Crypto transactions can disrupt remittances: Coinbase study
- Coinbase estimates that up to 97% of traditional transfer fees can be saved when using crypto.
- Transaction time compared to up to ten days in fiat to ten minutes in crypto is also crucial.
Crypto-assets, since their inception, were touted as solving inherent problems with the traditional financial system. Among many others, money transfer was a problem to overlook, and over time it became even bigger as the world became a trading village.
However, money transfers with the traditional fiat regime became tedious, consuming time and money. Recent Coinbase research reveals how using crypto transactions can save people “billions of dollars a year in remittance fees.”
In an April 3 post, Coinbase addressed several crucial factors in which crypto transactions can replace fiat currency remittance systems. It reveals that a significant portion of transfer fees from the US on international transfers can be saved if similar transactions are conducted in cryptocurrency. This can also save a lot of time.
Coinbase’s research shows that considering the 6.18% average fee rate in the US, native citizens end up spending up to $12 billion worth of money transfer fees alone. Considering the fast transactions of cryptocurrencies, where the average transaction traditionally takes at least one day and can go up to ten days, it can easily take around ten minutes!
The pain is multiplied when it comes to international transfers.
The conversion fees charged for currency conversion above the transaction fees are an additional burden for senders.
Significantly lower fees on crypto transactions
According to Coinbase, these transactions will be smaller if done using cryptocurrencies. It shows how transaction fees incurred on Bitcoin (BTC) transactions average 1.50 USD while about 0.75 in Ethereum (ETH).
Compared to the World Bank’s stipulated average surcharge of 6.3% as remittance fees in the traditional system, crypto transactions cost much less. Instead, the US leading crypto exchange estimates for conventional money transfer regimes can be 96.7% cheaper using Bitcoin (BTC) and Ethereum (ETH) as crypto assets.
Research shows that by 2021, over 8% of the US population, or around 27 million people, will own cryptocurrencies. Cryptocurrencies’ growing popularity and acceptance are likely to accelerate wider and mainstream adoption. With this ever increasing, remittance fees are likely to be resolved with a much greater impact.
Andrew is a blockchain developer who developed his interest in cryptocurrencies while graduating. A keen observer of detail, he shares his passion for writing alongside being a developer. His backend knowledge of blockchain helps him bring a unique perspective to his writing
