Cryptocurrency as an alternative: why transfer money via crypto when banks charge you a 15% fee

Let’s try to understand why international money transfers are so expensive and whether there is a more efficient way to send funds to relatives and friends abroad.

Why traditional transfers eat up half the amount

When you transfer money abroad via a bank, the funds go through a whole chain of financial institutions. Each link in this chain takes its fee.

A typical scenario: sending 1000 pounds sterling from the UK to Los Angeles through the banking system will cost you about 10-15 pounds just in fees. Processing time? From a few business days to a week. Not to mention hidden currency exchange fees.

The system itself is based on the SWIFT (Society for Worldwide Interbank Financial Telecommunication) network, which connects banks worldwide. The problem is that money often doesn’t go directly. It passes through intermediate banks, each charging a fee for processing the transaction and currency conversion. On average, banks take 2-4% of the transfer amount, plus hidden fees from intermediary financial institutions.

Fintech services like Wise or Revolut have tried to simplify this process, reducing fees to 1.50-4.66 pounds and making transfers almost instant. But even they are not accessible to a significant part of the global population, who either lack documents or live in countries with limited banking infrastructure.

Blockchain: minimum fees, maximum speed

Cryptocurrency transfers fundamentally differ from bank transfers. Instead of a chain of intermediaries, the transaction goes directly between two wallets via a distributed network. No banks, no holidays, no delays.

A real example from Reddit: a user received a payment in USD Coin (USDC) on an Ethereum address. The fee was only $0.008869. Execution time? Two seconds. In comparison: Western Union charges $10-12 for every $200 sent, plus 1-2% hidden fee for currency fluctuations.

Another user needed an urgent transfer home for repairs and faced a set of “cost-effective” options: Western Union (10-12% fee), Money Transfer Operators (3-5%), PayPal (10%). Then he tried Stellar (XLM) and found that even with withdrawal and deposit fees, the total cost was significantly lower than any traditional method.

On the Solana blockchain, the average transaction cost is about $0.00025, and confirmation occurs in about five seconds. It’s not just fast — it’s different.

What you need to know before your first crypto transfer

Before sending funds, it makes sense to understand the basics.

Choosing a cryptocurrency: Starting points are Bitcoin (BTC) or Ethereum (ETH), but for international transfers, stablecoins like Tether (USDT) or USD Coin (USDC) are usually more convenient. The market capitalization of fiat-backed stablecoins reached $161.2 billion by September 2024.

Choosing a wallet: There are two options — custodial wallets (managed by a third party, easier to use but with less control) and non-custodial (full control, but all responsibility lies with you). Hardware wallets provide maximum security, software wallets — convenience.

Choosing a platform: Crypto exchanges based on blockchain platforms allow you to buy cryptocurrency with fiat money. You need to check if the platform supports your local currency and whether it requires KYC (identity verification).

Step-by-step transfer process

Step 1: Ensure your wallet is secure. Set up a recovery phrase, activate two-factor authentication (2FA).

Step 2: Transfer fiat money to the platform and buy the required amount of cryptocurrency. Account for the exchange fee.

Step 3: Get the recipient’s wallet address and triple-check it. Blockchain transactions are irreversible — one typo can mean losing your money.

Step 4: Click the withdrawal button, insert the recipient’s address, specify the amount. Check the network fee (higher fee = faster transaction). Confirm the operation.

Step 5: Notify the recipient about the transfer, share the transaction hash for tracking.

Funds usually arrive within a few minutes.

Where the recipient can cash out cryptocurrency

If the recipient received cryptocurrency on an exchange, they can immediately sell it for their local currency. Be prepared for exchange fees and spreads (the difference between buy and sell prices).

Alternatives:

• Crypto ATMs: If available in the recipient’s area, cash can be withdrawn directly there.
• Direct spending: If merchants accept cryptocurrency, it can be spent without conversion.
• P2P platforms: Decentralized exchanges allow direct crypto exchange between people without intermediaries.

How crypto solves problems that banks don’t

Financial access for those ignored by banks

In countries like Venezuela, people escape hyperinflation by receiving transfers in Bitcoin or USDT. In September 2021, El Salvador officially recognized Bitcoin as legal tender to improve access to financial services.

Overcoming lack of documents

Lack of ID is a main reason millions remain outside the banking system. Traditional platforms require strict verification. But decentralized exchanges (DEX) allow sending and receiving money even without documents.

Speed for migrants

Migrants in the UAE or Singapore constantly send money to families in India, the Philippines, or Nigeria. Fiat channels take 2-5 business days and charge up to 10% fee. Blockchain handles it in seconds with minimal costs.

Aid in conflict zones

When banks close (as happened in Ukraine and Afghanistan), refugees and their families get urgent help precisely through cryptocurrency. It’s the only way to transfer money when traditional systems collapse.

Borderless charity

Ethereum co-founder Vitalik Buterin donated 50 trillion Shiba Inu tokens (worth $1.2 billion at the time of donation) to the India relief fund during the COVID-19 crisis. Such large-scale charitable transfers are almost impossible through traditional banks.

Security: how not to lose money

• Check addresses multiple times: Use copy-paste or QR codes, never type manually.
• Choose reliable platforms: They provide infrastructure and reduce fraud risk.
• 2FA — not optional, but essential: Add an extra layer of protection.
• Understand network fees: Bitcoin takes longer and costs more, Solana and Polygon are faster and cheaper.
• Update wallet software regularly: Ensure you are using the latest version.

Common issues and solutions

Network congestion: During peak activity, the network may be overloaded. Solution — set a higher gas fee for priority.

Cryptocurrency volatility: The rate can change during transfer. Solution — use stablecoins like (USDT, USDC).

Address errors: Can lead to permanent loss of funds. Solution — always double-check the address.

Unknown local regulations: Different countries treat cryptocurrencies differently. Solution — study your jurisdiction’s legislation before starting.

Taxes: what recipients should expect

In the US, IRS considers cryptocurrency as property, so transfers may trigger capital gains tax if the value has increased since purchase.

In the UK, HMRC considers such operations taxable if profit exceeds the annual exemption.

In Japan, crypto income is taxed as miscellaneous income with progressive rates.

Singapore does not impose capital gains tax but may tax companies working with crypto.

UAE has no personal income tax, making it a crypto-friendly jurisdiction.

Tip: keep detailed records of all transactions and consult local tax professionals.

Summary: blockchain for money transfers is no longer the future, it’s the present

By November 2024, Bitcoin’s market capitalization reached nearly $2 trillion, surpassing silver (1.7 trillion) and establishing itself as a serious global asset. It’s not just speculation — it’s a working infrastructure for international payments.

When a bank charges 15% fee and takes three business days, and blockchain handles it for $0.00025 in five seconds — the choice is obvious. Crypto via crypto — it’s not just a way to save, it’s a sign that the old money transfer system is outdated.

A proactive approach to platform selection, address verification, and using stablecoins turns crypto transfers into a safe, reliable, and surprisingly convenient way to send money to relatives and friends, wherever they are.

(ETH