7 ms·

Western Union: Bitcoin isn’t ready for international money transfer yet

35 points by cdvonstinkpot 13y ago

drewblaisdell 13y ago
(1977) IBM: Personal Computer Not Ready for Primetime Yet.
- chollida1 13y ago
  To be fair if they did say that, they were right. It wasn't until 1981 that the PC market started to take off.
  - drewblaisdell 13y ago
    The PC market of 1981 was taking off with the personal computer of 1977.
    - AsymetricCom 13y ago
      With a price from 1981
    - alphaoverlord 13y ago
      It's never just about the product. There's also the market, the logistics, and the peripherals. Even if it is the same product and "before its time", it's still before its time.
jasonlingx 13y ago
The biggest reason it is not ready for prime time: security. The regular user is very likely to get all their bitcoin stolen from them sooner or later. Heck, even the people running the exchanges and other bitcoin services get hacked all the time. There simply is no good way to secure bitcoin for the regular joe at this point in time.
- jedunnigan 13y ago
  I would say the largest existential threat to Bitcoin is scale. All the problems cited by WU are fixable; same with user security. However, dumping even half of the Visa/MC daily tx volume would bring the network to a halt. The transaction fee scheme has issues as is, it needs to be reworked before it can handle even double the current daily volume. [need to find source, gavin mentioned it somewhere] We could raise the block size, but that's no free lunch (makes it more costly to run a node, etc...), things could go off chain, we could use Ripple, etc... etc. Point being, something will need to change before the big players come in, and it's more than just liquidity and user security.
  - DennisP 13y ago
    Use offchain transactions for most things and onchain just to settle balances between service providers, and you could scale to major currency levels. Keep the number of transactions per block limited, and transaction fees could be maintained high enough to avoid the "bitcoin tragedy of the commons." That doesn't seem to be the direction they're going, though.
    - jedunnigan 13y ago
      Off chain is always a solution, but requires some form of trust in most situations. In all honesty I see Bitcoin becoming more of a commodity in the long term, and it is traded sparingly, or other coins/digital currencies are built that allow you to peg the value of Bitcoin to them, as to move it faster. This is just speculation, of course.
- ye 13y ago
  > There simply is no good way to secure bitcoin for the regular joe at this point in time. My coworker has a regular checking account. One day he noticed he had something like $20K missing. He called the bank, they have a long conversaton, put him on hold, long long hold, then they say "Your money is back, let's never talk of this incident again". If he hadn't noticed it, he would be out $20K.
DigitalSea 13y ago
Western Union are sort of right. Bitcoin although more stable recently than it ever has been, is still pretty unpredictable and laws surrounding its use are somewhat untested in a lot of regions. When Silkroad shutdown it cast a new light on Bitcoin, people think Bitcoin is for buying illicit drugs anonymously and don't currently see it as a valid alternative to actual currency, at least not yet. Once more and more countries release their stance on the currency, then Bitcoin might be ready for the prime-time.
nl 13y ago
One of the big sticking points is liquidity, he argues, adding that family support payments can currently only be useful once converted to local fiat currencies. “We’re a long, long way from sending momma in Mexico $240 each month or a Somali family in a refugee camp $200 each month in bitcoin that is held in a wallet for conversion to local fiat currency and spending as needed,” he suggests. This is absolutely the case. It's worth noting that there are tremendous opportunities for arbitrage in a market like that too.
- marcell 13y ago
  > This is absolutely the case. Is it? Assuming users don't wish to hold BTC directly, the buys and sells should match up in the long run, and the only costs will be exchange fees. Implementing international remittance will probably help bitcoin liquidity.
  - nl 13y ago
    Yes, it is the case right now, because the long-term balance doesn't help the person with short term needs. Go to a Somali refugee camp in Kenya and attempt to exchange your Bitcoin at anything approaching international market rates. This doesn't mean it will always be like that, though. The arbitrage opportunities (if nothing else) make it too attractive for that need to remain unserviced. (I speculate elsewhere about alternative international payment networks may fit perfectly into this model: https://news.ycombinator.com/item?id=6666899 https://news.ycombinator.com/item?id=6666899)
ye 13y ago
I'm actually in the middle of transferring a large sum of money between countries. WesternUnion would cost me at least 4.5%, their fee calculator doesn't even support large amounts. Bitcoin will cost me around 1.0% in fees (including USD wire-in, buy bitcoin, sell for Euro, SEPA-out). Guess which method I will be using.
- kristianp 13y ago
  Western Union is very expensive compared to an online trader like xe.com. I'd say that would be more comparable.
  - ye 13y ago
    xe.com was the other option I considered, but they are very secretive about the wire transfer fees out of their account. I didn't want to risk getting ripped off.
- cstrat 13y ago
  You might also get lucky that the value will increase throughout the process - it might also drop. With WU and XE and other exchanges at least you have certainty of the final converted amount you will end up with.
- usaphp 13y ago
  Did you try using a bank wire transfer? I've transferred money from US to Russia via bank wire transfer and they had a flat fee ($45) which is perfect for large amounts.
  - joezydeco 13y ago
    Except you had all those pesky FinCEN forms to fill out, right?
    - wmf 13y ago
      You'll have to go through the same know your customer at a Bitcoin exchange (twice if you go through two exchanges) and then the exchange may also randomly decide to decline your transaction due to "risk".
DennisP 13y ago
"For bitcoin to overcome these regulatory challenges, there are several 'areas of improvement,' he says. These include customer identification and due diligence, verifying ownership and control of wallet addresses, and transaction monitoring for fraud. Bitcoin institutions must prevent transfers that would violate OFAC (Office of Foreign Asset Control) sanctions or the UIGEA (Unlawful Internet Gambling Enforcement Act)." If he's serious I don't think he understands much about bitcoin. (More likely, he's trying to preserve a role for Western Union.)
- jpatokal 13y ago
  I think he understands it just fine. Those aren't a problem with Bitcoin itself, but they're very much a problem for any entity like Western Union that has to abide by legal and financial regulations in all its business.
gexla 13y ago
Translation: There is a lot of opportunity with Bitcoin and remittances.
badinker 13y ago
Does anyone expect a company like Western Union to come out and endorse a currency that can be transferred nearly instantly for practically nothing???!!!
- kbaker 13y ago
  This is their biggest issue... They have no incentive to bootstrap and provide legitimacy to what would end up becoming their biggest competitor in the future. They are stuck - they can see the short-term huge benefits and profits from being a trusted middleman, but once it takes off and becomes accepted in the mainstream they would be cut out of the picture (and forced to pivot again...)
yawaramin 13y ago
... in other news, Blockbuster says Netflix isn't ready for the national movie rental market yet.

