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> This is absurd. I spend money by wire transfer all the time. A good 80% or so of my ebay shopping would be wore transfers to merchants in Hong Kong via Paypal

> This is absurd. I spend money by wire transfer all the time. A good 80% or so of my ebay shopping would be wore transfers to merchants in Hong Kong via Paypal. It's worth noting that EFTs (Electronic Funds Transfers) between domestic banks in Australia is nearly always free, and that in your case you're not transferring money overseas at all. You are transferring money to PayPal Australia, who is then communicating to PayPal Hong Kong that all is well - so that PayPal Hong Kong can pay the merchant. Both entities can transfer to/from local bank accounts because they have explicitly set up B2B interfaces (and met regulations) that allow them to do so. In this case, PayPal is the bank, and they are a bank seeking to specifically facilitate money transfers between countries. You could not, for example, transfer money to a merchant in (e.g.) Siberia - they wouldn't be able to get that money out of PayPal into their regular bank account, because PayPal has no local presence/connection to the banks there.

XorNot 12y ago
This is the exact same thing involved in Bitcoin funds transfer.
- ncallaway 12y ago
  The article explicitly notes that PayPal is offering a very similar service. They argue that the open nature of Bitcoin is a competitive advantage to the network in the long run. From the article: "This would not, of course, be the first global payments network. One obvious comparison is with PayPal. The fundamental advantage a Bitcoin gateway ecosystem has over PayPal is that it’s open".
  - XorNot 12y ago
    Transacting in US dollars accomplishes the same thing, with far less volatility. In fact, transacting in any commonly exchanged currency does (US is the global reserve for this reason - you can exchange US dollars for any currency on the planet - notably Chinese currency - easily). Moreover, there's no benefit here: dealing with separate Bitcoin services removes any end-user guarantees. If I send money from Australia to England, Paypal Australia has to deal with the Australian government and the British government to obey consumer law. With a Bitcoin exchanger, once the BTC is transferred you're at the mercy of whatever local exchanger you use at the destination. Paypal wants to stay in both countries, which means there's an end-to-end legal protection for both parties. The open-nature of Bitcoin is irrelevant. The USD is pretty damn open.
  - sida 12y ago
    I can't reply the comment below so I will reply to this one. XorNot: Please correct me if I am wrong. USD is not a relevant comparison. What matters here is how money gets moved. When money is transferred within the country, a central bank (Fed Reserve, Bank of England, Reserve Bank of Australia) keeps an account for each local bank. Which means that when 'Alice' of Wells Fargo sends money to 'Bob' at Chase, the central bank actually debits and credits the banks. And then several times a day the banks will settle with each other and net out the differences. But this is not possible internationally, that means banks must each other have direct bank relationship and have an account with each other. And if 2 banks don't have direct relationship, then they have to go through intermediary banks which they do have a relationship. Enters Bitcoin, what bitcoin provides is not a reserve currency, what it provides in this context is a global ledger. Instead of the Commonwealth bank of Australia (CBA) needing to have a direct account relationship with Wells Fargo (WF) bank. CBA can just simply send bitcoin to WF. There is a bit more about the underlying transfers here: http://gendal.wordpress.com/2013/11/24/a-simple-explanation-of-how-money-moves-around-the-banking-system/ http://gendal.wordpress.com/2013/11/24/a-simple-explanation-... Although here is my question: Why doesn't international transfers just go through the VISA network. The VISA network is essentially the global central bank
    - gendal 12y ago
      Remember that many (most?) recipients of international remittances don't have bank accounts or access to payment cards. Hence why Western Union et al have to maintain extensive agent networks. As for visa, I wrote about it recently here: http://gendal.wordpress.com/2014/07/05/why-the-payment-card-system-works-the-way-it-does-and-why-bitcoin-isnt-going-to-replace-it-any-time-soon/ http://gendal.wordpress.com/2014/07/05/why-the-payment-card-... The thing to remember is that Visa authorisations are done in near real-time but settlement between issuers, Visa, acquirers and on to merchants is done over the normal banking system, as far as I know.
      - sida 12y ago
        Does it mean that even if it goes through the VISA network. Actual settlements still have to hop through layers of peering banks? Do you see an advantage for bitcoin then by removing the need of peering banks?

XorNot 12y ago

This is the exact same thing involved in Bitcoin funds transfer.

ncallaway 12y ago
The article explicitly notes that PayPal is offering a very similar service. They argue that the open nature of Bitcoin is a competitive advantage to the network in the long run. From the article: "This would not, of course, be the first global payments network. One obvious comparison is with PayPal. The fundamental advantage a Bitcoin gateway ecosystem has over PayPal is that it’s open".
- XorNot 12y ago
  Transacting in US dollars accomplishes the same thing, with far less volatility. In fact, transacting in any commonly exchanged currency does (US is the global reserve for this reason - you can exchange US dollars for any currency on the planet - notably Chinese currency - easily). Moreover, there's no benefit here: dealing with separate Bitcoin services removes any end-user guarantees. If I send money from Australia to England, Paypal Australia has to deal with the Australian government and the British government to obey consumer law. With a Bitcoin exchanger, once the BTC is transferred you're at the mercy of whatever local exchanger you use at the destination. Paypal wants to stay in both countries, which means there's an end-to-end legal protection for both parties. The open-nature of Bitcoin is irrelevant. The USD is pretty damn open.
- sida 12y ago
  I can't reply the comment below so I will reply to this one. XorNot: Please correct me if I am wrong. USD is not a relevant comparison. What matters here is how money gets moved. When money is transferred within the country, a central bank (Fed Reserve, Bank of England, Reserve Bank of Australia) keeps an account for each local bank. Which means that when 'Alice' of Wells Fargo sends money to 'Bob' at Chase, the central bank actually debits and credits the banks. And then several times a day the banks will settle with each other and net out the differences. But this is not possible internationally, that means banks must each other have direct bank relationship and have an account with each other. And if 2 banks don't have direct relationship, then they have to go through intermediary banks which they do have a relationship. Enters Bitcoin, what bitcoin provides is not a reserve currency, what it provides in this context is a global ledger. Instead of the Commonwealth bank of Australia (CBA) needing to have a direct account relationship with Wells Fargo (WF) bank. CBA can just simply send bitcoin to WF. There is a bit more about the underlying transfers here: http://gendal.wordpress.com/2013/11/24/a-simple-explanation-of-how-money-moves-around-the-banking-system/ http://gendal.wordpress.com/2013/11/24/a-simple-explanation-... Although here is my question: Why doesn't international transfers just go through the VISA network. The VISA network is essentially the global central bank
  - gendal 12y ago
    Remember that many (most?) recipients of international remittances don't have bank accounts or access to payment cards. Hence why Western Union et al have to maintain extensive agent networks. As for visa, I wrote about it recently here: http://gendal.wordpress.com/2014/07/05/why-the-payment-card-system-works-the-way-it-does-and-why-bitcoin-isnt-going-to-replace-it-any-time-soon/ http://gendal.wordpress.com/2014/07/05/why-the-payment-card-... The thing to remember is that Visa authorisations are done in near real-time but settlement between issuers, Visa, acquirers and on to merchants is done over the normal banking system, as far as I know.
    - sida 12y ago
      Does it mean that even if it goes through the VISA network. Actual settlements still have to hop through layers of peering banks? Do you see an advantage for bitcoin then by removing the need of peering banks?