If you have ever sent money abroad using your local bank you probably noticed that their model favors corporate profit over people’s need and its own convenience over fast speeds. For the majority of businesses and individuals in the developing world, foreign exchange remains a critical inhibitor to their success or sometimes access to basic food and medicine. As a leading blockchain banking company that strives to help people make international transfers faster and cheaper we noticed a particular trend in new users signing up from the developing countries.
While our early adopters have come from Europe and North America, more recently we have also seen a steep adoption rate among users sending money to and from developing countries on the African and Asian continents. In total the number of sign ups from the developing countries is coming closer to those in the US and the EU. Taken together users from developing countries form approximately 30% of our new signups globally.
Break down of new Bitwala users in the developing world
Our daily website visits also reflect this growing trend. Bitcoin users in North African countries are a growing proportion of Bitwala’s userbase, making up 4.4% of visitors, up from historically 2% and surpassing Switzerland.
Santander leak and the dangers of banks
Banks charge a lot of fees and manipulate currency exchange rates to their advantage, resulting in a huge cost to customers all over the world.
At a cost of $4 billion per year, international transfers to Africa are the most expensive in the world. Furthermore, online and offline businesses also continue to pay a steep price for transferring money abroad or even domestically as the majority of banks charge between 10-19% on any transfers to, from and within African countries.
While transferring money to South East Asia is cheaper than it is to Africa, banks and intermediaries doing so charge high enough fees that take away a significant amount of people’s hard earned money. Let’s consider the case of Jane, a hypothetical expat in Berlin who relies on banks and money transfer services to support her parents living in Beijing. She sends €500 to them regularly each month. As a customer in one of the European leading banks, it costs her a total of €47.7 each month to make that transfer. Over a year this number rises to more than €570. If she were sending €2500 per month – it would cost Jane a total of €1441 per year just in transfer fees.
This week’s leaked document from Santander, a major Spanish banking group, confirms the dangers of using banks. In 2016, the bank made €585m solely from international money transfers, making up 10% of all of its revenue. In addition to transfer fees, the bank also made another killing by controlling its foreign currency exchange which helped it earn €290 million. Perhaps the most shocking part is that 80% of all global money transfers are still conducted via banks and conventional monetary transfer channels.
“Bitwala is changing the way international payment transfers are handled today. Because we utilize the blockchain technology, we are much faster and cheaper than a traditional bank.” – Jörg von Minckwitz, CEO of Bitwala
Making bitcoin work for you
Bitcoin offers a much more efficient method of sending money abroad. This is done by shortening the time involved in trade settlements and securing the best exchange rate.
Most importantly, the strength of bitcoin and the blockchain technology that it relies on is that it allows you to send money across borders without paying the steep fees charged by traditional gatekeepers like Western Union, MoneyGram, Ria and others.
At Bitwala, our mission is to empower people to make cheaper and faster international transfers. For businesses, this means settling contracts in a matter of hours rather than days. Businesses can also trade with more countries as transfers are cashed out in more than 20+ currencies. You can also use the bitcoin debit card to pay for transactions abroad or make mobile money transfers to Africa free of charge. Follow us on Facebook , Twitter and Youtube to stay in touch.