Argentina bank becomes the first to use bitcoin for customer transactions
Today, Banco Masventas suddenly became the first bank to use bitcoin for customer transactions.
Argentina's Banco Masventas (BMV) has suddenly revealed that it now lets its customers select bitcoin as a cross-border payment option. The option comes thanks to a partnership with Latin American cryptocurrency exchange Bitex.
It might be the first domestic bank in the world to allow customers to use bitcoin as a payment option. According to BMV, customers can now use Bitex to send money to over 50 different countries in less than 24 hours, with a fee of 3% + VAT.
How it works
The system essentially works exactly the same as Ripple, except with bitcoin instead of XRP. Rather than bouncing fiat currency between banks on the SWIFT network, the money travels as cryptocurrency to an exchange that's able to cash out to the recipient.
The main difference might be that bitcoin, with its relatively slow transfers and high fees, is inherently slower and more expensive to move than XRP. This might be why BMV's transfer times are "within 24 hours" rather than Ripple's two minutes in the USA to Mexico corridor.
Ripple's quick transfers and negligible transaction fees lets banks move customer transactions as they come in. But because it uses bitcoin, BMV and Bitex might be waiting and sending transactions as one or two big batches per day. By contrast, average bitcoin transaction fees are about US$1.30 at the time of writing, and dealing with this for every single customer transaction would be cost-prohibitive.
It's still a nice deal for customers though, and the percentage-based fee structure finally opens the door to cost-effective international transfers of small amounts.
Should Ripple be worried?
Despite having the better system, it might still be a cause of concern for Ripple. Any financial institution that can access a suitable exchange is theoretically able to do this with any cryptocurrency they want. BMV happens to be using Bitex and bitcoin.
In all cases, the basic steps are the same and boil down to converting fiat to crypto, transferring crypto and then transferring crypto to fiat at the destination. It's probably no coincidence that Ripple is currently focused on finding more uses for XRP.
In the long run, the last word in cross-border payments might go to international banks that start doing cryptocurrency alongside their fiat currency or cryptocurrency exchanges that start offering a wide range of fiat currencies around the world.
This combination of fiat and crypto brings the best results for customers and prevents them from needing to touch the volatility of crypto themselves.
"The customers will ask the bank to do an international payment, and the bank uses Bitex as a provider," said Bitex chief marketing officer Manuel Beaudroit to CoinDesk. "For the customer, it's transparent, they don't touch, they don't see the bitcoin. We are a provider for them, and they are not touching bitcoin."
Disclosure: At the time of writing, the author holds ETH, IOTA, ICX, VEN, XLM, BTC and NANO.