Posted 5th Dezember 2023

How to Use Crypto To Send Money Abroad

bitcoin sent around world

In recent years, cryptocurrencies have grown massively in use and popularity.

They’ve become a major disruptor to financial institutions and how investors are trading their assets. Now, cryptocurrencies may offer you the best way to send money internationally.

Understanding how cryptocurrency works

International money transfer bureaus have hit many of us with large and unjustifiable bills when sending cash abroad. Cryptocurrency is the way to avoid these exorbitant fees.

Before we look at how to use cryptocurrencies for international money transfers, it’s worth understanding the fundamentals of cryptocurrencies

Cryptocurrencies are digital assets that holders can exchange for goods and services, as an alternative to traditional flat currency like the US dollar or the British Pound. They are decentralised, which means they’re not issued by a central authority like a bank or a government.

When you send crypto money to someone else, there’s no middleman between you and the person you’re paying. You always have full control over the assets you own in your digital wallet.

Introducing Bitcoin

Bitcoin was the first cryptocurrency and is the most widely known.

After Bitcoin launched, nearly 11,000 more followed in its wake.  Other notable assets in the crypto space include Ethereum, Ripple, and Cardano. You can send Bitcoin and any of these other currencies to other people and businesses around the world at little or no cost.

While fiat currencies, banks and other financial institutions hold a ledger of all transactions, cryptocurrency transactions are recorded a little differently.

Cryptocurrencies run on blockchain technology. This is a decentralised shared ledger that records all transactions. The ledger updates at all locations in real-time via a distributed peer-to-peer network of nodes. 

Transactions on the blockchain are immutable and irreversible. Anyone with an internet connection can view the blockchain record.

The decentralised nature of the blockchain means that all digital assets are traceable. Every coin has an owner and they can prove the asset is theirs through digital proof of ownership.

This infrastructure and transparency make it virtually impossible to „cheat the system.“ It’s also how cryptocurrency trading and cryptocurrency exchanges operate without needing banks. 

 How cryptocurrency offers the cheapest way to transfer money internationally

When it comes to transferring money internationally, Bitcoin and other cryptocurrencies such as Ethereum, Cardano and Ripple offer some of the cheapest ways to send assets abroad. The first step to sending money overseas using a digital currency is to select the right one for you.

Your choice will influence the account transaction fees you pay and how long these wire transfers take. It’s also important to consider crypto wallet compatibility.

Digital wallets

Most major software wallets like Metamask and TrustWallet can transfer digital assets. You can also send and receive assets such as Ethereum and Ripple using a wallet address on exchanges such as the Kinesis Exchange.

You can also store digital assets on a hardware wallet. They are encrypted physical devices that hold your assets offline. These provide greater security than software wallets and you can send and receive digital assets on them too.

To get started, you can either use an exchange wallet on Kinesis or another exchange or use a software wallet to send your first transfer.

Traditional versus cryptocurrency money transfers

To send money abroad the traditional way, you’ll need to go through a Money Transfer Operator (MTO) like Western Union. You can also use a bank transfer from your current or checking account.

Both banks and MTOs usually charge a fee for international money transfers. They also make a profit on the exchange rate they use when converting one currency to another. 

Unsurprisingly, this approach is expensive.

The World Bank reported that banks charge an average fee of 10.7% of the amount sent. That’s more than $21 in transfer fees for a payment of just $200. When you use the banks, there is no such thing as a cheap international money transfer.

When transferring money from the host country to the recipient, you, as the sender, face the following:

  • A transaction fee
  • Loss of value due to the exchange rate
  • Fee relative to the speed of transfer (can be as little as an hour up to six business days)

Most people sending an amount of money abroad are sending it back to their country of origin. They’re likely to be sending a remittance to their families and friends in a developing country. 

Quite often, recipients in these countries are underbanked. Money sent back home is often a substitute for banking to the poorest segments of society.

With cryptocurrency, it’s different and that’s why many consider it to be the best way to send money abroad.

You can send Bitcoin or other digital currencies directly to a recipient’s wallet. You do this via a peer-to-peer cryptocurrency exchange or using their wallet.

Once it reaches their wallet, the recipient can hold onto the cryptocurrency or cash it out to local currencies using an exchange.

Cryptocurrencies have become an attractive option for international money transfers. Users have cited a wide range of reasons for their preference including:

  • Speed: Unlike banks, cryptocurrency services generally operate 24/7. In many cases, transactions happen instantly.
  • Freedom: Cryptocurrencies aren’t tied to banks or government institutions. That means you can send as much money as you want, whenever you want. 
  • Flexibility: There are hundreds of ways to transfer cryptocurrencies. Choose from different payment options and platforms suited to different destination countries.
  • Transparency: With a crypto transfer, you can see exactly where your funds are at all times using the blockchain.

Is using cryptocurrency to send money abroad risky?

You should exercise due diligence and caution before sending any amount of money in cryptocurrencies.

