Cryptocurrencies Have No Borders
Bitcoin was invented to be P2P digital cash that can be transferred over the internet. Subsequently, many other cryptocurrencies have been created, starting from some fixed points taken from Bitcoin and differentiating in other characteristics. One of the founding characteristics is that cryptocurrencies have no geographical and political boundaries.
Just as the web is the information network, the blockchain is the value network. Cryptocurrencies allow you to transfer value to any point of the network, without having any constraints linked to central banks or governments. This is because cryptocurrencies are not issued by a monetary or political authority, but are generated by a computer protocol, a software that respects the rules of consensus and has a pre-established monetary policy that cannot be altered in a discretionary way.
Anyone who joins the network of value, represented by a specific cryptocurrency, can receive and send it using the internet, anywhere in the world. In order to use a cryptocurrency it is not necessary to request authorization from any bank or other financial authority. Opening a crypto account is as easy as downloading and activating a software or app, no economic skills or financial solvency are required, because the value network is decentralized and trust has a mathematical basis.
These principles apply to both individuals and businesses. Businesses will have to comply with the tax laws and regulations of the country in which they are based, and cryptocurrencies are legal in almost every country in the world.
International Money Transfer With Cryptocurrencies
International money transfer is important both for workers who work abroad and have to send money to their country of origin, and for companies that do business internationally.
The personal money remittance market hit $ 654B in 2019 and sees workers from countries like India, Mexico and the Philippines transfer tens of billions of dollars annually and have to pay hefty commissions, between 10% and 6% of the sums sent. Banks and Money Transfer Operators (MTO) are the economic operators that provide the service of sending money internationally, using the traditional financial infrastructure. The inefficiency of this infrastructure, which requires many steps to send and credit the money, in addition to the costs of the operators, makes the international money transfer market extremely inefficient. Competition in the last decade has increased with new MTOs pushing the market down in transaction costs.
Many companies need to make money transfers internationally, for example to pay for the services of providers located in a different country. Or if the company wants to enter a foreign market where there are taxes and commissions to be paid in another currency. Another case is when your company is present in many countries and you need to move funds between different locations. In Europe, since the birth of the Euro it is easier to make such transfers using the common currency. But even in the Eurozone there are still frictions and waiting times in the transfer of currency. If we consider the global market and the presence of 180 different currencies, it is evident that the functioning of the international monetary system is not yet efficient.
In this scenario, cryptocurrencies represent an important technological revolution that allows for lower transaction costs and almost immediate transfer times. Some experts, such as entrepreneur Wences Cesares, speculate that Bitcoin could become the reference currency for the world economy, just as the dollar is today.
Cryptocurrencies do not necessarily require the use of a provider (bank, credit card, and payment operator) in order to send or receive money. Individuals and companies can independently manage payments, so we can say that they become the bank of themselves.
However, not all people or companies want to keep and manage their cryptocurrencies directly, for this reason there is a market for providers that provide custody or management simplification services, in exchange for fees on transactions or deposits.
Advantages of International Transfers Using Cryptocurrencies
Using cryptocurrencies for money transfer has many advantages:
- Minimum costs. Cryptocurrencies do not use the traditional banking and financial infrastructure, but a worldwide network of nodes connected via the internet. Network costs of a specific cryptocurrency can be as low as a few cents. When you decide to use a provider you have to add its fees, but overall the fees are still much lower than those present in the traditional system. To give an example, a transaction worth €1M can cost less than 1 euro if done in cryptocurrency, while in the traditional system it can cost even €3000 Euros.
- Fast transactions. Sending money with an international bank transfer can take up to five business days. An unacceptable time in an ever-connected and rapidly changing economy, where information travels in seconds. An international transaction made using cryptocurrencies takes a few seconds, at most 10 minutes in the case of maximum security with Bitcoin.
- Security. Transactions carried out with the main cryptocurrencies cannot be modified or falsified, thanks to the use of the blockchain, which is a secure and non-counterfeit register. Funds transferred through the banking system are sometimes subject to scams.
- At any time. In the case of cryptocurrencies, there are no working hours or days off, international transactions can be carried out successfully and quickly at any time.
- No intermediary. Cryptocurrencies are P2P and do not require any intermediary. Intermediaries are optional if you want to delegate custody and security.
- Micro-transactions. International currency transfers are not convenient below a certain amount, because the minimum commission costs are not compressible beyond a certain amount. With cryptocurrencies I can transfer even a few cents of value, which can have a significant weight in less developed economies.
Cryptocurrencies bring great benefits to individuals and businesses. In particular, for companies, cryptocurrencies are a means of expanding their business worldwide without impacting costs and operating times. They allow companies to receive and send money without friction and simplifying their business.
In order to benefit with low transaction costs internationally, you can open an account with a crypto exchange, such as Monetum, being one of the few crypto exchanges that can exchange fiat to crypto or crypto to fiat, offering also an IBAN account as an all-in-one solution.
Soon, you can send money to any other user with a Monetum account using your crypto. You can send and receive crypto easily and have the recipient convert them to their local currency.