What is the future of money transfers? P2P V Crypto V Banks
and What Works Now!
Remember when Bitcoin was going to answer all our prayers even for money transfers overseas?
It just hasn’t worked – just yet..
The reality was that dealing currently with Bitcoin for money transfer can be relatively messy, costly and slow because of the need to use an exchange and wallet. You also still needed your fiat currency (like USD, GBP, EUR, CAD, AUD) at the start and end of each transaction.
Costs, speed and frustration aside – the biggest problem I found personally is the fluctuations in the Bitcoin price. In just days of holding Bitcoin you could loose or make 2, 5, 10% or more. That is not risk I or many others want to take.
But a solution is brewing in the Lighting Network!
Meanwhile Fintech companies like OFX (best all rounder) and TorFX (best customer service) and Remit Companies have been getting a growing piece of the market and more recently CurrencyFair (review) have lowered costs.
P2P (Peer to Peer)
For a while I thought P2P would offer the ultimate solution because you can swap money with others on the other side of globe instantaneously and very inexpensively. In practice though, they need to be geared towards smaller transactions to ensure there is enough liquidity on both sides of the transaction.
But there are some standouts.
For smaller amounts (less then $7000 USD) I think P2P can still work – it’s cheap, relatively fast and with great online platforms. Unfortunately few services have been able to make a go of this rather complex business model but there is one that still allows you to effectively swap currencies with others and it is Currencyfair. See how it works here.
Many people don’t realise this but Wise also started life as a P2P service. While it is no longer a P2P service the soul of the company has been focused and clear and they remain awesomely transparent with low fees.
You might also want to consider PayPal international for amount of just a few hundred dollars but beware the main reason I include PayPal is more about convenience as the fees can be signifiant for international transfers.
Most P2P services though become limited for larger amounts.
Also see CurrencyFair (review) and Wise (review).
For a small percentage of customers, they also have a slightly alarming practice of asking for more ID and potentially locking your account after you sent them your money to their account – if you exceeded certain thresholds in order to for them to meet regulations.
At the end of the day for larger amounts, it turns out that companies like OFX and TorFX are in my opinion the best way to go if you want to move larger amounts.
I also think there can be huge advantage to comparing international money transfer services.
Bitcoin and Lightning Network for Money Transfers?
The Lightning Network is a way many people are starting to use Bitcoin to send any currency quickly, securely, and cheaply – like basically free.
The cool part is that you don’t need to own Bitcoin, it is just the means to keep track of the transactions.
The challenge here is really just one of adoption.
To use the Lightning Network, you need a special wallet that supports it. There are several wallets available.
Once you have a Lightning-enabled wallet, you need your other party to also have a Lightning-enabled wallet.
You can then open a payment channel with them and start sending money back and forth instantly and securely.
Also, it’s important to note that not all Bitcoin wallets or exchanges support the Lightning Network, so you’ll need to do some research to find a wallet or exchange that supports it.
So there is a bit of set-up, but the payoff is huge.
If all this seems too hard, maybe CurrencyFair or Wise are the way to go.
Good news for everyone!