.
Super nodes in the system have write access to modify
and update the blockchain, while regulators have
read-only access to retrieve and view information.
This separation of access privileges ensures that super
nodes can write data with authority, while regulators
have limited access for monitoring and
auditing purposes.
Business Network
Governance
Governments deploy the rules for the system and the
general public and entities act as consumers. Business
contacts will be upheld through straightforward
contracts and effective information management,
ensuring the integrity of the system. Banks acts as the
KYC verifiers and mediaries for biometric
authentication.
FULL NODES (block
generators): legitimate banks
LIGHT NODES
(Regulators): non-member banks, fintech firms,
merchants, govt body etc.
Network
Membership
Governance
Super nodes/Full nodes and light nodes are connected
through a mesh network and In Hyperledger Fabric's
PBFT-variant consensus, subset of nodes called
endorsers engage in a sequential consensus process
through message exchanges and multiple rounds of
communication. They validate transactions, agree on
their order, and commit them to the blockchain. This
sequential approach ensures consistency and
correctness in the endorsement and ordering of
transactions.

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5. Call for
biometric
information
1. Applicant’s document hash
2. Documents
Private
IPFS
3. Verify Information and Confirmation
4. Confirmation
6. Encrypted Biometric Information
blockchain
Authorized
Passport Officers
Applicants
Fig: Document Verification and Biometric Information collection Diagram

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❖ Competition & Risk
Risks:
Type Source Details
Implementation risk
❖ Digital records
❖ Intermediate
corrupted officials
❖ Political pressure
Crucial task of record digitalization just
started and backlash protest from
intermediate parties.
Technical Risk
Operating system
errors.
Government officials within private
blockchain network may be corrupted
Operational Risk
Not definite that
people will stop using
hundi
No tracking of people earning money
overseas and the lifestyle of their relatives.

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❖ Revenue and Distribution
Revenue will be proportional to the year wise employment overseas. Here is our distribution
model.
Financial Projection

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References
[1] M. Martin, “Hundi/Hawala: The problem of definition,” Mod Asian Stud, vol. 43, no. 4, pp. 909–
937, 2009, doi: 10.1017/S0026749X07003459.
[2] Caroline. Mackenzie and International Organization for Migration., Labour migration in Asia :
protection of migrant workers, support services and enhancing development benefits.
International Organization for Migration, 2005.
[3] V. U. Rajput, “Research on Know Your Customer (KYC),” 2013. [Online]. Available: www.ijsrp.org
[4] S. Jani, “Smart Contracts: Building Blocks for Digital Transformation”, doi:
10.13140/RG.2.2.33316.83847.
[5] C. Xu, C. Liu, D. Nie, and L. Gai, “How Can a Blockchain-Based Anti-Money Laundering System
Improve Customer Due Diligence Process?”

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