Earlier this week, a Bitcoin user transferred 29,999 BTC worth $196 million with a $0.1 fee, a transaction which will cost more with banks.
A usual story against cryptocurrencies such as Bitcoin and Ethereum is that is costly to carry out transactions as a result of fees sent to miners. But, the $194 million payment on the Bitcoin blockchain shows the capability of compromise currencies to optimize cross-border payments considerably.
Transferwise is a UK-based multi-billion dollar company that removes hidden charges in bank transfers. Users are able to send small to large amounts through bank accounts with considerably lower fees on the platform.
But even on a platform such as Transferwise, to send more than $1 million, it costs more than $7,500 in transaction fees. That implies, through wire transfers and conventional banking methods, tens of thousands of dollar are needed to clear a transaction that is higher than $1 million.
In terms of percentage, $7,500 is lower than 1 percent of $1 million and in the respect, a $7,500 fee is cheap. However, on the Bitcoin network, which is allegedly highly unproductive in processing payments, it costs less than $0.1 to clear a $194 million transaction.
At the beginning of the week, publicly praised critic Nouriel Roubini, an economist, and professor at Stern School aid that it costs $60 to clear a Bitcoin transaction and that has been the case, it costs $63 to buy a Starbucks latte that costs $3, using Bitcoin.
“So the cost per transaction of bitcoin is literally $60. So if I were to buy a $3 latte at Starbucks I would have to pay $63 to get it! So the myth of a ‘Brilliant new technology that reduces the vast fees of legacy financial systems!’ turns out to be a Big Fat Lie!” Nouriel claimed.
Respected cryptocurrency investor and Blocktower co-founder Ari Paul responding to the claims noted that the transaction fee of Bitcoin, which is lower than $0.1, is publicly verifiable on the blockchain.
“BTC fees are less than $0.10, easily verifiable. If you value truth, you’d provide a public correction. If your goal is to mislead people with simply false statements, carry on. There’s nothing to research. Fees are publicly viewable from many sources (googling it works.) I find it better not to provide a specific source because then regardless of source, the source gets attacked,” Paul noted.