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but the only way for coinbase to actually move the money from Nigeria to the US or vice versa is to use legacy banking systems (which will charge for the privil

but the only way for coinbase to actually move the money from Nigeria to the US or vice versa is to use legacy banking systems (which will charge for the privilege of using their system)or by using bitcoin. Using BTC they can send it for very little cost, the money actually moves from Nigeria to the US, and in the destination location it is converted to local currency. Try to do that without bitcoin and you cannot do it instantly unless you want to assume the risk that the senders money doesnt arrive, or you make the person being paid wait 7 days for the international wire transfer to be completed.

maxerickson 11y ago
To be clear, they aren't offering to move money to Nigeria with this, they are only supporting local currency wallets (which are linked to a bank account) in USD, GBP and Euro.
flavor8 11y ago
In order to move BTC from the US to Nigeria, they'd need BTC buyers in Nigeria. Given that the two economies are asymmetric (particularly in terms of how much can be bought in BTC currently) that's a bottleneck. By contrast, big banks offer large scale international currency transactions for fractions of a percentage assuming you maintain a minimum balance. Coinbase could profit by making the exchange rate advantage cover the bank's very small fee.
- celticninja 11y ago
  OK, just look at USD/GBP conversion. I send BTC to someone in the USA from here in the UK. They convert via coninbase and have USD in their account almost immediately. Alternatively I send a wire transfer to a US bank, now I have to pay a fee (around about £25 flat fee plus a % on the exchange rate conversion from USD to GBP, or I send it in GBP and let the receiver worry about converting it to USD). The wire transfer takes 5 days to acheive what was achieved using bitcoin in a matter of minutes. So they are not the same service unless coinbase wants to take on the risk of paying out immediately in USD to the recevier and the wire transfer not arriving or of a change in the exchange rate that results in a loss for them as they receive less USD than the GBP they received. Also they have to eat the £25 wire transfer fee as the bitcoin transaction has no fees. So ultimately the bitcoin based exchange is faster, cheaper and more secure than the legacy banking system wire transfer. Yes coinbase could profit a small amount on exchange rate fee but that comes with accepting a significant amount of risk and making the process as long winded as the current wire transfer system is. The pointof this is that it all happens pretty immediately and at little cost. This is how i imagine bitcoin will ultimately succeed, we wont use it in day to day transactions (with the exception of online purchasing) but it will underpin the transfer of fiat currencies from country to country or person to person.
  - JoeAltmaier 11y ago
    Try Dwolla. Not a 5-day delay. Also electronic. Maybe a more fair comparison.
  - flavor8 11y ago
    > Alternatively I send a wire transfer to a US bank, now I have to pay a fee (around about £25 flat fee plus a % on the exchange rate conversion from USD to GBP, or I send it in GBP and let the receiver worry about converting it to USD). The wire transfer takes 5 days to acheive what was achieved using bitcoin in a matter of minutes. Right, but that's you as a small timer. Try holding a minimum balance of $250k in your Citibank account (which would be feasible for coinbase), and see what rates they give you for international transfers at that point. Hint: cents, not dollars, per transaction.

maxerickson 11y ago

To be clear, they aren't offering to move money to Nigeria with this, they are only supporting local currency wallets (which are linked to a bank account) in USD, GBP and Euro.

flavor8 11y ago

In order to move BTC from the US to Nigeria, they'd need BTC buyers in Nigeria. Given that the two economies are asymmetric (particularly in terms of how much can be bought in BTC currently) that's a bottleneck. By contrast, big banks offer large scale international currency transactions for fractions of a percentage assuming you maintain a minimum balance. Coinbase could profit by making the exchange rate advantage cover the bank's very small fee.

celticninja 11y ago
OK, just look at USD/GBP conversion. I send BTC to someone in the USA from here in the UK. They convert via coninbase and have USD in their account almost immediately. Alternatively I send a wire transfer to a US bank, now I have to pay a fee (around about £25 flat fee plus a % on the exchange rate conversion from USD to GBP, or I send it in GBP and let the receiver worry about converting it to USD). The wire transfer takes 5 days to acheive what was achieved using bitcoin in a matter of minutes. So they are not the same service unless coinbase wants to take on the risk of paying out immediately in USD to the recevier and the wire transfer not arriving or of a change in the exchange rate that results in a loss for them as they receive less USD than the GBP they received. Also they have to eat the £25 wire transfer fee as the bitcoin transaction has no fees. So ultimately the bitcoin based exchange is faster, cheaper and more secure than the legacy banking system wire transfer. Yes coinbase could profit a small amount on exchange rate fee but that comes with accepting a significant amount of risk and making the process as long winded as the current wire transfer system is. The pointof this is that it all happens pretty immediately and at little cost. This is how i imagine bitcoin will ultimately succeed, we wont use it in day to day transactions (with the exception of online purchasing) but it will underpin the transfer of fiat currencies from country to country or person to person.
- JoeAltmaier 11y ago
  Try Dwolla. Not a 5-day delay. Also electronic. Maybe a more fair comparison.
- flavor8 11y ago
  > Alternatively I send a wire transfer to a US bank, now I have to pay a fee (around about £25 flat fee plus a % on the exchange rate conversion from USD to GBP, or I send it in GBP and let the receiver worry about converting it to USD). The wire transfer takes 5 days to acheive what was achieved using bitcoin in a matter of minutes. Right, but that's you as a small timer. Try holding a minimum balance of $250k in your Citibank account (which would be feasible for coinbase), and see what rates they give you for international transfers at that point. Hint: cents, not dollars, per transaction.