From the top twitter comment:
> 0.06BTC in fees? Why so expensive?
Just gotta say, its pretty amazing we live in a world where 1 billion dollars can get transferred pseudo-anonymously in a reasonable time frame, only costing the transfer party $600. As a really stupid, non-real-world comparison, Western Union has a transfer limit of $2500 per transaction, and a $20 fee per transaction. If you were to initiate a $1,000,000,000 transfer it would take something like 400,000 transactions costing you something like $8 million dollars in fees.
International wire transfers between USD accounts usually cost about $25 regardless of the amount.
There's a lot of dollars moving around in the global financial system quickly and affordably, Bitcoin advocates just don't seem to know about it for some reason.
International wires are a bad example because they charge a huge FOREX spread. For a high-ticket transfer, you'd need to use a brokerage for the exchange first, which is also very cheap, but a bit more than $25 ($20 per million at InteractiveBrokers). Then a very cheap domestic wire for the last mile. Or, for small-ticket transfer TransferWise is around 0.85% for the whole exchange.
International banks are happy to open USD denominated accounts if you're a business or a private customer with a bit more than just paychecks and bills coming and going. Then you can send and receive USD with no exchange fee.
If you need to spend it locally, you still need forex at some point — but that's a much more predictable proposition than going from the wildly volatile BTC to local currency.
Depending on the regions, you can do tricks with your investment account too— Norbert's Gambit is the famous one for cheaply moving a lot of money between USD and CAD:
Is Norbert's Gambit anything but theoretical? It sounds like a guaranteed way to lose money.
Given the tick size, crossing the spread with this ETF is going to cost you around 10bp alone. Never mind that this ETF only holds $45m in assets - you're only going to be able to get a very small amount without eating through price levels. On top of all this you have to carry 3 days of currency risk?
I'm sure other online discount brokers are similar, but I checked Interactive Brokers, since I'm a customer, and they charge max 0.2bp fees, the spreads are around 1bp and there's no currency risk.
Are you in the US? While I've never personally done Norbert's Gambit my understanding is that it's extremely popular for Canadian investors to do if they want to get USD. Might not be vice-versa.
The most common use case I'm familiar with is within RRSPs, as there is sometimes a tax advantage to using US-listed ETFs within them. Most brokerages charge 1.5-2% to do currency conversion so it would be a lot better deal to do Norbert's Gambit to get USD trading funds.
I'm not in the US but there are probably even more online discount brokers operating in the US and Canada so maybe it's a tax efficiency thing?
Paying 1.5%-2% for FX conversion between two major currencies is very expensive unless the sums are small. The last time I converted currencies using a discount broker - including all costs I was charged less than .1% compared to the mid-market rate at the time.
You'd probably be best served to just go through an investment bank. FX market is relationship driven unlike the stock market. You don't have any of the trading relationships with the huge players in the market, and probably never will. The cost in time and money to participate in these markets vastly outweighs the paltry sum the traders are making on your transaction. Solicit quotes from multiple counterparties, pay attention to the institutional rates, and make sure you aren't getting screwed too badly.
Did you miss the part about it being anonymous(pseudonymous)? Also did you consider the fact that it circumvents any government regulations / oppression / sanctions that parties involved in the transaction may have been subjected to?
Bitcoin advocates know very well that centralized systems are faster and more efficient, that’s just the trade off of actually owning your assets. Right now you own nothing but some promise in some database controlled by bunch of potentially corrupt individuals governed by potentially repressive institutions.
>Right now you own nothing but some promise in some database controlled by bunch of potentially corrupt individuals governed by potentially repressive institutions.
To be fair, people[1] have raised the question of whether bitcoin is manipulated by people who have printed other types of currency without limit, which implies practically nobody understands how bitcoin works.
Also Tether is special case - it’s not unrelated altcoin, it’s supposedly stablecoin bound to BTC.
“Supposedly” because no proper audit of tether assets and liabilities was done and there is little transparency.
Counterargument is that if tether is insolvent, it would affect Bitcoin but only to some degree.
