3 ms·

I imagine there are also fees involved to turn $1B worth of bitcoins to local currency.

vmception 6y ago
There are, there is also a parallel global economy that allows for obtaining goods, services and investing in private equity or other assets directly using bitcoin, so those conversion fees are not an issue for the bitcoin owner. To counter the easiest rebuttal, there probably are only about $1bn worth of things to buy using bitcoin any given day, most of which are other new digital assets that would not be a great investment and would otherwise struggle to obtain any purchases. But for reference, in today's market you could expect to be able to negotiate a 1-2% spread in converting $1Bn in bitcoin to US Dollars. It would have to be multiple orders throughout the day as an OTC dealer will quote on price for $100m and a different price for $1bn. Block orders in the bitcoin OTC market often has more daily volume than the lit market on exchanges. Similar to other commodities markets.
- greenshackle2 6y ago
  Yeah, if you're fully buying into BTC, doing BTC transfer makes obvious sense. I was trying to see which is cheaper for the use case of "I hold USD in the US, I want to spend it locally as HKD in Hong Kong", which I think is what pbhjpbhj is asking.
  - vmception 6y ago
    yes that is one use case of digital assets like BTC: converting any international money transfer to a domestic money transfer, greatly reducing compliance flags, time and possibilities of banking errors that no bank wants to be accountable for and figure out themselves. often times leaving no record in payment networks like SWIFT, because only two local payment networks were used, one in their respective monetary union. the cost is 100% tied to liquidity of that market. the bigger and deeper the market, the lower the transaction cost. It is more likely that HKD's bitcoin market would be less liquid than USD's bitcoin market, so you would want your bank in Hong Kong to accept a USD deposit from a local OTC broker, and then convert to HKD at that point if you wanted or needed it.
- londons_explore 6y ago
  Even a $1M order has more than 1-2% slippage in my experience... $1B will probably have much more.
  - vmception 6y ago
    Negotiate harder, and in USD. Typically I will begin placing an order with two OTC desks at the same time, while also looking at exchange order books. I game the brokers against each other. If it is a smaller order (5 - 6 figures) I will compare Coinbase Pro's fees with whatever my OTC desk is telling me. OTC has to be less than Coinbase Pro. So thats how I pretty much guarantee a less than 1% fee. $1bn = multiple OTC desks and multiple orders. The bitcoin market is much deeper than people think and gets deeper every day.
    - rdbell 6y ago
      Thanks for the firsthand insight!

There are, there is also a parallel global economy that allows for obtaining goods, services and investing in private equity or other assets directly using bitcoin, so those conversion fees are not an issue for the bitcoin owner. To counter the easiest rebuttal, there probably are only about $1bn worth of things to buy using bitcoin any given day, most of which are other new digital assets that would not be a great investment and would otherwise struggle to obtain any purchases. But for reference, in today's market you could expect to be able to negotiate a 1-2% spread in converting $1Bn in bitcoin to US Dollars. It would have to be multiple orders throughout the day as an OTC dealer will quote on price for $100m and a different price for $1bn. Block orders in the bitcoin OTC market often has more daily volume than the lit market on exchanges. Similar to other commodities markets.

greenshackle2 6y ago
Yeah, if you're fully buying into BTC, doing BTC transfer makes obvious sense. I was trying to see which is cheaper for the use case of "I hold USD in the US, I want to spend it locally as HKD in Hong Kong", which I think is what pbhjpbhj is asking.
- vmception 6y ago
  yes that is one use case of digital assets like BTC: converting any international money transfer to a domestic money transfer, greatly reducing compliance flags, time and possibilities of banking errors that no bank wants to be accountable for and figure out themselves. often times leaving no record in payment networks like SWIFT, because only two local payment networks were used, one in their respective monetary union. the cost is 100% tied to liquidity of that market. the bigger and deeper the market, the lower the transaction cost. It is more likely that HKD's bitcoin market would be less liquid than USD's bitcoin market, so you would want your bank in Hong Kong to accept a USD deposit from a local OTC broker, and then convert to HKD at that point if you wanted or needed it.
londons_explore 6y ago
Even a $1M order has more than 1-2% slippage in my experience... $1B will probably have much more.
- vmception 6y ago
  Negotiate harder, and in USD. Typically I will begin placing an order with two OTC desks at the same time, while also looking at exchange order books. I game the brokers against each other. If it is a smaller order (5 - 6 figures) I will compare Coinbase Pro's fees with whatever my OTC desk is telling me. OTC has to be less than Coinbase Pro. So thats how I pretty much guarantee a less than 1% fee. $1bn = multiple OTC desks and multiple orders. The bitcoin market is much deeper than people think and gets deeper every day.
  - rdbell 6y ago
    Thanks for the firsthand insight!