Bitcoin Forum

Bitcoin has many immediate benefits including 0-friction ecommerce (no user accounts), low liability and fees in a purely Bitcoin enclosed market, micro payments and real escrow, just to name few. But the prophets peddling the idea it will have a huge impact on banking and commerce, how it is so much more efficient for international money transfer, are just downright misleading and actually distract people from fixing the problem.

This video (https://www.youtube.com/watch?v=dhh_4NXaYZw) touts how low the fees are for transfering money internationally with Bitcoin but limits itself to the example of $1000. All the benifits fall apart once the amount is >$5k. Let me give a real example.

I have a family member in the US that is part owner of company. A majority owner was leaving and so that presented an opportunity for me, in the EU, to send them $50k to invest. I could take profits from BTC as an early adopter or I could dip into FIAT savings. The former seemed ideal and seemed to be perfect for BTC according to the prophets. So I started looking into how to do it. On the US end MtGox can be used but with a long delay for 4 to 8 weeks and some marginal fees (0.5% exchange fee, $10 transfer fee). A bit ridiculous. But the other exchanges are worse, in a different way. For example Coinbase has 2 to 3 day transfer but a daily limit of 50BTC. That means it would take at least 9 days to sell enough BTC to convert into $50k. Assuming all these abstraction layers work out it would take 2 weeks to get the money with some fees for exchange (1%). CampBx doesnt really state their BTC sell limits clearly but do state a $1000k per day withdrawl limit. 50 days is nuts. Guess there is a wire transfer option but not knowing the BTC limits its just not clear if this would work. A p2p exchange such as #bitcoin-otc would have a 5% margin from my experience so this also seems a bit much. Localbitcoins and in fact most of the other exchanges have such low volume this also has to be considered.

So no, Bitcoin is just not good for money transfer (unless you are sending to Japan or China). In the end FIAT>FIAT internationally was way less of a headache, less time, and nearly the same or less fees than using Bitcoin in the BTC>FIAT route.

Is Bitcoin broken?
Well no. The other non-money transfer benefits are huge and will bring real growth. But they are limited to the sub $1k realm. The prophetic windfall from large commerce is not coming soon. It makes no sense for Paypal or Western Union to utilise Bitcoin. If exchanges have to reduce volume and limits or incur huge delays you could only imagine the volumes that these players would need and be unable to obtain stably with Bitcoin. They of course *could* solve them as Paypal did in the early days. But they would have to take upon themselves a huge headache that the exchanges already have. (It'd be a Heisenburg like headache (https://www.youtube.com/watch?v=zXH6fhueO3I) but where all the cash is legal.) One can expect they will stay far away from it until this is solved. So if you see posts or comments from large players considering to utilise it for anything other than micro or <$1k payments, forget about it. It's several years away.

Conclusion: It seems to me that to fulfil the prophecies Bitcoin will either have to become completely regulated at the exchange level AND more or the community will have to stop living in the fantasy that the problem is solved and focus on innovating on the p2p exchange models. Bitcoin.de had a potentially working model before they paired with a bank and limited activity to german citizens alone (edit: limited to citizens of several EU countries, not just germany). Each user makes that transaction directly between their banks. Exchange only escrows BTC to ensure transaction and reputation. A better system could avoid the whole user verification entirely, or find ways to obtain additional trust without taking on the liability of enforcement.

The trader (listed on localbitcoins and craigslist) who I deal with always offers to conduct larger exchanges with me.  Much larger.

He deals in gold, silver, and now Bitcoins.

I think what you mean is that Bitcoin is not a good way to get large amounts of fiat to someone right now. That's fairly obvious and missing the point. Bitcoin is, in fact, a fantastic way of transferring value. It's just that your family member apparently denominated his/her investment terms in dollars, not BTC.

I think that Bitcoin itself is a brilliant way to transmit money but the exchange services Fiat/ BTC are not good enough yet. If you do some research you will find that the Fidor Bank is planing to implement a bank account which can do the exchange in real time. This would make Bitcoin a really nice tool for conducting transactions as an alternative to Western Union and similar money transfer services.

On top of that it could easily replace paysafe cards since you could just change the Fiat given into bitcoin and print out a paper wallet. If you can change that into Fiat in real time then paysafe card and similar trashy services would be obsolete...

