We recently covered how bank transfers can take over a day for South African banks to process, and if you wanted the transaction to happen instantly you need to pay an additional fee.
International bank transfers are even worse, and sending money overseas can take several business days and cost several hundred rand – depending on how much you send.
This is where cryptocurrency takes the stage, and those backing the technology will be glad to tell you how cheap and fast a crypto transfer is compared to traditional bank transfers.
To see if this claim is valid, we tested a bank account transfer in rand against transfers using Bitcoin and Ethereum.
The test set-up was simple: transfer R50 from a Standard Bank account to an Absa account and measure how long it took, and how much it cost.
We would also send R50-worth of Bitcoin from a Luno wallet to a Bitcoin wallet created on Blockchain.com – and R50-worth of Ethereum from a Luno wallet to a MyEtherWallet account.
Here are the results of the test, which was conducted on a weekday.
|Transfer||Time Sent||Time Received||Cost|
|Standard Bank to Absa||08:56||20:04||R0|
It must be noted that the received times for the test indicate when the funds were in the recipient’s wallet and accessible.
Another factor to take note of is that while the cost of the bank transfer was R0, this formed part of a perk associated with the sender’s Standard Bank account.
The users pays a monthly fee for the bank account, which includes a number of free services – including free electronic transactions.
No monthly fees are charged on cryptocurrency wallets.
Where crypto shines
The strength of the Bitcoin and Ethereum blockchains are clearly demonstrated by the speed of the transfers in the test.
While the fee to transfer tokens via Ethereum is low by most standards, however, Bitcoin’s transfer fee is high compared to competing technologies.
At R2.21 for a Bitcoin transfer equivalent to R50, this is nearly a 5% charge.
It is important to note that unlike traditional bank transfers, though, cryptocurrency transactions are not limited by countries’ borders.
Whether you send one Bitcoin to a friend in South Africa or Switzerland makes no difference to how the transaction is processed – and the fees you pay.
This borderless system means international transfers using cryptocurrency are far superior compared to bank transfers in terms of speed and cost.
The ease of transferring tokens between countries has not escaped the eye of the authorities, and governments and central banks are looking at ways to monitor cryptocurrency transactions to ensure users follow legislation (and pay the appropriate taxes).