5 ms·

As a country where remittances make up roughly 20% of the GDP, and with remittance fees as high as 20% or more, this could boost GDP by 4-5%. Not surprising to

As a country where remittances make up roughly 20% of the GDP, and with remittance fees as high as 20% or more, this could boost GDP by 4-5%. Not surprising to see them be the first to do this. Others will likely follow.

arcticbull 5y ago
Well if you include the fact you have to pay 1-2% to an exchange to move USD->BTC, and your $0.50-60.00 transaction fee then wait a day or so, and deal with astronomical FOREX risk in the meantime (like today's 30% instant drop in BTC) suddenly Western Union doesn't look so bad. Especially since Western Union actually hands you cash which you have to get out of one of the Bitcoin ATMs that eats 20% of your withdrawal lol. Remember Strike is a centralized custodial wallet offering so not actually Bitcoin. They only use their own private LN to transfer Bitcoin between their own two custodial accounts (which they could elide entirely by using a spreadsheet lol). If they really cared about remittances Bukele would make a deal with TransferWise. That's not what this is about, at all.
- quantumBerry 5y ago
  What exchange are you using? A major exchange like Kraken charges ~.25% for small traders and lower for bigger ones. You can also buy face to face from someone; if you're lucky someone may need to dump some coin and be willing to trade at par with market. If I'm an el salvadoran with no documentation in the US I can send my $15k wages for like $40 to any individual in El Salvador (who can now use it as currency once on the appropriate local network) without getting rammed by Uncle Sam's large dong while trying to transfer. It's incomparable to Western Union.
  - arcticbull 5y ago
    Coinbase. Where I suspect most people actually transact.
    - quantumBerry 5y ago
      Can you think of a traditional international transfer service that has better rates for <1k transfer than coinbase (0.5%) ? I could buy LTC or BCH on coinbase and have pennies of transaction fees beyond the exchange fees. I think the only thing cheaper may be to find some company that allows international wire for very cheap, and that normally requires holding a lot of fiat in the bank.
      - arcticbull 5y ago
        0.5% + an on-chain transaction fee, which varies between $0.50 and $60.00, and of course, you have to price in exchange rate slippage over the course of your (a) initial transaction and (b) the hours-long confirmation times of a BTC payment. BTCs top tercile realized volatility is 79% [2]. Then there's the risk your exchange just up and keeps your money (counter-party risk, see Quadriga). Or that the recipients exchange does (counter-party risk, see Quadriga). Since USD is an official currency of El Salvador, you can just send a USD wire without currency conversion fees, that can be up to $50 -- but Fidelity charges $0. [3] You could also set up a Wise multi-currency account, which is supported in El Salvador. You'll get banking details in the US (and many other jurisdictions) to which you can ACH money free of charge, or receive a Fedwire for $7. [1] [edit] If you need to send small amounts of money, Wise is hard to beat. If you need to send big money, InteractiveBrokers Forex trading is the definition of market rate, and their commission is 0.002% (2/10th of a basis point), minimum $2. So, $20 per million. This has been a solved problem for a very long time. [1] https://wise.com/multi-currency-account/ https://wise.com/multi-currency-account/ [2] https://www.nasdaq.com/articles/the-best-way-to-understand-bitcoin-volatility-2021-05-19 https://www.nasdaq.com/articles/the-best-way-to-understand-b... [3] https://www.nerdwallet.com/article/banking/wire-transfers-what-banks-charge https://www.nerdwallet.com/article/banking/wire-transfers-wh...
        quantumBerry 5y ago
        How many even middle class Americans have a fidelity account? Do you think the average El Salvadoran sending remittance AND their counterpart are banked with low cost access to international wire transfer? Transferring crypto, without KYC (which is a real concern for persons from central america who may not have documentation for a bank account or legal status in the US), for $~3 in transfer fees plus whatever rate they can get face-to-face (which could be near 0% exchange fee) is damn good. I doubt most of these marginalized workers in the US (not all El Salvadorans, I'm sure there are plenty of rich ones with Fidelity accounts who haven't been the utilitarian use case for crypto transfer) could do better without packing up a bundle of cash and travelling to El Salvador on a plane.
99_00 5y ago
Do people actually use high fee and slow regulated remittance services? Or do they use low fee unregulated traditional informal systems? https://en.wikipedia.org/wiki/Informal_value_transfer_system https://en.wikipedia.org/wiki/Informal_value_transfer_system
JumpCrisscross 5y ago
> remittance fees as high as 20% or more Average remittance costs for El Salvador are between 1.67% and 4.33%, with the average being 2.85% [1]. Meanwhile, the two Bitcoin ATMs in the country charged a 5% fee. [1] https://sites.krieger.jhu.edu/iae/files/2021/06/Bukeles-Bitcoin-Blunder-Final.pdf https://sites.krieger.jhu.edu/iae/files/2021/06/Bukeles-Bitc...
- quantumBerry 5y ago
  Allowing BTC to function as currency bypasses the fiat conversion at the ATM; so your statement emboldens the argument for El Salvador making it a legal tender.