I use Bitcoin to transfer money to my family overseas all the time (literally, at least once a week). I buy them through either Virtex or Coinbase, then transfer them to a localbitcoins.com contact in the city where my family lives and he hands them local currency. I used to use Western Union, but between the ridiculous WU fees and the even more ridiculous exchange rate controls in the country my family is in, I was losing over 40% of the original amount. With Bitcoin the transfer is instantaneous and I lose less than a fraction of 1%.

So how is this not working as a money transfer again?

Can you tell us which country this city is in?

I think you missed my premise. I'm talking about larger transfers. I don't know the limts at Virtex but at coinbase they make it near useless for larger quantities.

Western Union- Taking 40% of the money that hard working people send home to feed their family. A really honorable business- NOT

In the 17th centry tulips were also a great way to transfer wealth (https://en.wikipedia.org/wiki/Tulip_mania) as well. For the foreseeable future most will need BTC>FIAT exchange.


True but this just illustrates that the road to solving the issue of larger transfers is dependent on regulation. I believe it can be augmented also by unregulated but better p2p exchange. The Fidor Bank plan is exactly the thing that turned a great open p2p exchange into a highly regulated and thereby highly limited one (to german citizens only) that I mentioned: bitcoin.de. To be clear, I'm not apposed to this but it has a slow adoption rate and will be many years before it removes the headache of >$1k transfers. So, with that now we have China, Japan and Germany able to exchange relatively easily between them. Only 190 more to go.

do not ever user tulips when comparing to bitcoins. that is honestly a very stupid irrelevant comparison that gets tossed way too much. why not just talk about some other irrelevant item like sea shells or shark's teeth.
you have valid points - you are right it  isn't the easiest to do today

however, just don't bring up tulips. thank you

Then I would also request people not use arguments that require a purely bitcoin world where all of a business or persons costs are denominated in this. It makes only as much sense as the tulip comparison I used as a response to it ;)

Right now you are right. However in the future I expect that you could be able to open a bank account denominated in bitcoin, in which case it will be the ideal currency to keep your savings. And you can just convert whatever you need to spend in local currencies.

Exchanges are dead to me in the US since Gox broke. I don't feel confident the USG won't be seizing my funds (in an exchange), having my bank (or Dwolla, a payment processor suggested to file for $2.5k transactions instead of the usual $5k) file SARs against me every time I twitch, or otherwise impeding transactions. Local BTC<->cash exchanges, I've found, are most convenient, low-to-no fee, lowest-hassle, and always fun.

Finding trustworthy people looking to buy or sell all over the world isn't a big issue, but it's a much more "uncertain" process than following a rigid exchange procedure, and you have to work with someone else's schedule.

Yeah, there isn't any listed in amarillo in localbitcoins.com, and i do not feel safe with bank transfers or exchanges.

I'd tell you, but then I'd have to send someone after you  ;D ;D Capital and exchange rate controls... been in the news and the forums quite a bit lately.

LocalBitcoins rates are very fair, 1% off of the top for escrow, but chances are you are selling above the Bitstamp price (but below the Mt Gox price) with an established account in a populated area, you would have had zero problems converting $50k in BTC to $50k in USD. The thing is, you werent prepared. You could have transferred the BTC to your uncle, he could have done the KYC verification with CampBX and also had cash pretty quickly.

When we say that BTC is good for moving money cheaply, the money we are talking about is BTC, not government fiat. After you move the money, you go through the same hassles to convert BTC to local currency as you would with any obscure foreign currency, in many places there simply are not a lot of options, and the options that are available are subject to extreme regulation.

The location for exchange in the EU and US are both major cities with populations >1m. In both cities the localbitcoin.com limits are too low and would likely require a couple weeks to disperse and then acquire $50k worth. I've also used local exchanges and yes they are great. Just not enough volume for larger quantities.