35 points by cdvonstinkpot 13y ago

drewblaisdell 13y ago

(1977) IBM: Personal Computer Not Ready for Primetime Yet.

chollida1 13y ago
To be fair if they did say that, they were right. It wasn't until 1981 that the PC market started to take off.
- drewblaisdell 13y ago
  The PC market of 1981 was taking off with the personal computer of 1977.
  - AsymetricCom 13y ago
    With a price from 1981
  - alphaoverlord 13y ago
    It's never just about the product. There's also the market, the logistics, and the peripherals. Even if it is the same product and "before its time", it's still before its time.

jasonlingx 13y ago

The biggest reason it is not ready for prime time: security. The regular user is very likely to get all their bitcoin stolen from them sooner or later. Heck, even the people running the exchanges and other bitcoin services get hacked all the time. There simply is no good way to secure bitcoin for the regular joe at this point in time.

jedunnigan 13y ago
I would say the largest existential threat to Bitcoin is scale. All the problems cited by WU are fixable; same with user security. However, dumping even half of the Visa/MC daily tx volume would bring the network to a halt. The transaction fee scheme has issues as is, it needs to be reworked before it can handle even double the current daily volume. [need to find source, gavin mentioned it somewhere] We could raise the block size, but that's no free lunch (makes it more costly to run a node, etc...), things could go off chain, we could use Ripple, etc... etc. Point being, something will need to change before the big players come in, and it's more than just liquidity and user security.
- DennisP 13y ago
  Use offchain transactions for most things and onchain just to settle balances between service providers, and you could scale to major currency levels. Keep the number of transactions per block limited, and transaction fees could be maintained high enough to avoid the "bitcoin tragedy of the commons." That doesn't seem to be the direction they're going, though.
  - jedunnigan 13y ago
    Off chain is always a solution, but requires some form of trust in most situations. In all honesty I see Bitcoin becoming more of a commodity in the long term, and it is traded sparingly, or other coins/digital currencies are built that allow you to peg the value of Bitcoin to them, as to move it faster. This is just speculation, of course.
ye 13y ago
> There simply is no good way to secure bitcoin for the regular joe at this point in time. My coworker has a regular checking account. One day he noticed he had something like $20K missing. He called the bank, they have a long conversaton, put him on hold, long long hold, then they say "Your money is back, let's never talk of this incident again". If he hadn't noticed it, he would be out $20K.