arcticbull 5y ago

Well if you include the fact you have to pay 1-2% to an exchange to move USD->BTC, and your $0.50-60.00 transaction fee then wait a day or so, and deal with astronomical FOREX risk in the meantime (like today's 30% instant drop in BTC) suddenly Western Union doesn't look so bad. Especially since Western Union actually hands you cash which you have to get out of one of the Bitcoin ATMs that eats 20% of your withdrawal lol. Remember Strike is a centralized custodial wallet offering so not actually Bitcoin. They only use their own private LN to transfer Bitcoin between their own two custodial accounts (which they could elide entirely by using a spreadsheet lol). If they really cared about remittances Bukele would make a deal with TransferWise. That's not what this is about, at all.

quantumBerry 5y ago
What exchange are you using? A major exchange like Kraken charges ~.25% for small traders and lower for bigger ones. You can also buy face to face from someone; if you're lucky someone may need to dump some coin and be willing to trade at par with market. If I'm an el salvadoran with no documentation in the US I can send my $15k wages for like $40 to any individual in El Salvador (who can now use it as currency once on the appropriate local network) without getting rammed by Uncle Sam's large dong while trying to transfer. It's incomparable to Western Union.
- arcticbull 5y ago
  Coinbase. Where I suspect most people actually transact.
  - quantumBerry 5y ago
    Can you think of a traditional international transfer service that has better rates for <1k transfer than coinbase (0.5%) ? I could buy LTC or BCH on coinbase and have pennies of transaction fees beyond the exchange fees. I think the only thing cheaper may be to find some company that allows international wire for very cheap, and that normally requires holding a lot of fiat in the bank.
    - arcticbull 5y ago
      0.5% + an on-chain transaction fee, which varies between $0.50 and $60.00, and of course, you have to price in exchange rate slippage over the course of your (a) initial transaction and (b) the hours-long confirmation times of a BTC payment. BTCs top tercile realized volatility is 79% [2]. Then there's the risk your exchange just up and keeps your money (counter-party risk, see Quadriga). Or that the recipients exchange does (counter-party risk, see Quadriga). Since USD is an official currency of El Salvador, you can just send a USD wire without currency conversion fees, that can be up to $50 -- but Fidelity charges $0. [3] You could also set up a Wise multi-currency account, which is supported in El Salvador. You'll get banking details in the US (and many other jurisdictions) to which you can ACH money free of charge, or receive a Fedwire for $7. [1] [edit] If you need to send small amounts of money, Wise is hard to beat. If you need to send big money, InteractiveBrokers Forex trading is the definition of market rate, and their commission is 0.002% (2/10th of a basis point), minimum $2. So, $20 per million. This has been a solved problem for a very long time. [1] https://wise.com/multi-currency-account/ https://wise.com/multi-currency-account/ [2] https://www.nasdaq.com/articles/the-best-way-to-understand-bitcoin-volatility-2021-05-19 https://www.nasdaq.com/articles/the-best-way-to-understand-b... [3] https://www.nerdwallet.com/article/banking/wire-transfers-what-banks-charge https://www.nerdwallet.com/article/banking/wire-transfers-wh...
      - quantumBerry 5y ago
        How many even middle class Americans have a fidelity account? Do you think the average El Salvadoran sending remittance AND their counterpart are banked with low cost access to international wire transfer? Transferring crypto, without KYC (which is a real concern for persons from central america who may not have documentation for a bank account or legal status in the US), for $~3 in transfer fees plus whatever rate they can get face-to-face (which could be near 0% exchange fee) is damn good. I doubt most of these marginalized workers in the US (not all El Salvadorans, I'm sure there are plenty of rich ones with Fidelity accounts who haven't been the utilitarian use case for crypto transfer) could do better without packing up a bundle of cash and travelling to El Salvador on a plane.

99_00 5y ago

Do people actually use high fee and slow regulated remittance services? Or do they use low fee unregulated traditional informal systems? https://en.wikipedia.org/wiki/Informal_value_transfer_system https://en.wikipedia.org/wiki/Informal_value_transfer_system

JumpCrisscross 5y ago

> remittance fees as high as 20% or more Average remittance costs for El Salvador are between 1.67% and 4.33%, with the average being 2.85% [1]. Meanwhile, the two Bitcoin ATMs in the country charged a 5% fee. [1] https://sites.krieger.jhu.edu/iae/files/2021/06/Bukeles-Bitcoin-Blunder-Final.pdf https://sites.krieger.jhu.edu/iae/files/2021/06/Bukeles-Bitc...

quantumBerry 5y ago
Allowing BTC to function as currency bypasses the fiat conversion at the ATM; so your statement emboldens the argument for El Salvador making it a legal tender.