I agree BTC is amazing when transferring and using only BTC. It's just not a realistic outlook though for day to day life and wont be for many years to come. So much so that if someone says "bitcoin is great for money transfer" I consider this misleading. Should be "bitcoin is great for bitcoin transactions". It will be years before someone can say the former without a disclaimer

As a side note: this issue illustrates pretty clearly why alternative coins will be at a constant disadvantage. 3 of 193 countries have easy bank/money <> bitcoin services. As that increases it embeds this currency even more. As has been stated elsewhere (Quora CEO: Do other crypto-currencies have a chance or is Bitcoin too far ahead? (http://www.quora.com/Bitcoin/Do-other-crypto-currencies-have-a-chance-or-is-Bitcoin-too-far-ahead)) unless an alt currency provides seriously strong features over bitcoin (ahem, better anonymity??) then the infrastructure of bitcoin will be near impossible to compete with. The headache of BTC users trying to live in a FIAT world and depending on various tools and regulations to allow this is a huge advantage that is growing.

over 3Kusd, not need use bitcoin, paypal, WesternUnion.
Just use swift international bank wire.

I am sorry for your trouble. My experience is quite the opposite. I have been using Bitcoin for international transfer for several years now. Not for the sake of using it, but because it works better than alternatives.

When MtGox started having problems with Dwolla, I was forced to look around for another USD option, and Bitstamp has been great.

Things you complain about have nothing to do with Bitcoin technology, but with exchanges you are using and not using, and with the current state of adoption. It's like complaining that TCP-IP is broken because your internet provider sucks or because somebody infected your PC with a virus.

I think not many people would claim that bitcoin is a good way to transfer "dollars/euros/yens/turkish liras" etc. Especially trying to do this by going through the exchanges, is a really bad idea. So I don't know who you are telling to "stop".

But bitcoin is a great way to transfer "money". Probably the best one out there.

I did this with a friend in Turkey. He did some service to me and I made him setup a wallet and sent him bitcoins. At the time bitcoin was about $50.

He asked me "but how do I turn them into Turkish Liras?". I said "that's a bad idea, but If you want, you can always send them back to me, and I will send you euros at the current exchange rates to your bank account. Of course It will take weeks, and all the fees, conversion rates etc. are your problem".

instead I showed him how he can buy stuff from bitmit, or how he can find a local buyer etc. if he needs TRY's.

In the end he decided to keep the bitcoins. Now he still has them, they are worth more than twice their value when I sent them. I can't imagine any other method that would have worked better than this for both of us.

While u r waiting for a confirmation this value can gain or lose 10% due to high volatility. Fantastic, indeed.

That's not true at all. The absurd tulip analogy is a completely different domain (store of value) than transfer of value. You state that your thread is about transfer of value. But you're actually wrong about that... Your thread is about currency conversion. Since we're putting in requests, mine is that you understand this distinction and re-phrase your argument accordingly. Also, I request that you try not to engage in irrelevant sensationalist ignorant comparisons.

He doesnt even need to transfer the BTC just tell his uncle over the phone the password.  His uncle then assumes control of that account immediately

Don't forget that Bitcoin is what....5 years old? It will get better over time as the infrastructure, companies, and services surrounding it improve.

"Stop saying Bitcoin is good for money transfer. It isn't."

Your title is misleading. You are talking about large, corporate sized funds transfer, when the market Bitcoin is most poised to disrupt is the small transfer remittance business. The small remittance business is massive, and the costs of transfer are large, and growing, because many banks don't even want to deal with remittance companies thanks to money laundering panic (http://www.theguardian.com/global-development/2013/jun/24/somalis-barclays-remittance).

Bitcoin is not designed to replace the SWIFT system for corporate payments, and I don't think too many have suggested that it has any chance of doing so.

For what amounts have you had success with bitstamp?

your analogy is true but i'd propose another. I agree one day bitcoin could be great for FIAT transfer even at values greater than $1k but I'm bothered that at this stage people run around saying its great for this when at the moment its not. It would be like people in the early very 1990's saying "look you can buy anything online!" when in fact at that time there was next to nothing. So, I'm bothered that the statement is way to early and misleading to those looking for exactly the feature some claim is so widespread.

If you have interest, please read this:
http://bitcoin.org/bitcoin.pdf

12.Conclusion
" We have proposed a system for electronic transactions without relying on trust. "

That is most important of bitcoin's concept.

