Large bank transfers, particularly cross-border transactions, typically involve hefty fees. But, CNN reports, a Bitcoin user moved $194 million worth of the cryptocurrency for an unbelievable $0.1 fee this week.
A common critique of cryptocurrencies is that the added fees for miners make it unfavorable for users to clear transactions on networks such as Bitcoin and Ethereum. Consensus currencies should be taken seriously, however, for their cost-saving benefits for cross-border transactions that would otherwise involve tens of thousands of dollars in fees.
As CCN notes, even a firm such as Transferwise that is positioned as alternative to expensive bank transfer fees still would charge $7,500 for a transaction over $1 million. While $7,500 is less than 1 percent of a $1 million and this fee is still much lower than wire transfers and traditional banking payments that would cost tens of thousands more to clear, ten cents on the Bitcoin network for a $194 million transaction is pretty hard to beat.
While the technology for more efficient processing of small payments using cryptocurrencies is still being developed, its current ability to process these incredibly large sums for a uniformly small transaction makes it a candidate for wider adoption in the $30 trillion offshore banking industry.
Critics such as NYU economist Nouriel Roubini decry cryptocurrencies, arguing that Bitcoin’s reputation for being a less expensive alternative to legacy financial systems is a “Big Fat Lie!” He claimed that to buy a $3 Starbucks latte using Bitcoin, one must spend $60 in transaction fees alone. His comments faced pushback from Ari Paul, an esteemed cryptocurrency investor, who directed him to look up the “easily verifiable” fees as public information on the blockchain.
While the technology for more efficient processing of small payments using cryptocurrencies is still being developed, its current ability to process these incredibly large sums for a uniformly small transaction makes it a candidate for wider adoption in the $30 trillion offshore banking industry, CCN observes. Spending ten cents for a small transaction such as a Starbucks latte may be unappealing, but to process a transaction as massive as $194 million at that rate is a coup for investors and firms in need of these financial services.