Western Union: Bitcoin isn’t ready for international money transfer yet

http://www.coindesk.com/western-union-bitcoin-international-money-transfer/

by cdvonstinkpot • 13 years ago

35 44 13 years ago

coindesk.com

drewblaisdell2• 13 years ago

(1977) IBM: Personal Computer Not Ready for Primetime Yet.

chollida1• 13 years ago

To be fair if they did say that, they were right. It wasn't until 1981 that the PC market started to take off.

drewblaisdell2• 13 years ago

The PC market of 1981 was taking off with the personal computer of 1977.

jasonlingx• 13 years ago

The biggest reason it is not ready for prime time: security. The regular user is very likely to get all their bitcoin stolen from them sooner or later. Heck, even the people running the exchanges and other bitcoin services get hacked all the time. There simply is no good way to secure bitcoin for the regular joe at this point in time.

jedunnigan2• 13 years ago

I would say the largest existential threat to Bitcoin is scale. All the problems cited by WU are fixable; same with user security.

However, dumping even half of the Visa/MC daily tx volume would bring the network to a halt. The transaction fee scheme has issues as is, it needs to be reworked before it can handle even double the current daily volume. [need to find source, gavin mentioned it somewhere]

We could raise the block size, but that's no free lunch (makes it more costly to run a node, etc...), things could go off chain, we could use Ripple, etc... etc.

Point being, something will need to change before the big players come in, and it's more than just liquidity and user security.

DennisP2• 13 years ago

Use offchain transactions for most things and onchain just to settle balances between service providers, and you could scale to major currency levels. Keep the number of transactions per block limited, and transaction fees could be maintained high enough to avoid the "bitcoin tragedy of the commons."

That doesn't seem to be the direction they're going, though.

ye4• 13 years ago

There simply is no good way to secure bitcoin for the regular joe at this point in time.

My coworker has a regular checking account. One day he noticed he had something like $20K missing. He called the bank, they have a long conversaton, put him on hold, long long hold, then they say "Your money is back, let's never talk of this incident again".

If he hadn't noticed it, he would be out $20K.

ceejayoz3• 13 years ago

If it'd been in Bitcoins, he'd still be out the $20k.

bpodgursky• 13 years ago

If you don't notice that you're out 20K... you should probably just give your money to a financial planner instead.

dingaling• 13 years ago

Checking accounts shouldn't really be used for sums of money like $20k; they're intended for payments-out, so should be restricted to the buffer needed for one or two months' payments.

They are equivalent to DMZ servers; hold only what is necessary for the service and be prepared to drop them quickly if problems occur.

The real money ( such as received salary and savings ) should be in firewalled deposit-only accounts ( like servers in the secure internal network ). Push from the salary receiving account to checking when necessary. Don't accept any requests from the DMZ.

AsymetricCom3• 13 years ago

Users can't control their hardware, so they can't control their bits, coin or otherwise. Institutions cannot stomach the idea of a populous with powerful computers that don't answer to them. Trusted Devices being the only electronic devices in existence is one solution.

DigitalSea• 13 years ago

Western Union are sort of right. Bitcoin although more stable recently than it ever has been, is still pretty unpredictable and laws surrounding its use are somewhat untested in a lot of regions. When Silkroad shutdown it cast a new light on Bitcoin, people think Bitcoin is for buying illicit drugs anonymously and don't currently see it as a valid alternative to actual currency, at least not yet. Once more and more countries release their stance on the currency, then Bitcoin might be ready for the prime-time.

nl2• 13 years ago

One of the big sticking points is liquidity, he argues, adding that family support payments can currently only be useful once converted to local fiat currencies.

“We’re a long, long way from sending momma in Mexico $240 each month or a Somali family in a refugee camp $200 each month in bitcoin that is held in a wallet for conversion to local fiat currency and spending as needed,” he suggests.

This is absolutely the case.

It's worth noting that there are tremendous opportunities for arbitrage in a market like that too.

marcell• 13 years ago

This is absolutely the case.

Is it? Assuming users don't wish to hold BTC directly, the buys and sells should match up in the long run, and the only costs will be exchange fees.

Implementing international remittance will probably help bitcoin liquidity.

nl2• 13 years ago

Yes, it is the case right now, because the long-term balance doesn't help the person with short term needs.