As you say, Large amount ($3K~) transaction is not comfortable for non-bank wire.
But all of people knows that.
You don't need worry. :D

Nothing wrong with bitcoin, there just appears to be a problem with converting them to cold, hard cash.

As the bitcoin ecosystem grows, so will the ability to do large cashouts.

got it. analogies are bad in general. i only meant that you response that the issue was myself or family member were denominating things in FIAT was the source of my problem with transfer/exchange delays... is true, but sadly because I live in a FIAT world I can't remove that problem for now.

And then what, how does he get that BTC to the share holders whom are probably expecting FIAT? In the answer to that we are back at square one: solving the huge latency and burden when wanting to go from BTC to FIAT.

Indeed true. Sadly the investment wont wait for the regulators to get their act together.

Transferring $50,000 to Japan via BTC/MtGox is a snap if you have trusted status. The problem is local regulations in various countries, and the exchange infrastructure, not Bitcoin itself.

what is your motivation ? you don´t like it, why do you waste your time telling others ?

There is no reason this isn't Bitcoin in the future.  However, today, in most areas your assessment of the current state of Bitcoin's utility for transfer of fiat money is valid.  Where bank wire transactions complete in under a full day and fees are relatively trivial (for large amounts), Bitcoin is no real competition just yet.

But try sending a wire on Saturday.   Try sending a wire to the billions of people who are unbanked.  Try sending a wire to (most anywhere of) the developing world.  That's why there is today hawala (or hundi) in a pretty large chunk of the world yet.

In those areas, bitcoin can be very good for money transfer.   Even there, it isn't (yet).    But it can be.    With the advantages Bitcoin offers, (essentially no fees and fast settlement) there's good reason to believe it will be used for money transfer in the future.   Those using it that way today are not complaining.   Mang Sweeney's customers who regularly send funds to family members in the Philippines aren't jumping ship to a competing service.  Bitcoin works for them.

Now remember, for money transfer outside the banking system (e.g., Western Union), Bitcoin has the advantage where traditional money transfer has the biggest challenge.    A Western Union needs agents on the sender's side as well as at the recipient's side.  That's a very expensive method to send fiat funds internationally.   With Bitcoin there isn't an international fiat transaction. There are instead two domestic transactions.  Those can be cheap.    Buying bitcoins in one country can cost less than 1% (e.g., via Dwolla USD transfer to Camp BX), and selling bitcoins in another country can cost a trivial amount as well.

Since there is a potential for profit in providing bitcoin exchange, this street-level exchange (versus Western Union agent offices) can happen without a large financial company like Western Union offering it.  Individuals can compete against Western Union by providing exchange at the street level.   They will network and larger traders will broker bitcoins, providing a way for the street-level traders to replenish their inventory of cash.  

Everything needed to make this happen is there, it just emerges slowly when there is no marketing effort and/or subsidy to build the "street level" exchange network.  There is enough profit in the money transfer industry though to ensure that a Bitcoin avenue will exist.  Check back in a few years, you will likely be very surprised with Bitcoin's progress in this area.

The problem you are describing is not really a fault of bitcoin's design, but that most of the world does not accept it in normal transactions. This can be a problem with any currency, however the current global banking system has the infrastructure to handle most currency exchange issues. This, of course, comes with a cost that bitcoin tries to reduce or eliminate.

Bitcoin and other cryptocurrencies are still a relatively new concept, a concept that clashes with the existing financial system. If bitcoin continues to succeed then we will see the infrastructure grow along with it. Unfortunately it will probably take some time for bitcoin to become easily traded with fiat, especially in large quantities.

It's the only way to the perfect coin -- discussion.

I don't get this thread.  I asked for money, sent my btc address, they sent me funds.  Seems a bloody good way to transfer money.

I have to agree with OP on his points.  I've tried to do larger investment deal with BTC and its rare to get any takers.  The conclusion though should be that wherever there is pain, there is opportunity.  We don't need to apologize for crypto-currency being in its relative infancy.  We need to see the opportunities it presents and work to make them a reality.

Those that see opportunities and act on them to make bitcoins more practical (for use as investments or wealth storage or everyday purchasing) are those that will be at the helm of a fundamental shift in the banking industry. 

