As a new kind of money, cryptocurrency has shaken both the banking and trade industries in recent years. Now, they are also modernizing the international money transfer process. Both mobile and online platforms support sending and receiving.
Since cryptocurrency is digital, transmitting it is as simple as sending an email. Cryptocurrency has no physical boundaries like dollars or euros, so you can transmit it to friends, relatives, or merchants abroad as easily as you can send it to someone next to you.
To transmit cryptocurrency, you’ll need the wallet address of the receiver. A wallet address is a unique string of characters that specifies where digital currency should be sent, much like a bank account number. Since crypto wallet addresses are lengthy, they are often presented as QR codes that can be scanned with a cryptocurrency program. Now let’s address the subject of how to transfer money overseas without incurring expensive costs.
How cryptocurrency works?
Cryptocurrencies are a kind of digital asset that may be used as a medium of exchange in place of traditional fiat currencies like the US dollar or the Euro. They are decentralized, meaning they are not supported by a central authority like a bank or government. You are in charge of your cryptocurrency wallet since there is no intermediary between you and the person you are paying.
Bitcoin is indeed the most well-known cryptocurrency, but there are already more than 6,000 other cryptos in circulation, and that number is only expected to keep expanding. Bitcoin and other cryptocurrencies rely on blockchain technology. The blockchain is a distributed ledger used to record the exchange of digital assets such as cryptocurrencies.
All virtual money is traceable on the blockchain, meaning each coin has a specific owner. This makes it very difficult to “cheat the system,” and it’s the main reason why cryptocurrency trade can operate independently of banks and other governing bodies.
How to transfer money overseas using Bitcoin?
Bitcoin and other cryptocurrencies are among the most cost-effective means of making international money transfers. Due to the decentralized nature of bitcoin transactions, you do not have to pay high costs charged by brokers for a conventional wire transfer.
Bitcoin remittances employ MTOs much like their traditional equivalent. However, in the context of Bitcoin, “MTOs” might refer to wallets, exchanges, or P2P markets. Bitcoin remittances can be made by anybody who knows how to transmit Bitcoin.
In addition to the savings in transaction fees, cryptos provide various other benefits for cross-border monetary exchanges:
- Flexibility
Cryptocurrency transfers may be made in a wide variety of ways, using a vast variety of payment methods and platforms that are tailored to certain nations.
- Transparency
A standard international bank transfer involves entrusting your funds to a third party and hoping that they arrive at their destination. However, with a crypto transfer, you will always know the precise location of your money.
- Freedom
Because cryptocurrencies are not connected to banks or government agencies, you can transmit an unlimited amount of money at any time.
- Speed
Cryptocurrency services, in contrast to banks, are available around the clock. Frequently, business deals close in a single swift motion.
- Price
Transactions conducted in cryptocurrency are not only quicker, but also lot more cost-effective. There are little opportunity costs, hidden fees, or intermediaries between you and your money.
Disadvantages of using cryptocurrency for international transactions:
The most apparent disadvantage is that, despite faster transmitting rates, there are more stages involved in the process, which is enough to terrify any newbie. Until the widespread use of cryptocurrencies, this mode of transfer caters to individuals that place a premium on speed and low costs.
Keep in mind that your currency is exchanged twice when you transfer Bitcoin to an international recipient. Your funds are converted twice: first when you make the initial purchase of bitcoin using fiat currency, and again when the receiver does the final conversion to their currency. You will lose money if you aren’t careful throughout this step of the procedure.
Comparison of traditional and cryptocurrency money transfers
To send money internationally in the traditional method, you must utilize a Money Transfer Operator (MTO) like Western Union or arrange a direct transfer from your bank account. Money transfer organizations (MTOs) and banks often impose a fee for cross-border remittances. They also benefit from the exchange rate used to convert one currency to another.