Here’s the logic: if tether was printed without backing to buy and prop up price of bitcoin then somewhere somebody is sitting on a pile of USDT which they will want to get rid of. You can get rid of USDT by asking tether to buy them back from you for USD or you can trade them on the market for BTC. Assuming tether goes dark USDT owners will be forced to sell USDT at discount creating even more buy pressure for BTC. The whole thing will be a huge debacle and incur some damage to BTC but ultimately it’ll be perceived like one more exchange scams - not your keys not your Bitcoin, trusting that USDT can keep USD parity is purely on you.
Bottom line is - people are being manipulated, not Bitcoin. Bitcoin will continue to live up to its promise - distributed open ledger and transaction platform, solving consensus problem via proof of work and there will only ever be 21 million of them.
That’s like manipulating value of USD by printing more Euros. Sure it has effect because economies are interrelated by it can’t be sustained - Euro will be worth nothing eventually.
But not all international transfers are USD to USD. Anytime there is an exchange of currency the banks involved take their own cut on the exchange rate.
Many people cannot access bank accounts that allow this sort of transfer and thats why Western Union etc exist, they charge a % of the value being transferred as well as a flat fee.
I think you're confusing the real-world version of you that has to pay $20 per transaction with a hypothetical billionaire version of you. People moving large amounts of money around don't do 400,000 transactions at $20 a pop.
Do you really think people use 400,000 transactions costing $20 apiece to move large amounts of money? If you keep a billion dollars in a bank account (!) you can simply call your private banker and have it done with no fee.
My US bank account has zero transaction fees and if I had this kind of money I do not see why I could not transfer for zero fees (don't see a limit anywhere). And if making smaller transactions, apps like Venmo can transfer money both instantly and free (unlike Bitcoin).
Banks typically treat billionaire customers differently too, it's absolutely ludicrous to think they'd have to use hundreds of thousands of transactions (let alone pay for them!).
Maybe. Having worked in the wire room before, that is not inaccurate. That said, transferring one billion would require advance knowledge, multiple signoffs, and adjusting permissions for people. Depending on the institution the payments may have to be split, but odds are the bank would eat the cost to maintain that relationship.
I run a VC fund. We move store money around in large amounts (6-7 figure transfers, 7-8 figure balances). Our bank loves us and doesn't charge us any fees for anything ($0 wires etc). Having millions parked with them allows to lend the money which is how they make their revenue. They don't care about fees.
In the case of China, hundreds of thousands of transactions is too many, but it is apparently routine for transfers of money outside China to be done in a large number of small transactions due to the legal per-person limit on transferring money outside. (And yes, since it's a per-person limit, not only do you need to do a large number of transactions, you need a new cooperator to put their name on each one.)
Well if I were to show up at the bank wanting to transfer $1bn I am sure I would get all kind of stares, but can not see a technical reason why they would not be able to do it. Difference with Bitcoin is you can do it completely anonymously, for all the good and bad things that go with that.
Except we're all out here talking about this and no one knows what other $1bn transactions have occurred in the banking system today so we're not talking about those.
He means anonymous from bank actors and state actors obviously. When you transfer money with a bank or wire service they know who you are and who you are transferring money to. Nobody afaik, knows who either of these wallets are held by.
No dollars were transferred. If you want to convert it to actual things you can spend you have to pay an exchange at least 1% on either end. You're comparing moving around intermediate representation to something you can actually use, like a bank moving bits around in its internal ledger. WU is not a good comparison for large-quantity FOREX, InteractiveBrokers is one of your many options, and they charge a commission of $20 per million, which is at most a $20K fee not an $8M fee.
With that in mind you seem to be conflating a FOREX transfer with a bank-to-bank transfer which you can use a $30 (or as cheap as free) wire to more the whole billion instantly.
> No dollars were transferred. If you want to convert it to actual things you can spend you have to pay an exchange at least 1% on either end.
