Bitcoin’s Transaction Fee is 300 Times More Cost-Efficient Compared to Bank Transfer Platforms
The inception of cryptocurrencies has seen the old guard reaping benefits from the finance industry heavily critic the technology. Among the experts skeptical on digital assets include bankers who enjoy over 80% in profits attributed to money transfers.
Data gathered from the Bank of America shows that charges for international transfers can range up to $35 while local ones could be as high as $30. This is relatively high given most of these are remittances earned through hours of hard work.
Making matters worse, the Fedwire which is the US operated RTGS charges the financial institutions way lower for the same transfers within its platform. The fees could go for as low as $0.25 for a single transaction.
This would mean that statistically banks retain over $29 for every transfer which can accumulate to over 80% as mentioned earlier. Therefore, the Bitcoin and cryptocurrency enthusiasts would probably win a cost-effectiveness argument on this feasibility.
Bitcoin’s Transaction Friendly Cost (300x Cheaper)
Back in 2017’s Q4, Bitcoin rallied to the $20,000 levels attracting a large entrance into the cryptocurrency markets. At that time, its transaction fee was at its highest given large volume of transactions the network was under pressure to handle.
The Bitcoin crypto coin enjoyed an early mover advantage having started back in 2009. This project managed to use its scalable platform as a competitive edge last year to dominate over 50% of the markets.
This year has been a fundamental value addition phase for blockchain & crypto projects. Both Bitcoin and the popular Ethereum have deployed resources in protocol development to scale services within their networks.
Ethereum is currently working on the implementation of Plasma & Sharding while Bitcoin linked Segwit and Lightning to tackle scalability inefficiency. The move is expected to positively affect the adoption of crypto coins as more users will be able to transact simultaneously in future.
Stats in 2018 show that Bitcoin is truly cost-efficient given the rates have been gradually reducing and now at below $1. Its median fee for the year is approximately $0.1 which is a drop in the ocean in comparison to the charges on bank transfers.
Bitcoin’s narrative of expensive transaction cost had been fueled by the market bulls in 2017. However, this has proven not to be the case over time. Crypto enthusiasts & analysts who understand the market might attribute the ‘expensive fee’ during that time to the forces of demand for digital assets. What remains clear is a significant economic disparity between the high cost bank transfers and low cost cryptocurrency-affiliated transfers.
The Cryptocurrency Economies Of Scale
In the world of digital assets, the volume of funds being transferred will not alter the transaction fees charges. This simply means that making a payment of $1million via BTC would cost you a similar amount to making a $10 payment through the same digital currency.
If one would have opted for the banking avenue, the same $1 million transfer would be charged thousands of dollars or even more to guarantee is completion. This is among the major drivers for blockchain adoption in token friendly assets like art and real estate.
University of Cambridge Historian, Dr. Garrick Hileman defended this logic with the sentiments below,
“If you’re only paying a $2 transaction fee on a piece of art that’s worth tens of thousands, the fee is basically zero. But if you’re paying two or three percent on a piece of art of that value, then the numbers can go up quite a bit.”