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Using Bitcoin for international money transfers

Cryptocurrency could one day offer a simple, safe and affordable way to send money across international borders.

In September 2015, Commonwealth Bank, Westpac alongside Barclays, Credit Suisse and J.P. Morgan participated in the international R3 project with a financial innovation company, Ripple Labs. The R3 project is focused on creating a distributed ledger technology that works much in the same way as the ‘blockchain’ structure on which all Bitcoin transactions are based. The aim of the project was to help the banks transfer funds to one another at a lower cost.

But what sort of impact will Bitcoin have on global finance and will it one day represent a safe and effective international transfer option? Let’s take a closer look.

Disclaimer: This page is not financial advice or an endorsement of digital assets, providers or services. Digital assets are volatile and risky, and past performance is no guarantee of future results. Potential regulations or policies can affect their availability and services provided. Talk with a financial professional before making a decision. Finder or the author may own cryptocurrency discussed on this page.

How to transfer money using bitcoin

Here’s the basic process for transferring money through bitcoin:

  • Deposit your fiat currency (government-issued currency, like dollars, euros and yen) onto a bitcoin platform.
  • Buy bitcoin and send it to your recipient.
  • Your recipient sells the bitcoin for fiat currency on a bitcoin platform.
  • Your recipient withdraws the fiat currency to their bank account.

The process involves a few more steps than using a traditional money transfer platform. What’s more, you have to complete them yourself — nobody takes care of the entire process for you.

What is Bitcoin?

Bitcoin is a form of digital currency that was established in 2008. Commonly referred to as the currency of the Internet, it is based on a peer-to-peer network that allows users to pay others using a digital unit of exchange called Bitcoins. These Bitcoins are stored in the user’s digital wallet.

This alternative payment system removes the need for a centralized authority and instead uses a public ledger known as the ‘blockchain’. This contains all processed Bitcoin transactions and allows new transactions to be verified and a user’s wallet to calculate its spendable balance.

Just like any other currency, the value of Bitcoin is determined by supply and demand, and in its early years it has been known to fluctuate wildly in value. At the time of writing, 1 Bitcoin was worth $404. But if you wind back the clock just a little, after hovering around the $100 to $110 mark in September and October of 2013, by December the value of 1 Bitcoin had climbed above $995.

If you want more information on how and where you can buy Bitcoins, our handy guide has all the details you need.

The impact of Bitcoin

In the early years of its existence, Bitcoin came in for criticism from several quarters due to a range of factors. In some cases, it has received bad press for making it possible for people to anonymously purchase illegal goods online. Its volatility, as demonstrated above, has also been criticized, while others have pointed to the lack of regulation of Bitcoin as grounds for concern. It could lead to money laundering and even the financing of terrorism.

Every new technology is bound to attract its share of criticism. Despite its detractors, Bitcoin does have many potential benefits for a range of people. It has been lauded by international migrants from companies such as the Philippines and India because it offers an affordable way to send money home to their families while working overseas.

Bitcoin’s benefits include low transfer fees, protection against identity theft and the control they allow users to have over their own money.
Bitcoin vs. PayPal

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What types of transfers can you carry out with bitcoin?

Could bitcoin soon offer a safer and more effective way to transfer money around the world?

The involvement of Commonwealth Bank and Westpac in the R3 project shows that the banks are aware that Bitcoin offers plenty of potential benefits for digital commerce. “The development of the blockchain will certainly have a very interesting and potentially disruptive impact on financial services,” Westpac chief executive Brian Hartzer said at the time.

There are also hundreds of other open-source blockchain experiments underway around the world, as financial institutions search for ways to streamline and simplify payments infrastructure. With lower fees on overseas transfers, fast processing of transactions and the ability to cut out the middle man, Bitcoin represents an exciting opportunity for international money transfers.

However, any transition to Bitcoin payments among banks and other established financial institutions is likely to be a slow one. Not only is much of the technology still in development, but regulators around the world are still catching up with the many implications of digital currencies. As research such as the R3 project continues around the world, finding a way to transform the international money transfer market is going to take some time – but the interest shown by large global banks indicates the possibilities.

In the meantime, the way we send money overseas will remain the same. While there is the option of sending a telegraphic transfer via your bank, specialist online money transfer companies still offer a cost-effective solution. It offers better exchange rates and charge minimal transaction fees compared to the banks, so it’s definitely worth considering when you need to send money abroad.
Predicting bitcoin’s future value and exchange rates

Disclaimer: Cryptocurrencies are speculative, complex and involve significant risks – they are highly volatile and sensitive to secondary activity. Performance is unpredictable and past performance is no guarantee of future performance. Consider your own circumstances, and obtain your own advice, before relying on this information. You should also verify the nature of any product or service (including its legal status and relevant regulatory requirements) and consult the relevant Regulators' websites before making any decision. Finder, or the author, may have holdings in the cryptocurrencies discussed.

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6 Responses

    Default Gravatar
    KingMykeSeptember 21, 2018

    Please how can I make a swift bank deposit or wire transfer to someone’s bitcoin wallet ?

      Default Gravatar
      joelmarceloSeptember 21, 2018

      Hi there,

      Thanks for leaving a question on finder.

      You cannot transfer dollars from a bank account directly into a bitcoin wallet.

      You’ll need to sign up with a bitcoin exchange service, there are many in existence. Once you have an account with one of them, you can transfer dollars to the exchange’s bank account, and then your user account will be credited. Next, you will be able to purchase bitcoins at the current market rate through the exchange.

      After that, you can withdraw your bitcoins to a bitcoin wallet you control.

      Please send me a message if you need anything else. :)

      Cheers,
      Joel

    Default Gravatar
    KunleSeptember 17, 2018

    I have a crpto currency company ,where i do buy and sell of bitcoin ,i want to partner with companies that can be selling btcoin to me on discount

      AvatarFinder
      JoshuaSeptember 18, 2018Finder

      Hi Kunle,

      Thanks for getting in touch with finder. I hope all is well with you. :)

      We currently don’t have a list of crypto companies that might be interested in doing business with you. However, you might want to start your search from looking at our list of exchanges. It’s a good place to start your search.

      I hope this helps. Should you have further questions, please don’t hesitate to reach us out again.

      Have a wonderful day!

      Cheers,
      Joshua

    Default Gravatar
    gloryOctober 4, 2017

    I want to transfer money from south Africa to US using bitcoin so I want to know the starting point ?

      AvatarFinder
      JudithOctober 4, 2017Finder

      Hi Glory,

      Thanks for contacting finder, a comparison website and general information service.

      You may send bitcoin worldwide through a wallet-to-wallet transfer. The recipient of the sent bitcoins would also need to have an active bitcoin wallet to be able to receive the sent bitcoin.

      I hope this helps.

      Regards,
      Judith

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