Actually, this isn't true. That's the lowest-cost way of converting the bitcoins to actual things. But if you don't want to interact with an exchange, you have enough BTC that you can easily find someone who will just take your payment in BTC and take on the job of going through the exchange themselves.
It still has to exit and you can’t discount that cost. Nobody will sell you a house for BTC and not exchange them for dollars. That means nobody will sell you the house for face value. You’re still going to have to discount the sale price to cover the exit costs unless you have data that shows otherwise.
For instance, if you came to me and offered me either $500K in dollars or $500K worth of BTC at today's prices (good luck defining that with volatility) I'd say sure, for $550K worth of BTC and I'll exit it immediately. Well, probably not, because I'm sure that BTC is either dirty or avoiding taxes and that's not a conversation I want to have with the IRS/FBI, but that's why you'd have to pay me so much more.
yeah if you look at https://jochen-hoenicke.de/queue/#0,1w , you'd see that anything above 20 satoshis/vByte would be overpaying[1]. the transaction in question paid 400 satoshis/vByte.
[1] ie. anything at that rate or greater would confirm in the next block, so there's no difference in paying more
It might. It depends on the status of the network at the time. If there is a significantly large unconfirmed transaction pool backlog and a transaction is made with a low enough fee then the miners may simply ignore the transaction for long enough that they let it expire and drop it completely. Theoretically, that transaction still could be confirmed at any time in the future, but, practically, it won't be. So, most wallet software will stop displaying an unconfirmed transaction after a number of days, returning to a pre-transaction available balance.
This got me thinking. I believe I saw last year where there was something like over 200k unconfirmed transactions on the blockchain. Right now it says 5000.
So, what is the minimum amount you could send with a proper transaction fee? Could someone flood the network with millions of unconfirmed transactions?
you could but if you wanted them to stop others from using the chain it would be pretty costly. if you didnt provide a fee then they go to the bottom of the list to get mined and some miners might not even bother
Yeah, looks like $1 would've probably been enough fees for this transaction to be confirmed within a reasonable timeframe (less than 10 blocks, ~a few hours).
>Just gotta say, its pretty amazing we live in a world where 1 billion dollars can get transferred pseudo-anonymously in a reasonable time frame, only costing the transfer party $600.
I'm quite sure the banking system could do the same, no problem. These are not technical limitations, they are regulatory. It's controversial enough whether any human actually needs a billion dollars, let alone the freedom to move/spend it however they want with zero oversight. But that's just me.
I don't have any experience with billion dollar transactions, but I am confident that people who do them as a matter of course don't incur 400,000 $20 fees each time.
I am not sure how bank handle such large transactions (100 milion+), but transferring millions is very cheap or for free - at least with standard IBAN within EU.
A large corp-to-corp (or even person-to-corp) transfer does have a lot of money involved (accounts to figure out taxes, lawyers if it's for buying or selling major assets, possibly international tax experts, maybe even an escrow service if it's between say a EU company and a Chinese company where they might not trust the other nations court systems).
And then the bank might charge a fee too, although I suspect with accounts that large, banks would do what they could to minimize fees since that much capital helps them with loads/interest.
$1 Billion USD at current prices. Having said that in the current SWIFT or any other legacy payment rail, there is no finality in transactions until 30+ days.
Not only that, is that you would have the Eye of Sauron quickly looking at you for moving such quantities especially if it were a private individual or some smaller group that isn't all registered with the powers that be.
The actual people who transfer $1 billion between each other (financial institutions, large corporations, and private investment vehicles) don't pay any fees either.
When you move $1B from one financial instution to another, the receiving end will payyou to choose them over their competitors, as well as provide other incentives.
Just gotta say, its pretty amazing we live in a world where 1 billion dollars can get transferred pseudo-anonymously in a reasonable time frame, only costing the transfer party $600. As a really stupid, non-real-world comparison, Western Union has a transfer limit of $2500 per transaction, and a $20 fee per transaction. If you were to initiate a $1,000,000,000 transfer it would take something like 400,000 transactions costing you something like $8 million dollars in fees.