How to transfer cash via bitcoins, for dummies
Tired of capital controls? Want to move cash abroad without paying a fortune on FX fees?
Bitcoin promises to make our lives easier..
What is bitcoin?
A digital currency based on cryptography. In contrast with physical currencies where there is a central bank controlling supply and demand, Bitcoins are decentralized. Bicoins live on the internet in decentralized computers that “mine” new coins while helping existing users to make transactions. Every coin can be used only once, they can divided in fractional units and their value fluctuates according to the demand. So this new breed of currency can be used as an exchange mechanism to buy goods or transfer cash abroad saving on bank fees.
How I make a wallet?
You need a wallet to store them. Handle them with care because a copy-paste is enough to lose them. My favorite wallet is the Blockchain because it can be controlled both via an app and via a browser. It is free and you can sign up here https://blockchain.info/wallet
Buying / Selling bitcoins
The easiest way to buy bitcoins with cash is via special cash-points called “Bitcoin atm”, the nearest one can be found here: http://coinatmradar.com/ in most of the cases this website discloses the fees as well. Usually these ATMs charge a 4% transcaction fee, Outch!
Cheapeer way to buy/sell bitcoins online is via a P2P network, like https://localbitcoins.com or a bitcoin broker like Kraken.com. I prefer Local Bitcoins to Kraken especially for smaller transactions because there is no-minimum fee for deposits/withdarwals and usually the total transaction fee charged is only 1-2%
LocalBitcions is like Craigslist or Ebay so you need to check a) the exchange rate you get is close enough to the market price as quoted on brokers like Kraken.com (at this moment 1 bitcoin is worth 253 euros) and b) you deal with a reputable dealer that made similar transactions in the past.
LocalBitcoins offer a bitcoin escrow account, so you can chat with the dealer and ask to put the bitcoins in the escrow account, then you transfer you money via a bank-transfer and ask the dealer to have the bitcoins released in your digital wallet. Once you have your first bitcoin (or a slice of it) you can sell it back to another dealer for another currency and ask for the proceeds to be transferred to another bank account that doesn’t have to be in the same country where the bitcoin was purchased.
For example you can deposit 258 euros via a SEPA bank transfer to a reputable dealer found on https://localbitcoins.com/ and get 1 bitcoin. Then after a couple of minutes you can sell this bitcoin to another dealer and get a deposit in your foreign account of 177GBP, at GBP/EUR 1.42 after fees, which is the most competitive rate I could find !!