Using bitcoin for international money transfers
Bitcoin could one day offer a simple, safe and affordable way to send money across international borders.
Conducting a wire transfer to send money overseas with a Canadian bank is not only expensive but can also easily take up to five days or more. If you’re looking for a more affordable service, money transfer companies like TorFX and XE Money Transfer can be a good place to start. For those daring souls looking to modernize the way they send money overseas, bitcoin is emerging as a way to send and receive money across borders without the need for an intermediary like the bank or a money transfer service.
What is bitcoin?
Bitcoin is a decentralized global digital currency that runs on a peer-to-peer network called blockchain. A bitcoin itself is essentially a line of computer code that’s signed digitally when it goes from one owner to another. When a user purchases a bitcoin, it will be stored online in a “digital wallet”, and can be used to buy goods and services online and in-store, wherever bitcoin is accepted as a payment method. This payment system removes the need for a centralized authority (like the bank) and instead uses a public ledger to track all processed transactions. Many Canadian platforms like Coinbase or Coinmama will sell bitcoins to users for a fee.
How much is bitcoin worth?
In 2010, bitcoin was worth a piddly eight cents but over time it’s accumulated value and each coin is now worth thousands. While a few lucky souls managed to cash in on bitcoin when it was first introduced, it’s much more expensive to purchase bitcoins now (around $8,158 as of 17 September 2018). Bitcoin is a notoriously volatile currency, so it can swing from one extreme to another without warning. For example, Bitcoin surged up to $19,000 in December of 2017, but now hovers around an average of $8,000. For this reason, many experts have developed an understanding about how the cryptocurrency is bought and sold, and which factors affect the price. Two of the most important factors are the number of bitcoins that will be created as well as bitcoin’s market share in the world of cryptocurrency.
The downsides of bitcoin
Bitcoin has come under fire in recent years for a number of reasons. One of the main criticisms for bitcoin is that due to its anonymity and lack of regulation, the currency can be used to finance illegal operations, including money laundering and terrorism. Others criticize the volatility of the currency, since it is more lucrative for day traders and short-term investors but is less suited to investors who have a buy-and-hold strategy. There are also widespread environmental concerns related to bitcoin, stemming from the process of “mining” for bitcoins, which requires enormous amounts of energy.
The benefits of bitcoin
In addition to bitcoin’s low transfer fees, secure trading platforms and simple peer-to-peer transfer system, the currency has also been applauded by international migrants from countries such as the Philippines and India because it offers an affordable way to send money home to their families while working overseas. Given bitcoin’s many benefits, banks and private companies are leaning more towards blockchain technology to develop digital commerce platforms. There are also hundreds of other open-source blockchain experiments taking place around the world, as financial institutions search for ways to streamline and simplify their processes.
Paving the way for international money transfers
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. While it will likely take some time for the international money transfer market to welcome bitcoin with open arms, this cryptocurrency is continuously evolving and working out the kinks. In the meantime, the way we send money overseas will remain largely the same. You can pay more to send a wire transfer with your bank, or tap into an online money transfer company to access bank-beating exchange rates and fees.
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