Bitcoin as a vehicle to avoid international bank transfer fees.
Bitcoin is a cryptographic currency with no centralized issuing authority. It is infinitely divisible (unlike dollars which is divisible to the penny, or sometimes pips if you’re into forex trades). The currency got its start in around 2009 when a supposed “Satoshi Nakamoto” designed and implemented the protocol. It has since been used as any currency would be, and effectively. The nature of bitcoin keeps logs of every transaction ever made as part of the protocol, and verifies the logs to prevent double spending. The basis of Bitcoins lie in cryptography and producing that currency on the basis of computational power spent to solve algorithms. Producing Bitcoins involves an incredible amount of processing power, and the methods used to create them are not discretely covered in this essay. Cryptography is not a simple field, but fortunately, it is one you don’t need to know a thing about to manage trading Bitcoins, which I will describe below.
But before I do, I would like to speak about the risks, which while minimal, I should touch on. There are wallets in Bitcoins, which are basically anonymous addresses. Having this on file, and not losing it, is absolutely critical. I describe a method below to avoid this risk entirely. Also, it is possible to have someone steal a wallet, provided they find out your unique address, along with the passwords you use to access it. Avoiding prying eyes, is the best way to keep things secure. For large sums of money, additional steps should be taken to avoid potential prying eyes from potential spyware and malware by doing a cold boot on a computer and doing transactions from there. These issues are no different from any other online bank transfer you would initiate from your desktop. An additional measure of safety would be to carry out transactions quickly and not letting your Bitcoins sit idly in an account for an extended period, so that in the case that your account password had been compromised the attacker would have little time to work.
In many ways, it is just a forex market exchange, but don’t let that scare you. With this guide I’ll teach you how to make exchanges from your Japanese bank account (any bank will work), all the way to your American account for roughly 1.2% of the amount of the trade value, plus a couple of quarters. To put that into context, I would need to be transferring somewhere along the lines of 333,300 JPY to make the usual 4000 JPY bank transfer seem reasonable.
This workaround involves Bitcoins. Now, despite what people might say about its shadiness (money laundering, black market trading), I am suggesting you leave what you might have heard at the door, because this method can work to help you send cash cheaply. Here’s the step by step:
Create a Mt. Gox account
Mt. Gox is the world’s most popular bitcoin exchange, and luckily for us, it’s based in Japan. This means that domestic transfers are possible to your Mt. Gox account. If you have ever transferred money into someone else’s account before, say, a leasor or landlord for example, you may have gone through this process already. You may also find, depending on your bank, that this transfer may not cost anything. For larger transfers, refer to your bank’s policy on fees. Also, Mt. Gox likes to check on the security of large transactions, and if making single trades over 10,000 USD in a month, would like to verify the account user.
Transfer whatever amount you wish to transfer your American account into your Mt. Gox account as a domestic transfer. Take into consideration that you will lose .6% of the trade amount twice plus a couple of quarters once you decide to transfer it into your American bank account so throw in a couple of extra bucks for good measure. This transfer should finish in a few hours.
Create a Bitcoin Wallet. I highly recommend this link – http://www.wikihow.com/Create-an-Online-Bitcoin-Wallet. Keeping the wallet online and backed up is important, because if you lose that data, you lose your wallet. This process should only take about 10 minutes.
Trade your yen for Bitcoins at Mt. Gox. At this point, you are ready to trade your Japanese yen into Bitcoins. For speed’s sake, Go over to Mt. Gox and do a quick sell of whatever amount you would like to trade for, and you will find that your cash has been instantaneously converted into Bitcoins (minus the .6% transaction fee). Voila! You’re on the Bitcoin bandwagon.
Create a Camp BX account
Camp BX is the American version of Mt. Gox, however, they do their trades in just USD and Bitcoins. Send Bitcoins to your Wallet. Visit Mt. Gox, click funding options, and enter in your Bitcoin address along with the amount of Bitcoins you would like to transfer. In case you didn’t keep it handy, it can be found of the blockchain.info website we used to create your wallet in step 3. Send Bitcoins to your Camp BX account. Once that’s done, you can send your Bitcoins to your Camp BX account. You can start a transfer to this account by going to the transfer page of Camp BX and clicking “Generate Address”. With that address, you jump back over to blockchain.info and click Send Money. Put in the amount and address again and click send payment. You Bitcoins will land in your Camp BX account within the hour. Trade your Bitcoins for USD on Camp BX. Now, unless the market has violently swung in the span of an hour, which is highly unlikely, you will exchange your Bitcoins for USD near the JPY -> USD exchange rate. You have then successfully transferred your yennies to pennies, and they’re stateside.
Create a Dwolla account
Setting up a Dwolla account is another great fee saver, but this one does a bit of security checks for your safety. You will have to set up your bank account with them, which can take up to two days. Don’t worry, if you’ve followed the steps up to this point, your cash isn’t going anywhere.
Procedure to send money
Send USD from Camp BX to your Dwolla account. Once set up, send your USD from your Camp BX account to your Dwolla account from the campbx.com website. Send USD from Dwolla to your Bank Account. Once the cash lands in your dwolla account, which would have cost .25 USD, then send it into your American account, another .25 USD and you’re done!