The IMF has just reminded that the fees for sending $200 abroad can reach 50%… Bitcoin fixes this.
Bitcoin as a payment system
Does bitcoin need to become a universal means of payment accepted everywhere? This question has come up again recently. Particularly because of soft fork proposals such as CTV or LNHANCE.
Answering yes ultimately means that bitcoin will replace fiat currency. Your servant strongly doubts it. The overwhelming majority of people do not see bitcoin as a replacement for their Mastercard, but as a store of value for their savings.
That said, there are some cases where bitcoin payments are clearly more attractive than fiat payments. These are typically international transfers.
The global average cost to send $200 to another country was $12.50 in the first quarter of 2023, or 6.25%, according to the database Remittance Prices Worldwide of the World Bank.
The G20 has set itself the objective of achieving a global average cost of no more than 3% by 2030 as well as a maximum cost of no more than 5%. However, as this IMF chart shows, some costs are much higher than this target. For example, fees exceed 50% for funds sent from Turkey to its Bulgarian neighbor…
Costs are particularly high for sending money to sub-Saharan Africa. Tanzanian remittances to Uganda and Kenya suffer from fees exceeding 30%. It is also not reasonable to send money from South Africa to Botswana or Lesotho.
Bitcoin is ideal in such situations. A transaction of any amount costs $0.74 at the time of writing these lines. Not to mention the Lightning Network which can further lower costs.
Obviously, you inevitably have to pay fees during the two Bitcoin/Fiat exchanges if this money must be spent immediately. And these fees are rarely less than 3%. But it is still very advantageous for those who can afford to save these bitcoins.
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