Sending money abroad with bitcoin is a better option — here’s why
Suppose you moved to Canada from Argentina five years ago to start a new and promising career, while your family stayed at home. Now you want to send money to your family to help them. After a few tries, you find that there are two main challenges with sending money abroad: it’s expensive and time-consuming. You’re probably thinking: “There must be a better way.”
We’re here to say that you’re right.
How traditional money transfers work?
Remittance means sending or transferring funds to another party. In most cases, the sender is an immigrant and the recipient is a family member. Traditionally, there are several ways to send money overseas: wire transfer, electronic payment system, post, money order or check.
Going back to our previous example, let’s say you want to send money from Canada to Argentina. What is the first step? The first is to go to a money transfer operator (MTO) near you. The next step is to fill in the operator with whom you want to send money, where they live and how much to send. The MTO will then take this information, complete the remittance for you, make sure your funds get where they need to be, and convert them at the appropriate exchange rate.
In most cases, MTOs are customer-facing, meaning that these services transact directly with customers. They also typically use software from larger remittance service providers (RSPs). When an MTO agrees to help you send money, it usually charges a small fee for its services. A portion of that fee is then distributed to RSPs for software installation, subscription and maintenance.
Sounds easy, right? In a way, it’s really simple. However, there are a number of potential problems with this system.
Problems with the current remittance model
In the current remittance system, there are two main issues: price and speed. Fees can increase and remittances can take a long time to reach the recipient.
Traditional money transfer services often charge additional fees for withdrawals, deposits and transfers. Also, they use their exchange rate when converting and make money from it. In most cases, the fee charged will vary depending on the amount you are sending and the speed of the transfer you expect.
Some companies offer same-day transfers for an additional fee. So the question arises: Are you willing to pay more for faster transactions? If you’re not willing to pay the extra fee, just be prepared to wait at least two days for the recipient to receive the funds.
Unfortunately, even if you decide to transfer money online, you still face the same cumbersome steps, high fees and slow transaction speeds. If you use bank transfer, you have to provide more information (eg account number, SWIFT code, etc.), spend the same time confirming the transaction, and even pay more than regular transfer services.
In addition to the above two issues, banks sometimes set funding limits that limit the amount you can send and receive.
How to use Bitcoin to send money internationally
Like traditional remittance agencies, Bitcoin remittances utilize MTOs. However, “MTO” in the Bitcoin world refers to a Bitcoin wallet, exchange or peer-to-peer marketplace. Basically, if you know how to send BTC, you can do bitcoin money transfers.
Want to transfer money internationally with Paxful? The operation method is as follows:
- First, you and your payee will need to create and verify your own Paxful account.
- Next, you need to buy Bitcoin, there are more than 350 payment options on Paxful to choose from.
- Please send you the recipient’s Paxful Bitcoin wallet address or QR code.
- After getting the recipient’s bitcoin address, go to your Paxful wallet, copy the recipient’s wallet address or scan the QR code, and send bitcoins. Note that Bitcoin transactions are irreversible, so make sure the wallet address is correct.
Simple, right? The best part is that cashing out is just as easy, you just need to reverse the steps above:
Once the bitcoins have been transferred to the recipient’s wallet, you can notify them to sell bitcoins on Paxful to cash out, or view the existing offers to sell bitcoins page. Opponents can also create new offers, which can be redeemed using over 350 payment methods.
The digital and decentralized nature of Bitcoin makes it very easy to use, especially for those without access to a bank account. They can send money online instantly, all they need is a smartphone and a stable internet connection.
If you want to see the BTC value in your local currency, you can visit Binance’s bitcoin converter page.
Advantages of using bitcoin for international transfers
First (and foremost), Bitcoin remittances solve the main problems traditional remittances face: price and speed. Bitcoin remittances are not only faster, they are also much cheaper. There are hardly any middlemen, extra fees and payment intermediaries, and you don’t have to pay high fees. Its low cost also allows you to make a profit. For example, some countries may have lower exchange rates than others. That is, you can buy BTC from one country at a lower price and sell it at a higher price in another.
Next up: Bitcoin’s decentralized nature. Since Bitcoin is not tied to any government or institution, you can send any amount you want, anywhere, anytime. Don’t forget that banks are closed on holidays and weekends . On a normal business day, the bank closes in the afternoon and you cannot make overnight transactions. The decentralized nature also makes cross-border payments simpler, and your funds no longer have to go through slow and expensive processes.
In addition, using Bitcoin to send money abroad is also more flexible, both in terms of payment options and amounts. There are hundreds of payment options on Paxful alone, catering to the specific needs of each country. You can easily send money online . With these payment methods, you also have the option to buy smaller bitcoin amounts (as low as $10).
Finally, Bitcoin gives you the power to control your finances for yourself. When you deposit money in a traditional MTO, the money is no longer in your control, you can only hope it reaches the recipient. But with Bitcoin remittance, you can watch the money move in person, making sure it gets where it needs to go. While not everyone needs to witness this process, we believe it is also an important aspect to consider.
What are the disadvantages?
Bitcoin remittances have only a few disadvantages, but they can be resolved with little time and patience.
The most obvious point is that although transfers are faster, the entire process requires more steps and a learning process that can be a bit daunting for newcomers. But as long as you take the time to learn the whole process, you can easily master it. Right now, for those who value speed and fees, Bitcoin remittances are perfect for their needs…until the day when using cryptocurrencies becomes mainstream.
Still, if you’re someone who values speed and fees, you have to be extra careful and keep an eye on transaction prices. Remember, when you send bitcoin abroad to someone in another country, your funds will be converted twice. The first conversion occurs when you buy BTC with fiat, and the second occurs when the recipient converts it back to fiat.
If you are not careful during this step, you may lose funds. To prevent this from happening, you have to be conscious of making the best trade possible. Remember that cryptocurrencies are still volatile – make sure you understand how to use them to your advantage.
Change is imperative
Right now, we see new things that are unheard of, and sometimes we may feel that these things are not simpler or have many advantages.
We need to understand that these new things will have a learning phase that interferes with our “normal” way of life. When faced with any technology, be sure to keep an open mind to surprises. And that’s exactly what technology does for us: bringing us new things that make our lives easier.
Looking back at the early days of the internet, not everyone was immediately receptive. But nowadays, in the era we live in, there is basically no way to live without the Internet. Let’s face it, Bitcoin remittance will definitely interfere with the traditional fiat money transfer business, but it can be said that all these changes are for a better future. As more and more people realize this, the chances of bitcoin transfers becoming mainstream are growing more optimistic.
Who would reject a faster, more economical and safer way to send money? It’s safe to say that Bitcoin is emerging as one of the best and most economical ways to send money internationally.