Just post one of your public keys, and I'll show you how easy it is to use bitcoins to transfer wealth.

lol, true.

Avoid Localbitcoins for the next 24 hours.

They are dealing with a potential security issue and have temporarily disabled all bitcoin withdrawals.

The extent of the issue is not yet clear.  Hopefully it will not destroy them, but until the dust settles you don't want to be transferring any additional bitcoins to their service.

I assume you mean private keys?

Or were you planning on making a donation to them?

The only donation he will be making, would be to himself LOL  :D

I'm just glad to see prophets are prophesying about Bitcoin profits :-)

The sad truth is that Bitcoin is a dream for scammers.  No chargebacks is great for the seller, it is absolutely horrible for the buyer.  No recourse sucks.  It's the price we pay for something decentralized with no Government ties.

People need the nanny-state to wipe their ass.  Mass acceptance will not be achieved unless recourse is implemented...somehow...I don't know how that is possible.

That doesn't come for free.  You pay a minimum 3% in higher prices for that ability to chargeback.   For every $1,000 in charges you'ld need to do chargebacks of $30 to make that 3% fee justified.    For some types of purchases (e.g., Travel), the fee is an even greater percent.   Tell me the last time you disputed your room charge from a hotel stay?   Chances are never.   So I trust some merchants and don't need that protection.   Other vendors, I wouldn't order from unless I knew I had the ability to do a chargeback if the item never ships.   

So if Bitcoin (and Dwolla or other cash-based competitors) causes credit cards to end up being used less for the Wal-Marts, hotels, etc. (where there are low fraud rates) but still used for the transactions with a higher fraudulent ratio, the credit card companies need to raise their rate above 3% as they lost their most profitable revenues.  Then that higher rate pushes more merchants towards preferring Bitcoin (and Dwolla, etc), and it becomes a self-reinforcing trend.

Why? lol

This simply reflects that bitcoin is still in its infancy.  There will be many more options for converting bitcoin to fiat and vice versa once people get comfortable with what bitcoin is and how it works (i.e. including regulators).  There is no getting around the fact that you want to swap BTC for fiat - that's where the bottleneck happens.

That said, $50K is not a problem.  There are plenty of traders on localbitcoins.com who can deal with large amounts (though admittedly that requires you to go out and sell your coins).

Interesting post, thank your for sharing your experiences.

But one point I have to correct: You say bitcoin.de doesn't accept users outside germany. This is not true.

Bitcoin.de accepts users from the whole EU and some other european countries (e. G. swiss, norway).

To perform large international transactions you need liquid exchanges and a secure environment. Secure high volume means by nature high regulation resp high legal consumer rights. The cooperation with the fidor bank has the potential to make bitcoin.de a strong part of the chain. That this goes along with higher verifcation standards is a naturall part of the process.

No, no, I meant public...
Transfering wealth from one party to another is much easier using bitcoins than bank wires or western union or whatever, and that was a semi-trollish way to make this point.

The OP title is misleading.
His problem is actually the difficulty to acquire BTC by spending FIAT.

Well you said:


So, does that mean that if he posts his public key, you'll send him some bitcoin?


Definitely.
Easier and cheaper.


Yes, most people who complain about the difficulty they are having in obtaining bitcoin assume that it is because bitcoin is difficult.  What they don't seem to realize is that it is the FIAT side of their transaction that is causing the issue.  They are finding it difficult to get FIAT to the bitcoin providing entity in a fast and non-reversible way.  If they could solve their FIAT problem, then they wouldn't have such difficulties in acquiring bitcoin.  Of course if they could solve their FIAT problem, we wouldn't really have a need for bitcoin any longer either.

You were doing so well there but this is where I have to disagree.

Fiat problems won't ever go away as their fundamental problems are set in stone.

The problems with getting fiat into Bitcoin would go away in an instant if we could get rid of the overbearing overregulations that are being erected to be obstructionist in nature.

How would you have any free of charge exchanger?

Whenever you make money, by speculating or whatsoever, you have to pay taxes. So, unless you never sell your btc for fiat money, you will have huge fees, people to pay, and some regulation.

