Key Takeaways
- Sending money with crypto significantly reduces the lengthy processing times and high fees associated with traditional forms of overseas money transfer.
- Crypto international money transfers are especially essential in regions with little or no banking infrastructure.
- Using crypto to send money abroad ensures faster and more secure transfers without delays caused by banks or holidays.
- Use a secure platform and ensure you have the correct wallet address to facilitate a smooth transaction.
As the world becomes more globalized and connected digitally, sending money with crypto has become the easiest way to facilitate international money transfers. This article will explore using digital currencies to send money to friends and family in other parts of the world.
What is Cryptocurrency?
Cryptocurrencies are a digital or virtual currency that uses cryptography to secure transactions. Crypto operates on blockchain technology, ensuring security and transparency in transactions, with Bitcoin and Ethereum being the most popular cryptocurrencies. Since May 22, 2010, when Laszlo Hanyecz made history by spending 10,000 BTC on two Papa John’s Pizzas, cryptocurrencies have gained massive popularity and Bitcoin is now trading at over $100,000 per BTC. Moreover, they have also significantly disrupted the traditional financial industry, and now sending money with crypto is becoming the best way to make international money transfers.
How Sending Money with Crypto Works
Making international money transfers can be expensive because the transfer bureaus charge exorbitantly. However, when you send money with crypto, you avoid these exorbitant fees because, unlike the transfer bureaus, no middlemen are involved between you and the person receiving your cash gift. Sending money with crypto operates on a peer-to-peer basis, meaning you retain complete control of the digital assets in your crypto wallet.
As a digital currency, you can also use cryptocurrencies to pay for goods and services, just like you do with your local government-issued currency. While Bitcoin remains the most popular cryptocurrency, there are over 11,000 other digital assets. However, the most notable cryptocurrencies you can use to send money abroad include Ripple, Ethereum, Cardano (ADA), and USDT (Tether).
While sending money with crypto internationally can be cheaper than banks or other traditional financial institutions, you must understand how digital assets work to choose one that best suits your interest. Your choice will determine the amount of transaction fees you will pay and how long it takes to make the transfers. Moreover, you must carefully select your digital wallet to ensure wallet compatibility. You can choose between using an exchange wallet or a software wallet to transfer your cash.
Why It’s Cheaper to Send Money with Crypto
Sending money abroad using traditional methods can be more expensive than sending money with crypto because banks and money transfer organizations charge fees for international transfers. Moreover, traditional operators also profit from the exchange rate when they convert your money from the original currency to another, leading to an extra expense. According to World Bank reports, the average fee for making an international transfer can go up to 10.7% of the amount sent in some cases.
Most people making international money transfers mostly remit to friends and family members in their countries of origin, especially in developing countries. In some cases, the recipients are either unbanked or under-banked, and the funds sent become a substitute for banking. However, sending money with crypto is different because you send the funds directly to the recipient’s digital wallet or via a peer-to-peer exchange. Once the funds hit the recipient’s wallet, they can cash it out to their local currency using a crypto exchange.
Benefits of Sending Money with Crypto
Some of the reasons cryptocurrencies have become an attractive option for international money transfers include the following:
Speed: Unlike your regular bank, crypto operates 24/7, and the transfers usually happen in real time.
Freedom: Users can send money whenever they want because digital assets aren’t tied to any banking or government institution.
Flexibility: There are different types of cryptocurrency to choose from—you select one that is suited to you or the destination country.
Transparency: All transaction details are available on the blockchain, meaning you can see exactly where your funds are.
Prerequisites for Sending Money with Crypto
There are prerequisites you need to know before you can successfully send money with crypto:
Understand Crypto Basics
Before you can send money with crypto, you need to familiarize yourself with the basic terms and processes of the crypto world. Take the time to learn about cryptocurrencies like Bitcoin and Ether or stablecoins like USDT, cryptocurrency exchanges, block confirmations, transaction fees, etc.
Setting up a Crypto Wallet
When choosing a crypto wallet, consider your unique needs to know the difference between custodial and non-custodial wallets. Custodial wallets that third parties manage hold your private keys. It’s simpler to use them, but there are challenges associated with control issues. On the other hand, non-custodial wallets are hardware wallets where the user has complete control of their private keys. They prioritize security, and you’re fully responsible for key management.
Choosing the Right Platform
Do your research to locate an exchange platform for crypto-to-fiat conversion with a strong reputation, robust security measures, and affordable fees. Verify that your preferred crypto exchange supports your local currency. Ensure you complete the Anti-Money Laundering/Know Your Customer (AML/KYC) requirements and all other required processes to complete registration.
How to Send Money Abroad Using Cryptocurrency
The following are the steps to follow when you want to send money with crypto:
Step 1: Set up a crypto wallet
Choose a crypto exchange or wallet supporting the cryptocurrency you wish to send. Secure the wallet recovery phase and enable security measures like two-factor authentication (2FA).
Step 2: Buy Cryptocurrency
Transfer the money you need to the exchange to buy the crypto you will send. Remember to include an extra amount to cater for exchange fees and conversion.
Step 3: Obtain the Recipient’s Crypto Wallet Address
Since crypto transactions are irreversible, carefully confirm the recipient’s address to ensure an error-free transaction.
Step 4: Initiate and Complete the Transaction
Once you have confirmed all the details, tap the “Withdraw” button. After that, you must copy the recipient’s address and paste it in the required field, followed by the amount you intend to transfer. Confirm transaction details, enter the withdrawal amount, and select the network. Once you tap “Send,” the platform will ask you to confirm the details before you can send the amount. The recipient should receive the funds in a few minutes.
Step 5: Notify the Recipient
Once you’ve completed the transaction, notify the recipient and share the transaction ID with them for tracking if required.
Platforms that Facilitate Crypto Transfers
There are different platforms or methods you can use to send money with crypto, including the following:
Crypto Exchanges
Cryptocurrency exchanges enable the buying, selling, and trading of crypto, acting as intermediaries that provide a secure environment for crypto-based transactions.
Peer-to-peer (P2P) Platforms
P2P crypto platforms facilitate crypto transactions between individuals. A decentralized approach eliminates third parties, giving users more control and potential cost savings.
Mobile apps
There are mobile apps that enable crypto remittances by leveraging blockchain technology. Consider apps like Cash App and Strike for a convenient and streamlined process when sending money with crypto.
Conclusion
Sending money with crypto is emerging to be one of the easiest, cheapest, fastest, and most secure ways to send money to family and friends abroad. The widespread adoption of crypto, which has seen its usage surge, has created an opportunity to enable international money transfers. As crypto adoption grows, crypto-based transfers will become faster and more affordable, especially when stablecoins eventually become a part of global payment networks.
