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How does cryptocurrency help those who have moved to a new country

Cryptocurrencies are increasingly used in cross-border payments. For example, in the Philippines, cryptocurrencies account for more than 9% of the country's GDP in international transfers. Cryptocurrencies are popular because they help solve several problems associated with traditional remittance instruments.

Why use cryptocurrencies for international transfers in the first place?

If you need to transfer to another country, you can do it in two ways: send non-cash money from a bank account or payment system or send cash through a money transfer system. It is estimated that the average global cost of international transfers in 2022 was more than 6% of the transfer amount. So you may pay, for example, more than $600 to transfer $10,000.

If the transfer requires currency conversion, the costs will be even higher. There are still situations when the use of cryptocurrencies is already a necessity. For several reasons, sending this or that currency abroad may not be available. Currency transfers to some countries may also be banned in banks.

Citizens recently arriving in another country may not have a residence permit. There are cases when a person moves even without a visa. In such cases, newcomers to another country may have problems opening a bank account, and without one, it may be challenging to receive and send remittances.

If you do not have a visa and/or residence permit and try to send or receive a large amount of money to another country, you may still be scrutinized by local law enforcement agencies. Of course, there is still an option to use your bank card abroad, but in some cases, it will be impossible to use it, for example, for payment or cash withdrawal.

By resorting to money transfers using traditional methods, users put themselves in a dependent position, delegating the right to dispose of their funds to an organization. For example, a bank may delay a transfer, require additional verification or even require a personal visit to the office, freeze the transfer on any grounds or block the money or the account altogether. Companies have complete control over financial transactions and can unilaterally suspend them even for questionable reasons.

Advantages of cryptocurrencies

  1. Speed. Transaction times for cryptocurrency transfers range from a few seconds to a few minutes, depending on the network chosen. Bank transfers can take up to 3 business days and may require additional verification. Cryptocurrency is the best way out when you need to receive or send funds urgently;
  2. Low fees. On average, you will pay a few cents to $2 (rarely more) for sending cryptocurrency, regardless of the transfer amount. If, for example, you transfer $10,000, the commission will be up to 0.02% of the amount;
  3. No censorship. A cryptocurrency wallet cannot be blocked, and when making transfers, there are no intermediaries who not only charge commissions but can also interfere in the transaction process. No company can restrict your access to the wallet, much less write-off funds. It is possible to block individual tokens, such as USDT, USDC or PYUSD stablecoins. However, the probability of this is much less than blocking a bank account or, for example, a PayPal account;
  4. Anonymity. To create a cryptocurrency wallet, you don't need to go to a bank office and provide your identification data. Third parties will not know to whom you transferred, why, and how much money you transferred.
  5. There is no need for banks. After moving, you will not need to open a bank account immediately, so there will be no problems, even without a visa or residence permit.
  6. No restrictions. When entering a new country, you can only take a limited amount of cash with you and can't hide it in any way. Cryptocurrencies make it easy to bypass this restriction. Any amount of money can be transferred. Cryptocurrencies have no limits: transfer even $1 million — no one can interrupt your operation.

However, you should not forget about the risks of digital assets. If you mistakenly send cryptocurrency to the wrong address or compromise the private key, you are most likely to lose your funds irrevocably.

In addition, all cryptocurrencies, except for stablecoins, are very volatile: their rate can rise or fall by tens of per cent in a short period of time. But the risks will be small if you buy them for a quick transfer.

Cryptocurrency as a tool to protect against inflation

Cryptocurrencies, among other things, will help you protect yourself from inflation in your new country of residence. Here are a few factors that can positively affect the exchange rate of cryptocurrencies:

  • Asset scarcity. Many cryptocurrencies, such as Bitcoin, Ethereum and others, have a deflation mechanism or, in other words, limitation of issuance. For comparison, over the past 10 years, the purchasing power of the dollar has decreased by almost a quarter, while Bitcoin has increased by nearly 3,300 times;
  • Small capitalization. So far, cryptocurrencies lag far behind in capitalization, liquidity, and other indicators from the stock market and even more so from the currency market. This provides digital assets with huge growth potential, especially considering that mass adoption is yet to come;
  • Alternative asset. In a financial crisis and the subsequent collapse of indices and local currency exchange rates, cryptocurrency could rise as some investors' capital would flow into it.
  • Capital protection from devaluation and hyperinflation. If the national currency's exchange rate falls against foreign currencies, it is likely to become cheaper against cryptocurrency.

© BestChange.com – , updated 12/21/2023
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