2013-09-08 Ready for prime time as a world wide remittance replace

[zakoliverz]

http://gigaom.com/2013/09/07/bitcoin-isnt-ready-for-prime-time-as-a-world-wide-remittance-replacement/

One of the key advantages of Bitcoin as a payments mechanism is that it is free. This is one of the reasons that international remittance is often brought up as a potential key early adopter use case for Bitcoin. According to the World Bank’s research, the worldwide average cost of remittance is about 8.85 percent of the $514 billion sent each year. Taking that price to zero, or close to zero, is a big savings for immigrants sending money home, and one of the opportunities that many have identified as an opportunity for Bitcoin startups.

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[StarfishPrime]

This will be big.

With 8.85% currently being skimmed by the banking /remittance industry - from those who can afford it least - this will happen all by itself. Guaranteed.

[murraypaul]

Add in conversion charges and bid/ask spread from local fiat to bitcoin.
Add in transaction fee.
Add in conversion charges and bid/ask spread from bitcoin to local fiat.

How 'free' is it now?

[StarfishPrime]

Add in conversion charges and bid/ask spread from local fiat to bitcoin.
Add in transaction fee.
Add in conversion charges and bid/ask spread from bitcoin to local fiat.

How 'free' is it now?

Yes, that's an important point, it'll never be completely "free", but it will be a lot more "free" than it is now. Once btc/fiat conversion becomes more distributed, spreads of 1-2% percent will likely be commonplace.

Coinbase already has this in the US. Anyone could offer similar rates in another country (Philippines, China, etc.) and total fees could then be 2-4% instead of 8-9%.

[murraypaul]

Add in conversion charges and bid/ask spread from local fiat to bitcoin.
Add in transaction fee.
Add in conversion charges and bid/ask spread from bitcoin to local fiat.
How 'free' is it now?

Yes, that's an important point, it'll never be completely "free", but it will be a lot more "free" than it is now. Once btc/fiat conversion becomes more distributed, spreads of 1-2% percent will be commonplace. Coinbase already has this.

I agree, I think this could be a viable marketplace for a startup, the original article was just annoyingly simplistic.

[davidgdg]

Of course the more widely used it is the less relevant are the exchange fees. Ultimately the floor is set only by the level of fees required to maintain the network - which (if the network were entirely maintained by transaction fees) would have varied between mostly about 1% to 3% over the last 12 months. See http://blockchain.info/charts/cost-per-transaction-percent.

[Le Happy Merchant]

Add in conversion charges and bid/ask spread from local fiat to bitcoin.
Add in transaction fee.
Add in conversion charges and bid/ask spread from bitcoin to local fiat.

How 'free' is it now?

Minimum 1.2%

But just wait until it's a BTC world economy.

[xxjs]

Add in conversion charges and bid/ask spread from local fiat to bitcoin.
Add in transaction fee.
Add in conversion charges and bid/ask spread from bitcoin to local fiat.

How 'free' is it now?

Again it is important to be forward looking. You only need a single bitcoin accepting drugstore in Mumbay to slash your third point for thousands of indian foreign workers in all countries.

[TraderTimm]

Add in conversion charges and bid/ask spread from local fiat to bitcoin.
Add in transaction fee.
Add in conversion charges and bid/ask spread from bitcoin to local fiat.

How 'free' is it now?

It still beats the living hell out of other methods, but of course you should already know that. How about the typical $40 dollar or more wire transfer fee? Most transfers are international.

Anyway, the whole point is to use BTC and keep it in the system, not transfer out to paper token systems. It will take some time, but we'll get there.

[DeathAndTaxes]

Add in conversion charges and bid/ask spread from local fiat to bitcoin.
Add in transaction fee.
Add in conversion charges and bid/ask spread from bitcoin to local fiat.

How 'free' is it now?

It won't be free but it doesn't have to.  Bitcoin is an open network with low barriers to entry that will mean lower prices.  WU couldn't sustain the sometimes 10%+ fee without high barriers to entry.  The same thing applies with banking.  A "wire transfer" is a copy lines of text sent over a computer network and the banks collect up to $40 to do that.   Their cost is essentially $0.   Why the infinite markup?  Because banks are a "members only club" with nearly impossible barriers for new players and that keeps the fees high.  Credit card networks are the same thing.  All traditional fiat transfer networks involve massive barriers to entry which protect margins.  Bitcoin is disruptive.

Still the article was somewhat simplistic, it will take a while before Bitcoin is ubiquitous enough to compete with traditional money transmitters.  The article says remitters collect 8% on $815B annually and it could go to zero or close to zero.  Well that is kinda naive but a Bitcoin based competitor charging 4% would mean remitters save half on fees and 4% of $815B is a nice chunk of change.

[StarfishPrime]

Add in conversion charges and bid/ask spread from local fiat to bitcoin.
Add in transaction fee.
Add in conversion charges and bid/ask spread from bitcoin to local fiat.

How 'free' is it now?

Again it is important to be forward looking. You only need a single bitcoin accepting drugstore in Mumbay to slash your third point for thousands of indian foreign workers in all countries.

Exactly, just as an employer paying in bitcoin would eliminate the first point as well.

The NY-based startup "Buttercoin" that just received $1M funding from Google Ventures and Y-Combinator among others has targeted remittances as a primary business opportunity.

[RodeoX]

If the remittance market opens up to bitcoin then we are all going to be stinking rich, not just stinking.