DigitalSea 13y ago

Western Union are sort of right. Bitcoin although more stable recently than it ever has been, is still pretty unpredictable and laws surrounding its use are somewhat untested in a lot of regions. When Silkroad shutdown it cast a new light on Bitcoin, people think Bitcoin is for buying illicit drugs anonymously and don't currently see it as a valid alternative to actual currency, at least not yet. Once more and more countries release their stance on the currency, then Bitcoin might be ready for the prime-time.

nl 13y ago

One of the big sticking points is liquidity, he argues, adding that family support payments can currently only be useful once converted to local fiat currencies. “We’re a long, long way from sending momma in Mexico $240 each month or a Somali family in a refugee camp $200 each month in bitcoin that is held in a wallet for conversion to local fiat currency and spending as needed,” he suggests. This is absolutely the case. It's worth noting that there are tremendous opportunities for arbitrage in a market like that too.

marcell 13y ago
> This is absolutely the case. Is it? Assuming users don't wish to hold BTC directly, the buys and sells should match up in the long run, and the only costs will be exchange fees. Implementing international remittance will probably help bitcoin liquidity.
- nl 13y ago
  Yes, it is the case right now, because the long-term balance doesn't help the person with short term needs. Go to a Somali refugee camp in Kenya and attempt to exchange your Bitcoin at anything approaching international market rates. This doesn't mean it will always be like that, though. The arbitrage opportunities (if nothing else) make it too attractive for that need to remain unserviced. (I speculate elsewhere about alternative international payment networks may fit perfectly into this model: https://news.ycombinator.com/item?id=6666899 https://news.ycombinator.com/item?id=6666899)

ye 13y ago

I'm actually in the middle of transferring a large sum of money between countries. WesternUnion would cost me at least 4.5%, their fee calculator doesn't even support large amounts. Bitcoin will cost me around 1.0% in fees (including USD wire-in, buy bitcoin, sell for Euro, SEPA-out). Guess which method I will be using.

kristianp 13y ago
Western Union is very expensive compared to an online trader like xe.com. I'd say that would be more comparable.
- ye 13y ago
  xe.com was the other option I considered, but they are very secretive about the wire transfer fees out of their account. I didn't want to risk getting ripped off.
cstrat 13y ago
You might also get lucky that the value will increase throughout the process - it might also drop. With WU and XE and other exchanges at least you have certainty of the final converted amount you will end up with.
usaphp 13y ago
Did you try using a bank wire transfer? I've transferred money from US to Russia via bank wire transfer and they had a flat fee ($45) which is perfect for large amounts.
- joezydeco 13y ago
  Except you had all those pesky FinCEN forms to fill out, right?
  - wmf 13y ago
    You'll have to go through the same know your customer at a Bitcoin exchange (twice if you go through two exchanges) and then the exchange may also randomly decide to decline your transaction due to "risk".

DennisP 13y ago

"For bitcoin to overcome these regulatory challenges, there are several 'areas of improvement,' he says. These include customer identification and due diligence, verifying ownership and control of wallet addresses, and transaction monitoring for fraud. Bitcoin institutions must prevent transfers that would violate OFAC (Office of Foreign Asset Control) sanctions or the UIGEA (Unlawful Internet Gambling Enforcement Act)." If he's serious I don't think he understands much about bitcoin. (More likely, he's trying to preserve a role for Western Union.)

jpatokal 13y ago
I think he understands it just fine. Those aren't a problem with Bitcoin itself, but they're very much a problem for any entity like Western Union that has to abide by legal and financial regulations in all its business.

gexla 13y ago

Translation: There is a lot of opportunity with Bitcoin and remittances.

badinker 13y ago

Does anyone expect a company like Western Union to come out and endorse a currency that can be transferred nearly instantly for practically nothing???!!!

kbaker 13y ago
This is their biggest issue... They have no incentive to bootstrap and provide legitimacy to what would end up becoming their biggest competitor in the future. They are stuck - they can see the short-term huge benefits and profits from being a trusted middleman, but once it takes off and becomes accepted in the mainstream they would be cut out of the picture (and forced to pivot again...)

yawaramin 13y ago

... in other news, Blockbuster says Netflix isn't ready for the national movie rental market yet.