How does that compare to e.g. paypal?
The cost to transfer from wallet to wallet, is about $4.00 right now. This destroys Pay Pal where the cost which would be $145.00, if you do this wallet to wallet transfer at night it could take 30 minutes to move from person to person. This is fine for us, but obviously will never work for transactions in a store.
He can then use a site like Coinbase, to sell the Bitcoin and then withdraw the Bitcoin into his local bank/currency. This can happen in as fast as 4 days, but as much as a week. I'm not sure if that's on Coinbase or his local bank, but it actually has nothing to do with Bitcoin.
But the amount being transferred is fixed before the withdrawal starts, so it the time he is exposed to Bitcoin price fluctuations is only a few hours.
Basically it comes down to this. If you can afford to wait a week to access your funds Bitcoin is a great way to transfer large sums of money. If you need the money immediately you still need to pay a high fee to Pay Pal, or an even higher fee to Western Union to the less technically inclined.
http://mashable.com/2017/08/28/bitcoin-transaction-fees/#.7b...
Please correct me if I am wrong, but it very much looks like I need to pay minimum 1.49% to convert from USD to BTC and also your brother needs to pay minimum 1.49% before he has gotten his local currency. So this is more expensive than Paypal?
Most people who do significant transactions on Coinbase actually use the trading tool called GDAX. Which can be a little scary to look at first. It's a trading platform owned by Coinbase and transfers between the platforms are completely free.
Purchasing and selling directly through Coinbase has a similar fee to Paypal, especially if you are buying with a credit card.
Coinbase takes my money in U.S. dollars, then I transfer to GDAX, buy Bitcoin. You could actually skip Coinbase entirely and just use Gdax but the Coinbase interface is nice and its easy and I like to do it this way.
GDAX charges a .25% fee on the "taker" of a transaction. The maker/taker dynamic I am not equipped to explain, but only 1 of the parties pays that fee. If both my brother and I got hit with the taker fee on our transactions we would be losing .5% total, still much less than Paypal.
This fee could be avoided entirely by becoming the "maker" but that exposes you to some risk, because you are setting the price you think Bitcoin should be traded at, and you must wait for someone to agree to the price you are setting.
But still I fail to understand what is the case where bitcoin is a competitive option to get money from bank account to another. in addition to the possible 0.25% fee you are anyway facing the bid ask spread over two currency exchanges (usd-> btc and btc -> target currency) and if you compare those to bank transfer costs, I just don't see how looping through btc could be more economical.
Also, if you can afford to wait days, you do not compare to paypal, but to a normal international bank transfer. Haven't done that for a while, but I assume that cost is around 10-20 dollars.
I can transfer $5,000 to my brother in Ukraine for, essentially 0 using Bitcoin.
You are correct that the fees may be too high for typical consumer transactions like buying a soda from a vending machine. But for large transactions, and institutions moving money around Bitcoin provides a big advantage.