Financial institutions still struggle with both simple and complex transactions abroad, serious travelers need cryptocurrencies.
Cryptocurrency May Not Be What You Think
At its core, crypto really shouldn’t be viewed as it has been portrayed. Bitcoin and other cryptocurrencies are seen as either a way to obscure transactions for nefarious purposes or a completely speculative market for intangible and valueless goods.
On a base level, cryptocurrency should allow Person A to transfer value to Person B nearly instantaneously with very little cost. It makes sense. Money is just a number in an account and with modern technology, there’s no reason why we shouldn’t be able to transfer X value to another person instantly for next to nothing.
The concept of cryptocurrency is a decentralized platform for which transactions are both anonymous and public. Cash used to satisfy the anonymous component (though now high-value transactions can almost never be paid with cash anonymously.) Fiat currencies like the US Dollar or the Euro, for example, are controlled by central banks that can increase or decrease the value of the currency based on politics, or any other reason.
Cryptocurrencies avoid the centralization element, no one controls the currency and most currencies have a finite amount of coins that will be minted. In theory, finite currencies like Bitcoin should only ever increase their value as expanded adoption can only create further scarcity.
Cryptocurrency Is Optimal for Travelers
It’s not all that important that travel sites like Online Travel Agencies (OTAs) accept cryptocurrency to book flights. While it may be convenient if the travel industry began accepting bitcoin as a payment method, the two benefits of crypto (privacy and cost) aren’t really a factor. Whether buying airline tickets or a car rental, identification will still be required so privacy is not really a factor. Most credit cards no longer charge foreign transaction fees so there’s not really a cost-saving either.
The Euro helped travelers visiting more than one country on the continent to avoid expensive changeover fees as they traveled, but currency exchange is still a problem for many outside of Europe.
Crypto could ease the burden and cost of those living and working abroad. Remote working visas make this more common than ever before. Many have found themselves stuck in a foreign country unable to get home due to arrival restrictions and find themselves requiring more cash than under normal circumstances – crypto helps with this too.
There are also some advantages for loyalty programs to utilize blockchain-based technology. (If you’re a developer, email me: firstname.lastname@example.org.)
Banks Struggle, Still – Some Examples
When I was living in the UK I was paid in US dollars to my American bank account for an extended period of time. Every paycheck cost me approximately $150 in transfer fees to move it from the US to my UK account where I paid my living expenses. In a given year, I spent almost $4000 on transfer fees alone which at the time was a considerable portion of my overall post-tax wage. Little has changed in the last 13 years to improve upon this process with traditional banks.
My wife and I would go abroad someplace in Europe once a month. We would disclose to the bank (Barclays at the time) our travel plans in advance of our departure. Without fail, the first ATM withdrawal would clear and subsequent charges would be blocked until I called them to remind them of the travel notice and have my account freed.
We were told to expect this, that nothing more could be done, but I suspect that if the CEO of Barclays or Chase’s Jamie Dimon had this experience every time they left the country, they’d have it fixed.
I have a friend that recently went abroad and his bank (Citizens) has not allowed him account access despite daily calls to the bank. Each time the bank claims to have resolved the matter yet his funds remain unavailable. They shrug their shoulders indifferently.
That same friend was buying a property abroad. He transferred the amount via wire but there was no timeline given for the transfer of funds used in the purchase. Upon arrival, the receiving bank where he owned an account held the funds at their whim. He arranged for his local attorney to remind them that they were expecting exactly this amount and it was operating exactly as planned when it finally arrived. They ultimately released the funds.
In 2010 while we lived in Thailand, my wife and I were able to move our savings for a nominal fee from a UK bank to a local Thai bank that accepted foreign denominated instruments. This wasn’t free, but it was still cheaper than going through the usual channels of wire fees plus exchange costs.
My first example occurred in 2008, the most recent example occurred two days ago. Banks have made virtually no effort to move funds or make their clients’ finances available to them despite jumping through the requisite hoops. It’s time for a change.
Why Hasn’t This Been Solved Yet?
With the availability of technology to solve these sorts of problems, banks seem unwilling to advance solutions that make it easier for their customers to move money around the world, even when notified or presented with a contract. They make money by obstruction so banks have little incentive to solve the problem.
Chase has invented its own cryptocurrency to solve these global transfers but it isn’t available for customer use and hasn’t been implemented in a way that allows clients to remove their funds in a simple and low-cost method.
There are debit cards that will allow some of the benefits of cryptocurrencies but not full access in a simplified manner. Why hasn’t the crypto finance arena allowed for peer-to-peer transactions as inexpensively as they can be conducted online? There’s no money in that.
Travelers possessing the ability to hold their money in a single digital wallet instantly available to them wherever they go is the way forward. Issues like the stability of digital currency must be overcome. Transactional processes can make spending crypto as easy as swiping a credit card though options to do this are limited right now. Blockchain technology protects banks against financial risk but they refuse to co-operate due to lowered demand for bloated, slow transfer options. Travelers and travel companies can lower their risk and their costs by using digital currency and accepting it as a payment option; serious travelers could save a substantial amount by using crypto.
What do you think? Will cryptocurrency become a more viable option for travelers?