When moving funds from the host nation to the receiver, the sender may incur additional costs such as transaction fees, currency rate losses, and fees associated with the transfer’s pace, which may range from less than an hour to more than six days. You can use a peer-to-peer cryptocurrency exchange to transmit Bitcoins or other digital currencies from one country to another.
If you’re wondering if cryptocurrency money transfers are free, you should know that on some exchanges and platforms, you can transfer bitcoin from your wallet to another person’s wallet for free. Some need a minimal cost.
In most situations, however, utilizing bitcoin is one of the least expensive methods to transfer money overseas since you avoid the fees and exchange rates charged by MTOs and banks.
How to send crypto
If you want to give someone crypto, you’ll need their wallet address. Because crypto wallet addresses are lengthy, they’re commonly presented as a QR code you can scan in your app. When you have the wallet address, it’s a simple matter to open your cryptocurrency wallet, input the address, and then choose the amount of cryptocurrency you want to transfer.
There is often a modest price to transmit cryptocurrencies, known as the “gas fee,” however this fee is typically far cheaper than fees for wire transfers or Western Union. A few things to consider when transmitting crypto:
- Make sure you transfer Bitcoin to a Bitcoin address and Ethereum to an Ethereum address since each form of cryptocurrency has a unique address.
- After your transaction has been validated and confirmed, the cryptocurrency will appear in the recipient’s account. This can take between a few seconds and several minutes.
- Sending cryptocurrency is simple and inexpensive, whether the money is moving across the room or over the globe.
A guide to transferring money from blockchain to your bank account
You must first convert your cryptocurrency holdings to fiat money on the exchange platform you’re using before you can deposit them into a bank account. You can then withdraw the money to your bank account.
It’s also possible to “cash out” cryptocurrency in a few different ways:
- Utilize a card that enables crypto transactions
You may use these cards just like any other debit card after you attach them to your cryptocurrency wallet. As you make purchases with the card, it automatically deducts cryptocurrency from your wallet and converts it to fiat cash at the card’s conversion rate.
- Use it directly
Most businesses are now accepting cryptocurrencies like Bitcoin as payment. This implies you may use your cryptocurrency wallet to make immediate buys in the online store.
- Use a crypto ATM
In big cities, Bitcoin and other cryptocurrencies can be purchased via actual ATMs. You can use some of these ATMs to exchange cryptocurrency and withdraw cash in local currency.
Which cryptocurrencies are ideal for international money transfers?
The best cryptocurrencies for international transactions are those with high liquidity (so they can be readily changed back into fiat money) and low gas expenses. Stablecoins are therefore one of the finest cryptocurrencies for sending remittances overseas. Fiat-backed stablecoins are maintained by strong liquidity and are tied to fiat currencies so that inflation is not a concern.
Bitcoin is also seen as a viable option for international money transfers. However, since Bitcoin’s fees are computed per byte rather than as a percentage, even very inexpensive transactions can add up quickly.
Litecoin is far less expensive than Bitcoin, so if you’re concerned about transaction costs and transfer money regularly but in lesser quantities, this may be the best option. Another popular alternative includes XRP, which, unlike Litecoin and Stellar, is as fast, safe, and inexpensive as Bitcoin, all while being very liquid.
Conclusion
Currently, we have something wholly new, and since it’s unlike anything we’ve seen before, it may seem neither simpler nor superior. We must recognize that there is an adjustment phase for things that interrupt our “normal” way of life.
Money transmission via middlemen such as banks takes time. A typical overseas payment takes two to three days to settle. Consequently, a secure, effective, and low-cost method of international money transmission is particularly desirable. Cryptocurrency facilitates and reduces the cost of international money transfers to family, friends, and business partners.
Transactions involving cryptocurrencies are significantly quicker than those involving official channels of currency transfer such as SWIFT. Furthermore, the costs associated with cryptocurrency transactions are much lower as compared with minimal remittance systems such as Western Union and MoneyGram, which have dominated the market for remittances for many years and are able to charge significantly higher fees as a result.
