Bitcoin has historically been praised as a money transfer network, a store of value, and a medium of exchange, but with such grandiose goals, it’s good to step back and objectively compare the benefits and costs of bitcoin compared to more traditional money transfer systems such as PayPal, Western Union, Moneygram, and Venmo. After comparing speed, convenience, and other factors, it is clear that bitcoin is an efficient contender for anyone`s money transfer needs.
Banking Account Requirements for Other Options
Both Venmo and PayPal require users to have a bank account in order to transact through their network. This is fine for many people, but not for the 20% of US households who are unbanked or underbanked. These 25 million households rely on expensive, slow, and outdated systems like Western Union or Moneygram. With bitcoin, anyone can create their own wallet, which is essentially a secure virtual vault for storing their new digital funds. Some people say bitcoin is essentially allowing the underbanked to have a bank account in their pocket. This allows them to send money fast and at little cost whenever they want after the bitcoin is purchased.
Transaction Processing Speed
Bitcoin transactions can be sent instantly and only take typically 30 minutes to be confirmed on the network for the recipient to spend the Bitcoin. This still compares very favorably to all other networks. Western Union and Moneygram can often take hours or even up to days, while PayPal and Venmo transactions take a few days to fully process a transaction to and from a bank account. This time along with intermediaries involved exposes banks and others to financial risk and fraud that is greatly reduced by the irreversibility of bitcoin.
While processing fees have also increased on the bitcoin network due to its massive popularity, the average transaction cost is currently only $2. These processing fees charged by the bitcoin network are not on a percentage basis, so they don`t increase exponentially like other services. This compares very favorably to Western Union and Moneygram, where it might cost up to $15 to send as little as $50. PayPal and Venmo often have somewhat low fees around 3%, but when you consider their 5% foreign transaction fee the fees can rack up. The truth is that Bitcoin has lived up to its promise to be a successful money transfer network. That’s not to say Bitcoin can’t improve even more; there are several ongoing proposals to scale Bitcoin: from Segwit to larger blocksizes. However, many people predict that Bitcoin transaction fees will drop significantly even as the network grows 10x in the next few years.
Western Union and Moneygram are known to be inconvenient for the agent location and the customer. Many agent locations do not want to spend time processing paper transactions and verifying the customer’s identity for 5 to 10 minutes, only to make a couple dollars. Bitcoin Depot’s crypto ATMs are a way for stores to get the benefits of money transfer networks without having to interact with customers. This saves the store time, while also offering convenience to the end customer. The user can simply follow the steps on the screen to purchase Bitcoin. All compliance features are automated.
As was described above, Bitcoin Depot’s ATMs are a great alternative to established money transfer services such as Western Union, PayPal, Moneygram, and Venmo along several key metrics. The automated transaction process offers customers and host locations convenience, no bank account is required, transaction times are quick, and sending bitcoin to others is easy and inexpensive. All in all, bitcoin is an ideal solution for anyone seeking for cost effective money transfer solutions.