It’s worth noting that while blockchains give you a certain level of anonymity, blockchain transactions are traceable and recorded, which leaves a trail of your transfers to and from a wallet address.
This is unlike cash. Cash is effectively anonymous and untraceable when using paper fiat currency.

The second is removing your assets from an exchange or a wallet. To exchange cryptocurrencies for local currencies and remove them from an exchange or wallet to a card or bank account can be tricky if local banks flag the activity as suspicious. Your recipient can withdraw Bitcoin to their bank account or debit/credit card or convert cryptocurrency into cash. However, they may have trouble completing the transaction if the local bank flags up the activity as being suspicious.

Before sending or receiving cryptocurrency, check the on and off-ramp procedures to ensure you can deposit and withdraw cryptocurrencies or fiat to and from an exchange or wallet.

Your recipient can withdraw Bitcoin to their bank account or debit/credit card or convert cryptocurrency into cash. However, they may have trouble completing the transaction if the local bank flags up the activity as being suspicious.

Before sending or receiving cryptocurrency, check the on and off-ramp procedures. Make sure that you can deposit and withdraw cryptocurrencies or fiat to and from an exchange or wallet.

Can you transfer money internationally free with cryptocurrencies?

Some exchanges and platforms will allow you to send cryptocurrency from your wallet to another person’s wallet for free. Others will charge a minimal fee if using a blockchain to send the assets.

In most cases though, using cryptocurrency is one of the cheapest ways to send money abroad. You don’t have to pay the fees and foreign exchange rates associated with MTOs and banks.

For example, sending Bitcoin to another wallet costs an average of $1.00 to $3.00 per transaction and Ethereum an average of $0.50 per transaction.

This is far cheaper than traditional methods of sending and receiving money abroad. As you can send crypto to any wallet around the world, it’s a much cheaper alternative. 

Exchanges can also be cheaper. 

Most exchanges charge between 0.1-1.5% for sending assets to another wallet, which again works out much less than traditional options. 

For example, on Kinesis, you can send assets to another user for a flat 0.22% fee. This makes the platform another viable alternative to using a wallet or a bank/MTO to send money abroad.

How to send money from blockchain to a bank account

To withdraw cryptocurrency to a bank account, you’ll first need to convert the asset to a fiat currency via the exchange platform you’re using. From there, you can cash out the funds to a bank account using your bank details.

Three ways you can do this are:

  • Use a card that supports cryptocurrency payments: You can link these cards to your crypto wallet and use them in the same way as any other debit card. When you use the card, it draws from your crypto wallet, converting it into fiat currency at the card’s exchange rate. Some retailers allow you to pay by crypto via a QR code.
  • Spend it directly: A growing number of online and physical merchants accept cryptocurrencies. Popular cryptos accepted include Bitcoin and Ethereum. This means you can shop online and spend using your crypto wallet via a card like the Kinesis Virtual Card, with instant conversion to fiat currency.
  • Use a crypto ATM: In major cities in the United States and other countries, you can buy Bitcoin and other cryptos at physical ATMs. Some of these ATMs will also allow you to convert crypto and withdraw cash in the local currency.

Sending money abroad with Kinesis

Cryptocurrency provides an easy and cheaper way to send money to friends, family or business associates abroad. But what happens when market fluctuations impact the value of your crypto wallet?

One of the biggest arguments against using cryptocurrency is its inherent volatility. 

Kinesis presents an alternative digital currency backed by historically stable, physical assets. We protect the value of the currency by pegging it to fully owned and stored gold and silver bullion we have in our vault. 

Kinesis digital currencies combine the security and flexibility of crypto with the rising value of precious metals. This approach minimises volatility and brings stability to your portfolio.

So, how do you start transferring money internationally?

You can buy, sell and manage your digital currency portfolio on the Kinesis platform, as well as fiat currencies.

Not only that, Kinesis has introduced a ‘send-to-email‘ feature. This enables users to send digital assets to those who don’t yet have a Kinesis account. You only need the recipient’s email address needed as information for the transaction.

Showing people how easy it is to transfer crypto is key to its widespread adoption. According to Content Producer, Latifa Alkhanjary:

“When a Kinesis account holder is sending crypto to a potential Kinesis user, the recipient will be sent an email. It will contain instructions prompting them on how to receive their funds. 

“The recipient of the email will then need to sign up for a Kinesis account and verify their email address to accept their payment.”

As a streamlined payment option for all Kinesis users, you can use the ‘send-to-email’ feature on our desktop and mobile applications.

The functionality allows users to transfer digital assets quickly. This includes Kineses gold (KAU) and Kinesis silver (KAG), as well as Kinesis Velocity Token (KVT). Send them to friends, family or business associates even if they haven’t set up a Kinesis account yet.

Open an account with Kinesis to start sending, spending, storing and trading digital currencies in one place.

This publication is for informational purposes only and is not intended to be a solicitation, offering or recommendation of any security, commodity, derivative, investment management service or advisory service and is not commodity trading advice. This publication does not intend to provide investment, tax or legal advice on either a general or specific basis.