While Bitcoin critics claim the cryptocurrency is too expensive to use for transactions, data from Bank of America (BoA) shows traditional fiat transfers cost 6000 times as much.
BoA, along with other domestic US institutions, makes use of the Federal Reserve’s money transfer network FedWire, which charges them a maximum of 83 cents to process a payment.
According to its public figures, however, BoA charges customers themselves up to $45 for the same service.
The FedWire fee varies with the size of the payment involved and whether it qualifies for an “incentive” fee, described as “transfers that exceed 60% of a customer’s historic benchmark volume.”
As such, the fee payable by banks themselves can be as low as $0.032 for an “incentive” transfer worth over $90,000.
BoA charges at least $30 for a transfer, meaning its minimum profit margin is 87.2 percent. Imperfect exchange rates for foreign transfers subsequently incur further charges to the customer.
By contrast, the recommended Bitcoin fee from Earn.com – which would deliver the quickest settlement applicable to the fee paid – was 8 satoshis per byte on September 19. This translates to around 75 cents for a $90,000 transaction.
Bitcoin Users Recognize Less Is More
For both consumers and merchants using Bitcoin, however, complaints about fees remain, despite the average cost contracting significantly in 2018 to record lows.
As we reported, businesses who opted not to add support for SegWit – a protocol allowing for faster and quicker transactions – have faced a backlash from clients and critics alike.
BitPay, one of the cryptocurrency ecosystem’s oldest merchant payment processors, has seen open source alternatives publicly resolve to make it “obsolete” after high fees additionally combined with poor performance.
Coinbase, the US’ largest exchange, and wallet provider had contended with similar threats prior to introducing SegWit functionality in February.
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