Yeah, I would have sent a tip and asked him 20 minutes later, when the BTC would have been confirmed on his side, to send back the same amout to me in FIAT, in the same time frame, with the same ease it was for me. 
Then would have asked him to edit this completely false title. ;D

I hate to break it to you, but your argument is totally bogus, and the headline is downright misleading.  If you want to replace it with "Stop saying Fiat is good for money transfer.  It isn't."  then, I will happily agree with you.  Because in all these different examples, you are talking about transferring from Bitcoin -> Fiat -> Fiat, which is not at all the same as Bitcoin -> Bitcoin like in the traditional way this money transfer argument works. 

The argument that bitcoin is good for money transfer is still intact, and valid, even if you are using exchanges like in your example.  Want to transfer $50,000 worth of bitcoins from Coinbase?  Go right ahead, I just looked this up on Coinbase, there's no limit on the amount of bitcoins you can send from your account.  As long as you have that many bitcoins, you can send them.  I could do the same from Armory and send any amount of money I like to anyone else in the world and they'll get it within an hour, most of the time.  Even if it's Sunday.  Try doing that with a Bank. 

That isn't what you're talking about here.  You're talking about Bitcoin, but all you mention here are exchanges which means you'd be getting your fiat money out.  So what you're really talking about is cashing out and transferring money in Fiat.  That's always been a pain, and there's nothing Bitcoin can do to change that.  Even if Coinbase had an unlimited withdrawal, keep in mind that your bank might flag the transaction because you're talking about an amount of $50,000 and (at least in the United States) by law Banks have to report any transfer of money that's over $10,000.

Bitcoin is only used to transfer money by people who have no other choice. Like everything in life people are only into it if it benefits them.

That's not the only way to make the problems go away. You can also build systems which the regulators are unable to affect in practise.

We could have decentralized exchanges which would be effectively unregulatable if a method existed for creating a distributed, P2P fiat interface so that the exchange would not need to deal with a bank.

In order to create such an interface though you need some kind of cross-border contract enforcement and dispute resolution system that does not require any assistance from the existing legal systems in order to function (because one or more parties might be located in incompatible legal jurisdictions, or be anonymous, or be located where there is no functioning legal system).

Once the problem of creating a stateless private law system is solved, then we can build the other pieces.

No, there aren't. I checked. It'd be nice if one could sort localbitcoins listings by volume limits. Instead I checked major cities and everything is too low. Sure, if I contact them directly perhaps they will tell me that they have higher limits than they list. But on the surface, for $50k localbitcoins will not work.

And I agree, Bitcoin is still in its infancy and the issue of FIAT exchange will improve.

I agree. What p2p does very well is reputation systems. but these are not enough in themselves to provide similar levels of trust that a regulated exchange with AML/KYM'ed users can provide. I would be up for a network that combines a p2p network exchange with reputation that has optional physical anchoring. Where one builds their reputation through successful virtual transactions while also having the option of using physical gatherings to share notarised ID/papers.

I also agree with everyone that the problems I am experiencing are due to FIAT, not Bitcoin. But this problem is here to stay. If anything, it should solidify that argument that governments have nothing to fear. Their monopoly on finance is safe, for the most part.

I have heard that TradeHill is good for exchanging large amounts of bitcoin.

+10000
This is the reason bitcoin will suceed.
Governments are interested in national boundaries. People aren't.
National fiat can stay local.
Bitcoins are global.

Bitcoin is good for transferring bitcoin.  How's that?  Not sure I got the capitalization syntax right ;)

the biggest problem here is that you still need to pay real money in real life.
if people doesn't have to exchange btc into usd or euro, then you wouldn't have to pay that fee to mtgox or bitstamp and wait for days, you could use btc in half an hour after your family member sent it from europe.

do you remember the mid 90ies ? mobile phones were brand new. only gangsters/pimps/tv-celebrities were able to afford them. they would work only in major cities but not deep inside buildings, not out in the countryside.

you are actually complaining bitcoin hasn´t grown big enough yet.

but it will. 

I would phrase it slightly differently.  Bitcoin isn't good for exchanging fiat across geopolitical boundaries. I'm ok with that. Smooth movement in and out of fiat is a double edged sword.

In the early 1990s you could not buy anything online.  I don't think I saw anything for sale online until at least 1996.