Go to a Somali refugee camp in Kenya and attempt to exchange your Bitcoin at anything approaching international market rates.

This doesn't mean it will always be like that, though. The arbitrage opportunities (if nothing else) make it too attractive for that need to remain unserviced.

(I speculate elsewhere about alternative international payment networks may fit perfectly into this model: https://news.ycombinator.com/item?id=6666899)

ye4• 13 years ago

I'm actually in the middle of transferring a large sum of money between countries.

WesternUnion would cost me at least 4.5%, their fee calculator doesn't even support large amounts.

Bitcoin will cost me around 1.0% in fees (including USD wire-in, buy bitcoin, sell for Euro, SEPA-out).

Guess which method I will be using.

kristianp• 13 years ago

Western Union is very expensive compared to an online trader like xe.com. I'd say that would be more comparable.

ye4• 13 years ago

xe.com was the other option I considered, but they are very secretive about the wire transfer fees out of their account. I didn't want to risk getting ripped off.

cstrat2• 13 years ago

You might also get lucky that the value will increase throughout the process - it might also drop. With WU and XE and other exchanges at least you have certainty of the final converted amount you will end up with.

usaphp2• 13 years ago

Did you try using a bank wire transfer? I've transferred money from US to Russia via bank wire transfer and they had a flat fee ($45) which is perfect for large amounts.

joezydeco• 13 years ago

Except you had all those pesky FinCEN forms to fill out, right?

twelvechairs• 13 years ago

the flat fee is not the only spot where money is made on these transfers. the big one is giving you a bad rate (so effectively the bank takes a percentage anyway). also they make money through holding your cash rather than transferring straight through.

ye4• 13 years ago

I can absolutely guarantee you that they screwed you over on the conversion rate. $45 is just a fee to distract you from 3-5% they take on the bad rate.

pbreit• 13 years ago

If you're smart, not bitcoin, considering the value of bitcoin frequently fluctuates considerably more than 4.5% in a single day.

wereHamster• 13 years ago

You don't have to wait a whole day. It takes 10-20 minutes to transfer bitcoins from one account to another. Add another 10 minutes to initiate the withdrawal. Bitcoin dosen't change that much in 30 minutes.

VexXtreme• 13 years ago

The problem with wiring money is that it's oftentimes very cumbersome and difficult to do without involving all sorts of different parties. For instance, where I am from, most wire transfers get audited by the tax service and our local banks will often freeze funds until you can prove the source of the money and what it's for.

Here in Japan it's not so bad but when you get audited they generally have a list of all your inbound international wires and ask you to prove that the money is not taxable... otherwise you can get fined heavily.

It's a sad state of affairs when free people are not allowed to move their money as they see fit without explanations and justifications. It's yet another proof that fiat is not really your money and that it needs to go. Can't wait till Bitcoin becomes more ubiquitous.

DennisP2• 13 years ago

"For bitcoin to overcome these regulatory challenges, there are several 'areas of improvement,' he says. These include customer identification and due diligence, verifying ownership and control of wallet addresses, and transaction monitoring for fraud. Bitcoin institutions must prevent transfers that would violate OFAC (Office of Foreign Asset Control) sanctions or the UIGEA (Unlawful Internet Gambling Enforcement Act)."

If he's serious I don't think he understands much about bitcoin. (More likely, he's trying to preserve a role for Western Union.)

jpatokal• 13 years ago

I think he understands it just fine. Those aren't a problem with Bitcoin itself, but they're very much a problem for any entity like Western Union that has to abide by legal and financial regulations in all its business.

gexla• 13 years ago

Translation: There is a lot of opportunity with Bitcoin and remittances.

badinker• 13 years ago

Does anyone expect a company like Western Union to come out and endorse a currency that can be transferred nearly instantly for practically nothing???!!!

kbaker• 13 years ago

This is their biggest issue... They have no incentive to bootstrap and provide legitimacy to what would end up becoming their biggest competitor in the future.

They are stuck - they can see the short-term huge benefits and profits from being a trusted middleman, but once it takes off and becomes accepted in the mainstream they would be cut out of the picture (and forced to pivot again...)

yawaramin• 13 years ago

... in other news, Blockbuster says Netflix isn't ready for the national movie rental market yet.

Western Union: Bitcoin isn’t ready for international money transfer yet

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