6 ms·

"big banks charge only cents to send large amounts of cash internationally" This is utterly false. The entire reason the remittance industry exists (Western Un

by mrb 12y ago

"big banks charge only cents to send large amounts of cash internationally" This is utterly false. The entire reason the remittance industry exists (Western Union, etc) is because banks don't offer cheap ways of sending money internationally, and/or recipients often don't even have bank accounts. In fact, remittance fees are so high[1] that this is precisely why many analysts see Bitcoin's potential to disrupt this industry[2]. [1] Average remittance cost in the world: 8%. Average to Africa: 12%! Nigeria to Ghana: 22%! Source: http://www.irinnews.org/report/99977/remittance-rip-offs http://www.irinnews.org/report/99977/remittance-rip-offs [2] http://www.businessweek.com/articles/2013-10-08/will-migrant-workers-drive-bitcoins-mundane-future http://www.businessweek.com/articles/2013-10-08/will-migrant...

sanswork 12y ago
You missed out on the word large. Remittances are generally very small. Also the cost of remittances isn't in moving the money it's in having lots of people in the destination country that your family can go to and get cash from. There is no indication that bitcoin would make that cheaper.
- mrb 12y ago
  The most blatant way Bitcoin can make remittances cheaper is if the recipient can directly spend the bitcoins. So no more Western Union = no middle man pocketing remittance fees!
  - sanswork 12y ago
    Yes, but people can't so it doesn't.
    - mrb 12y ago
      Yes they can, and here is one more example: according to the World Bank the lowest remittance costs to send 140.00 EUR from Italy to China are 12.00 EUR (this is 8.6%!) see http://remittanceprices.worldbank.org/en/corridor/Italy/China http://remittanceprices.worldbank.org/en/corridor/Italy/Chin.... However thanks to Bitcoin exchanges existing in both Europe and China, and with their low fees of typically <1% (so <2% total), the costs with Bitcoin would be less than 2.80 EUR, which is much lower than 12.00 EUR. So do not say that Bitcoin "would not" make remittance costs cheaper. It does.
      - sanswork 12y ago
        The world bank includes a very small number of possible remittance services and basically ignores any of the small grey networks most people actually use. http://www.cabel.it/media/documents/cemla_slides.pdf http://www.cabel.it/media/documents/cemla_slides.pdf has an example of a remittance service that offers fees of 1.15%(See page 7). So that service would cost 1.61 EUR. With bitcoin the process would be: Transfer money to BTC-E which is 1% + the payment source fee so we're already over and we haven't even gotten our bitcoin yet. ok lets try another one since that didn't work out and I'm sure we can find cheaper. Kraken is free for SEPA deposits. I can't find any example fees for SEPA transfers from Italy to Germany but lets say 0.10. Trading fee: 0.28 Withdraw fee is in btc(0.00050) so hard to say but currently around 0.31 then there is the bitcoin fee to deposit on the chinese side in okcoin which is another 0.06 then luckily its free to trade at ok coin and only 0.4% to withdraw in CNY which is 0.56 Total cost: 1.31 So assuming no slippage(which there would be since any country receiving a lot of remittances like this would be a buyers market) you can go through 3 extra transfers and save yourself 0.30 EUR on your 140EUR transfer. This also assumes my SEPA fee is right which I think it might be quite low for reality. Italian banks tend to have very high transfer fees even nationally.
        mrb 12y ago
        I was tempted to reply that your unknown service, mentioned on page 7 of some slide deck written by some obscure tiny Italian financial holding company probably does not even exist, because it is referred to as a future potential project ("The company will be working...") so it probably means you were unable to find proof of its current operations. But you would miss my main point. Even if it existed, you are wrong: most people actually use Western Union/Moneygram/etc. This is why they are companies worth hundreds of millions of dollars and not some footnote on a slide deck. At best, if you tried to support your side reasonably by bringing Hawala in the discussion, know that even Hawala represents a minority share of the total remittance market. And Hawala has fees typically higher than 1-2% anyway. So, you did demonstrate my point that Bitcoin can make remittance costs cheaper for MOST people.
        12y ago

by mrb 12y ago

sanswork 12y ago

You missed out on the word large. Remittances are generally very small. Also the cost of remittances isn't in moving the money it's in having lots of people in the destination country that your family can go to and get cash from. There is no indication that bitcoin would make that cheaper.

mrb 12y ago
The most blatant way Bitcoin can make remittances cheaper is if the recipient can directly spend the bitcoins. So no more Western Union = no middle man pocketing remittance fees!
- sanswork 12y ago
  Yes, but people can't so it doesn't.
  - mrb 12y ago
    Yes they can, and here is one more example: according to the World Bank the lowest remittance costs to send 140.00 EUR from Italy to China are 12.00 EUR (this is 8.6%!) see http://remittanceprices.worldbank.org/en/corridor/Italy/China http://remittanceprices.worldbank.org/en/corridor/Italy/Chin.... However thanks to Bitcoin exchanges existing in both Europe and China, and with their low fees of typically <1% (so <2% total), the costs with Bitcoin would be less than 2.80 EUR, which is much lower than 12.00 EUR. So do not say that Bitcoin "would not" make remittance costs cheaper. It does.
    - sanswork 12y ago
      The world bank includes a very small number of possible remittance services and basically ignores any of the small grey networks most people actually use. http://www.cabel.it/media/documents/cemla_slides.pdf http://www.cabel.it/media/documents/cemla_slides.pdf has an example of a remittance service that offers fees of 1.15%(See page 7). So that service would cost 1.61 EUR. With bitcoin the process would be: Transfer money to BTC-E which is 1% + the payment source fee so we're already over and we haven't even gotten our bitcoin yet. ok lets try another one since that didn't work out and I'm sure we can find cheaper. Kraken is free for SEPA deposits. I can't find any example fees for SEPA transfers from Italy to Germany but lets say 0.10. Trading fee: 0.28 Withdraw fee is in btc(0.00050) so hard to say but currently around 0.31 then there is the bitcoin fee to deposit on the chinese side in okcoin which is another 0.06 then luckily its free to trade at ok coin and only 0.4% to withdraw in CNY which is 0.56 Total cost: 1.31 So assuming no slippage(which there would be since any country receiving a lot of remittances like this would be a buyers market) you can go through 3 extra transfers and save yourself 0.30 EUR on your 140EUR transfer. This also assumes my SEPA fee is right which I think it might be quite low for reality. Italian banks tend to have very high transfer fees even nationally.
      - mrb 12y ago
        I was tempted to reply that your unknown service, mentioned on page 7 of some slide deck written by some obscure tiny Italian financial holding company probably does not even exist, because it is referred to as a future potential project ("The company will be working...") so it probably means you were unable to find proof of its current operations. But you would miss my main point. Even if it existed, you are wrong: most people actually use Western Union/Moneygram/etc. This is why they are companies worth hundreds of millions of dollars and not some footnote on a slide deck. At best, if you tried to support your side reasonably by bringing Hawala in the discussion, know that even Hawala represents a minority share of the total remittance market. And Hawala has fees typically higher than 1-2% anyway. So, you did demonstrate my point that Bitcoin can make remittance costs cheaper for MOST people.
        12y ago