Bitcoin has often been criticised for being too expensive, but according to Bank of America’s data, the bank charges $30 for outbound domestic wire transfers and $35 for outbound international sent in foreign currency which is 300 times more expensive than sending a transaction via the Bitcoin network.
The American banks charge a lot of money for their transactions, especially since Fedwire, the official real-time gross settlement funds transfer system operated by the United States Federal Reserve Bank, allows banks to transfer funds and charges only $0,25 per transaction. Hence, banks, like Bank of America, are profiting $29,75 per transaction which adds up to a remarkable 83 % profit margin per transaction.
Bitcoin, however, reached its peak of transactions fees in November and December 2017, when the demand for cryptocurrencies demonstrated the highest levels of demand in its lifetime. The price of Bitcoin almost reached $20,000, and the valuation of the crypto market was near $800 billion.
During the peak, Bitcoin and the other cryptocurrencies were struggling with scalability since the blockchain systems were not ready for the number of transactions that occurred. However, over the past months, throughout the bear market, developers have been working on the scalability issues and upgraded Bitcoin together with several other cryptocurrencies such as Ethereum.
Bitcoin implemented SegWit and the Lightning network. These scalability solutions are expected to expand the transaction capacity of the blockchain network in the months and years to come. Since January, the transaction fee of Bitcoin has declined to less than $1, and the median fee hovers around $0,1 per year, which is around 40 % cheaper than Fedwire and 300 times cheaper than a wire transfer from the big banks.
During the peak in December, fees for Bitcoin reached $55 per transactions according to bitinfocharts.com. Today, the average transaction fee hovers around $0,491. Even though there was a peak in fees for Bitcoin, it is still on average way cheaper than the banks around the world. Even though the cryptocurrencies and blockchain are in an early stage of development, they are substantially cheaper than banks already. Since new scalability features are applied to the networks and enhancements are made regularly, the fees might decrease even more in the future.
Bitcoin has suffered a huge drop in price over the past months and has fallen around 70% from its peak. Many say that this is only the beginning of new technology and some are even more optimistic than others. Tim Draper, the billionaire investor, has said that the cryptocurrency market could reach $80 trillion in the next 15 years because of its huge potential to disrupt industries all over the world.
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Dennis Sahlström has been trading and investing since 2012 and has for the last two years been consistently profitable. He has been in the crypto- and blockchain space since the middle of 2017 and realized its potential for our world, not least how it is transforming the society we live in. He has now created an education platform, together with the wealth coach Marcus the Maria. They teach regular people how to invest and trade in the cryptocurrency market with proven strategies. If you want to learn more and feel like its time to get into this new asset class, download our free book and register to the next live training to get your future in cryptocurrencies started.