Moving Money Across Borders As We Know It
One of the most prolific aspects of Bitcoin and the underlying blockchain technology is the use case of sending money to anyone else in the world. Rather than using traditional financial structures and options, Bitcoin allows a user to transfer value to the other end of the world in mere seconds.
Comparing this with bank transfers – which may take several days or weeks, depending the recipient’s locations – which are not only far more time-consuming, but also subject of hefty fees, Bitcoin is clearly a better option. Especially when you take into account how many people in this world have no or limited access to a bank account, credit card or any form of banking service.
You could make the argument that there are services who bypass the need for a bank account or credit card, such as Western Union. The way this type of money remittance works is by sending a person in a different country a certain amount of money – including a hefty fee – so they can pick it up within minutes at their local Western Union office.
On paper, Western Union sounds like a godsend, as the company has established offices in nearly every country in the world. And even though they charge a hefty fee for any transaction, the company provides a quick and convenient way to send money around the world. But there is one major problem that Western Union can not fight against, and that inflationary currency.
To give an example: sending money to Argentina through Western Union is probably the worst solution. Whenever the Argentine person goes to collect money from a local Western Union office, they are always paid out in the local currency. Regardless of the currency you use to send money in – EUR, GBP, USD, CNY – the recipient will always be paid in the Argentine peso.
It goes without saying that, in countries such as Argentina, people want to get rid of the pesos as fast as possible, and would much rather receive foreign currency. Unfortunately for them, this is not possible when using Western Union, nor through any other traditional financial platform. Tight government controls are working hard to keep their own currency relevant, even though its value is far more volatile than Bitcoin’s.
Bitcoin is Different in Many Ways
On the other hand, whenever you send Bitcoin to someone else in the world, they have the option of selling it for nearly any local currency used on this planet. In the case of Argentinians, they can choose to convert their Bitcoin balance to USD, EUR, GBp, CNY or any other currency that is not the local peso.
Most people assume that, in order to buy and sell Bitcoin, you need access to a bank account. In the Western world, that is partially true, even though there are other options available as well. Countries such as Argentina have seen Bitcoin brokers emerge, who will exchange the digital currency for fiat currency on the spot.
And even though a Bitcoin holder may lose a small percentage due to this conversion process, they will have access to far less volatile fiat currencies. Plus, all of this is still made possible without owning a bank account, as these trades can take place completely outside the reach of the government.
Granted, Bitcoin is often criticized for allowing the trading of illegal goods and services, and being a perfect tool for money laundering. Then again, so do fiat currencies, and they are much harder to track once they have left the bank vaults. Bitcoin transactions are recorded on a public ledger for everyone to see, making it far from an anonymous payment method, despite popular belief.
In fact, core Bitcoin believers will eve go as far as saying that people who use Bitcoin, literally have nothing to hide. Transactions can be traded from their address or origin to wherever the coins are sent in the end. Cash transactions are untraceable and are far more suited for money-laundering and illegal activities, as there is no way to trace bill numbers unless they are stored inside a bank.
Furthermore, Bitcoin has proven to be a far more convenient way to convert fiat currency to an “asset” that can easily be transported all across the world. Whereas traditional investors used to look at precious metals to store their value, Bitcoin is a preferred method of doing so these days. Due to its borderless nature, and ability to convert it to any local currency in the world, Bitcoin is a far more versatile “transfer of value” compared to gold or silver.
What are your thoughts on using Bitcoin as a method to transfer value across borders? Let us know in the comments below!
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